What is an extracontractual claim?

An extracontractual claim is an action taken against an insurance company when they have failed to meet the terms of an insurance contract. In Washington, extracontractual claims are sometimes referred to as "bad faith" claims and are usually brought against an insurance company when they have acted in a manner that goes beyond what is contractually obligated. This could be anything from failing to properly investigate a claim, denying coverage without a reasonable basis, or refusing to pay an insured’s benefits. These extracontractual claims can be brought when the insurance company has not followed the legal obligations of the insurance contract. In Washington, an extracontractual claim could be brought when the insurance company has withheld or diminished payment for a claim due to bad faith. This could include a situation where the insurance company does not act in good faith when investigating or evaluating a claim or delays payment of benefits due to an unreasonably long investigation. Additionally, if the insurance company unreasonably denies a claim, or denies payment without providing a reasonable explanation, this could be grounds for an extracontractual claim. In Washington, an extracontractual claim could also be brought when the insurance company fails to make a reasonable settlement offer in a timely manner. The insurance company must also be careful about bargaining with its customers in an unreasonable manner. It is important for an insurance company to be aware of these legal obligations and to treat their customers fairly, or they can be held liable for extracontractual claims.

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What is an extracontractual claim?

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