Washington’s Senate Invoice 6031, championed by Insurance coverage Commissioner Patty Kuderer, has unanimously handed the State Senate. 1 The invoice would create a standalone crime of insurance coverage fraud and classify it as a Class B felony, punishable by as much as 10 years in jail and vital fines.
On its face, this seems to be a robust, fashionable step towards combating fraud within the insurance coverage market. The invoice supplies:
An individual is responsible of insurance coverage fraud if the particular person knowingly, and with intent to defraud, commits, or conceals any materials info regarding… Submitting a press release, estimate, bill, bid, proposal, proof of loss, or some other doc that misrepresents the scope of damages or prices of repairs related to a property insurance coverage declare.
That’s not slender language. It doesn’t restrict the crime to fraud in opposition to insurers. It doesn’t carve out exceptions for contractors, public adjusters, brokers, or insurance coverage firm staff. It applies to “an individual.”
It additional states:
Insurance coverage fraud is a category B felony. Every occasion of insurance coverage fraud constitutes a separate offense.
If somebody knowingly submits an estimate that misrepresents the scope of damages or the prices of repairs related to a property declare, and does so with intent to defraud, the statute defines that as a felony.
So, if an insurance coverage firm adjuster or a vendor knowingly lowers an estimate with out factual assist, and does so with intent to misrepresent the true scope or price of harm with a view to cut back cost to a policyholder, does that fall inside this definition? Primarily based strictly on the language above, it might.
There may be, after all, an vital authorized distinction between a respectable dispute over valuation and intentional deception. Adjusters are allowed to disagree. They’re allowed to train judgment. They’re allowed to query scope and have an trustworthy distinction of opinion. However they aren’t allowed to knowingly misrepresent.
Felony fraud requires proof of intent. It requires displaying that the submitted doc was materially false, that the particular person submitting it knew it was false, and that the particular person supposed to deceive. That may be a excessive bar, and it ought to be.
Nevertheless, if proof ever demonstrated that an estimate was intentionally altered to misstate the scope of harm or the price of restore, not due to knowledgeable disagreement however due to an intent to underpay by way of deception, or ordered with out justification by a superior desk adjuster, the statutory language doesn’t exempt the claims division.
The subsequent query is whether or not an insurance coverage firm itself might face publicity. Below common rules of company legal legal responsibility, an organization may be held accountable when staff act inside the scope of their employment and for the advantage of the corporate. If fraudulent practices have been systemic or directed, legal responsibility wouldn’t be restricted to a single particular person. Whether or not prosecutors would pursue such instances is one other matter. However legally, the statute doesn’t seem to create a one-way road.
For policyholders, there’s something else vital on this invoice. It expands the definition of “sufferer” to incorporate insurance coverage clients and beneficiaries, making them eligible for legal restitution. That is a vital recognition that fraud within the insurance coverage world doesn’t solely transfer in a single course.
Fraud is fraud. If an estimate or skilled report is knowingly manipulated to misrepresent the quantity or trigger of harm with a view to cheat a policyholder, the statute’s plain language means that can be fraud.
The true take a look at will probably be enforcement. Will the legislation be utilized evenly? Will this legislation, if handed by the Washington Home and signed by the Governor, defend policyholders with the identical vigor it protects insurers? Will or not it’s used as a protect for integrity somewhat than a sword wielded selectively?
Insurance coverage is constructed on belief. When that belief is deliberately damaged, the implications mustn’t rely on who dedicated the act. Washington has written robust phrases into this invoice. I hope it will definitely turns into legislation.
My wager is that Doug Quinn and the American Policyholders Affiliation (APA) will assist this laws.
Thought For The Day
“Justice can’t be for one aspect alone, however should be for each.”
—Eleanor Roosevelt
1 Insurance coverage fraud modernization invoice passes state Senate. Workplace of the Ins. Commissioner, Washington State. Feb. 17, 2026.