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Vol. 11 - Issue 4

August 15, 2022


Do Insurance Adjusters Need To Know And Research Case Law?


In a May 5, 2022 dispatch of Coverage Opinions, I reported on the late-March decision in Security National Ins. Co. v. Construction Associates of Spokane, where a Washington federal judge, in addressing a coverage dispute, spoke of the importance of adjusters considering case law when making a coverage determination.

Long-time insurance coverage attorney turned expert witness, Stephen Johnson, provides his insight on this issue here.


Comment on Security National Ins. Co. v. Construction Associates of Spokane: Adjusters And Case Law

Stephen Johnson

In Security National Ins. Co. v. Construction Associates of Spokane, No. 20-167 (E.D. Wash. Mar. 24, 2022), the Washington federal judge stated that adjusters should have at least a baseline understanding of the relevant state’s law in carrying out their duties. So far, so good.

The decision went on to state insurers “must undertake what in practice are reasonably small steps to ensure adjustors are equipped to make reasonable coverage and defense determinations. Such steps could include teaching adjustors to run case searches or, more likely, supplying adjustors with subscriptions to relevant legal newsletters, a resource most attorneys rely on to keep apprised of legal developments.”

Some of these steps described are neither small nor reasonable.

Both sides of the litigation aisle and insurers would agree that adjusters should have awareness of certain key legal concepts and variances per state – e.g., pure versus modified comparative negligence, key landmark cases, etc.

However, when the Construction Associates court went on to suggest that adjusters should be taught to “run case searches” or otherwise perform legal research, if literally applied, then (in the style of my friend Randy): “Danger, Will Robinson!”

Adjusters cannot be expected to astutely sherardize cases, accurately differentiate between dicta and the holding within a reported decision or otherwise competently perform full legal research as is sometimes needed. Imagine an adjuster complaining to Human Resources – “My supervisor and I wanted to retain coverage counsel, but management said no … that I need to perform my own legal research. My job description says I am an adjuster, not an attorney! In fact, I am not an attorney.” Any readers know a good employment lawyer?

Washington state is known as a jurisdiction unfriendly to insurers sued for bad faith claims handling or practices.  Any insurer defending bad faith litigation with “bad facts” in that state – or in many other states – well could rue the day it decided to “teach” adjusters to act as attorneys and forego retaining learned coverage counsel – such decision being another bad fact. The likelihood of a sophisticated insurer going down that path should be minimal, as last resort voices of reason could include human resources or the general counsel’s office.

The optics would be horrible. Policyholder counsel would have a field day convincing the jury that the insurer “went cheap.” Instead of spending what was necessary to get it right, by bringing in a coverage attorney to provide crafted, lawyerly and reliable advice, the insurer opted to “coach up” an adjuster and hope for the best.

Sometimes “getting it right” means bringing in – and paying for – outside counsel steeped in applicable state law. This decision’s narrative would have been much better had that sense of practicality been added.

I am in my 40th year as an attorney, have been the top claims officer at large insurers and have known many other chief claims executives over the years.  Having adjusters exposed to newsletters, relevant continuing education content and the like all makes sense and is what the P&C industry does. I know of no insurers which would try to transform adjusters into attorneys as suggested by the Washington federal court in Construction Associates, nor should they.

Stephen Johnson is an industry veteran, having led insurers claims departments and applied industry standards for his adjusters for many years prior to becoming an expert witness.


[The opinions expressed in outside commentaries are solely those of the author.  Publication of a commentary is not an endorsement of the content and are simply provided as a service to readers.] 




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