Coventry v. American States Ins. Co.


Court: The Supreme Court of Washington. En Banc

No. 65850-1.

Date published: Sep 3, 1998


In 1990, Coventry was constructing an apartment complex in Renton, Washington, when a retaining wall collapsed due to heavy rainfall. Coventry’s insurer, American States, denied the claim due to an exclusion for damage to the retaining wall, not the cause of the damage or any loss of business coverage. Coventry filed a lawsuit against the American States, alleging breach of the insurance contract, bad faith, and CPA violations. The trial court granted American States’ motion for summary judgment on the breach of contract claim and dismissed the remaining bad faith and CPA claims. The Court of Appeals affirmed and granted Coventry’s petition for review, raising questions about Washington’s bad faith or CPA cause of action, the presumption of harm if insurers act in bad faith, and available remedies for insureds.



The majority ruled that a presumption of harm and coverage by estoppel do not apply when an insurer conducts a bad faith investigation of a first-party insured’s claim. The court acknowledged that a first-party insured may maintain a bad faith or Consumer Protection Act (CPA) claim in the absence of coverage if the bad faith investigation actually harms the insured. The majority also stated that a cause of action exists when an insurer breaches its duty to act in good faith, if such bad faith causes resulting harm to the insured. The court agreed that summary judgment was improperly granted due to unresolved questions of fact.

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