What Constitutes A ‘Thorough’ Investigation?

By
F. J. Maloney

[Editor’s Note: F. J. Maloney is an associate with the West Coast law firm of Bullivant Houser Bailey, practicing in its Portland, Oregon office. Mr. Maloney’s practice focuses on first-party insurance coverage litigation, including complex and extra-contractual claims. Copyright 1999 by the author. Replies to this commentary are welcome.]

I. Introduction

With the increasing number of “bad faith” lawsuits filed against insurance companies, it has become imperative for insurance companies to conduct a thorough and “good faith” investigation prior to making any claims decision. The claims investigation may set the tone for any subsequent litigation — a sloppy or incomplete investigation can open the door to allegations of bad faith, whereas an organized and thorough investigation, in addition to providing important coverage information, can often prevent allegations of bad faith.

Almost all state and federal courts have now held that there is an implied duty of good faith between an insurance company and its insureds.1 This implied duty of good faith is separate and distinct from the duties that arise under the terms and conditions of the insurance contract.2 Courts have held that this duty of good faith extends to the insurer’s obligation to thoroughly and promptly investigate claims by its insureds,3 the failure of which may result in tort liability for “bad faith” and potential exposure to punitive damages.4 In fact, the Supreme Court of Washington has held that an insured can still maintain a tort action against an insurance company for bad faith investigation of a claim even where the insurance company was ultimately correct in determining coverage did not exist!5

The ultimate goal of a thorough claims investigation is to obtain enough information to make an informed, objective and accurate coverage opinion. This article will discuss how to achieve this goal and how to protect against allegations of “bad faith” after a claim has been denied.6 Although this article will for the most part discuss how to thoroughly investigate first party property claims, the investigative steps and suggestions apply equally to liability claims.

II. Purposes and Goals of a Thorough Investigation

The primary goal of a thorough good faith investigation is to obtain enough information to make an informed and objective decision about (1) whether coverage exists for the claim, and (2) if there is coverage, the amount of the covered loss. It is impossible to evaluate any questionable claim without investigation.

All states have now, in one form or another, enacted statutes and/or regulations regulating insurance claims handling practices. These “unfair claims settlement acts” impose generalized obligations by statute and more detailed obligations in regulations promulgated pursuant to the statutes. An investigator should become familiar with and give special attention to the respective states’ rules throughout every step of an investigation. Failure to abide by these regulations may subject an insurance company to claims of bad faith. Examples of violations of these laws include refusing to pay claims without conducting a reasonable investigation,7 failing to acknowledge and respond to a submitted Proof of Loss within 15 working days,8 and failing to give a prompt and reasonable explanation for denying a claim.9

In conducting a thorough investigation, always keep in mind that if allegations of bad faith are later made by the insured, the factfinder (whether a judge or jury) will be looking back in time to evaluate the reasonableness of the insurance company’s investigation. Whether fair or not, the factfinder’s analysis is often made with the benefit of 20/20 hindsight. A good question to always keep in mind is how the insurance company’s investigative steps, or lack of investigative steps, will look to a reasonable third person six months or a year from now.

There are a number of readily available resources that the insurance company can look to in initially investigating the claim. The first place to look is the insurance policy itself. Be careful not to overlook the basics: Is the claim being submitted by an “insured person?” Is the loss location a “covered location?” Did the claimed loss occur during the applicable policy period? What losses are covered and excluded? Are there applicable sublimits of liability? A review of the applicable coverages and exclusions will go a long way in narrowing the scope of any investigation and streamlining investigative efforts.

Other helpful places to investigate include:

• The Underwriter’s File. The underwriter’s file, including the insurance application, is an often overlooked resource that can provide valuable insight regarding the claim. The insurance application may also provide evidence of misrepresentation of material facts in the application. Most insurance contracts, including the standard New York fire insurance policy (the “165 lines policy”),10 have a specific provision voiding the contract if the insured makes any willful misrepresentation material to the policy or claim. Be aware that many states have passed statutes imposing further requirements, such as physically attaching a copy of the policy application to the policy at the time it is issued to the insured, before an insurance company may rely on a misrepresentation in the policy application to deny a claim.11

• Police Reports. If the claim is for a theft or other crime, a police report can provide valuable corroboration regarding the date and time of the loss, what items are claimed and the circumstances of the claim. Most policies require the insured to file a police report as a condition to filing a theft claim. The fact that the insured did not bother to report the matter to the police should be examined. Because police reports are made soon after the loss is reported, a police report may provide the “freshest” recollection of the events.

• Public Court Records. Although sometimes more difficult to track down, public court documents of lawsuits involving an insured may be helpful in evaluating a suspicious claim. Does the insured have any criminal convictions for theft, fraud, perjury or other crimes of dishonesty? Are there any recent judgments against the insured? A recent divorce may also provide sworn affidavits regarding property distributed to the insured as part of the divorce decree.12

After initially reviewing the insured’s claim, the insurance policy, underwriting file and other available materials, the investigator should note specific goals of the investigation. Although these goals should not be exclusive, they should provide the general direction for the investigation. By following general goals, unnecessary investigative tangents and expenses can be avoided. The investigation must be objective and fair to the insured. Possible goals include:

• Coverage of the loss. Is the claimed loss actually covered by the policy? Depending on how the claim is presented by the insured, what may appear at first glance to be a covered loss may in fact not be covered upon closer examination. Many policies only cover damage caused by an “occurrence.” Did an “occurrence” cause the loss, or was the loss caused, for example, by a preexisting condition or excluded cause?

• Fraud/Misrepresentation. One of the most common concerns is fraud or misrepresentation in the claim. Investigative issues to consider may be whether the property ever existed, whether it was actually owned by the insured and whether the property was actually destroyed or damaged. An intentional fraud or misrepresentation may also be made in the valuation of the claim. Can receipts and invoices be verified? Have any receipts or invoices been altered? Although there is an endless list of ways to submit a fraudulent claim, “the devil is in the details.” Many fraudulent claims can be discovered through verification and cross-referencing, with objective sources, of the information provided by the insured. Keep in mind that a requirement in proving fraud/misrepresentation is proving that the misrepresentation was intentional, and not merely a “mistake.”

• Motive. Although not an actual element required to prove a fraudulent claim, practically speaking, motive is a necessary part of the investigation. Motive is most often financial. Indications of recent changes in lifestyle that may have caused a sudden change in financial circumstances are important considerations.

• Opportunity. Proving that the insured did or did not have the opportunity to have caused a loss is necessary in any claim suspected to have been caused by the insured. Where was the insured at the time of the loss? Can the insured’s whereabouts be verified through independent witnesses, restaurant receipts, airline tickets, etc.?

• Specific Exclusions. Depending on the nature of the claim, specific policy exclusions may become relevant to the coverage investigation. For instance, was the personal property used for an excluded business purpose? Was the insured house vacant for more than 60 days? Much of this type of information is not immediately evident and requires looking beyond the initial report made by the insured.

• Contractual Suit and Time Limitations. Most insurance policies have a suit limitation provision limiting the time in which the insured may file suit against the insurance company. In many states, these suit limitation provisions are superseded by statute.13 It is important to note the actual date the loss occurred, and not simply the date the loss was reported. Although a suit and time limitation provision does not operate as an exclusion, it may prevent a later lawsuit from being filed. Insurance representatives should be careful not to waive any suit/time limitation provision in the policy.

• Subrogation. If the loss is a covered loss, and the insured is indemnified, then the investigative goal may be to determine the viability of a possible subrogation. Most often, this involves a product liability action.

III. Steps in the Claims Investigation Process

Although no two claims are exactly alike and stages of the investigation are likely to overlap with each other, there are generally 6 identifiable stages of the claims process, beginning with the time of loss through the final coverage decision. These include:

1. The initial report (recognizing red flags);

2. The preliminary investigation;

3. Invoking the insurance company’s contractual right to Notice and Proof of Loss;

4. Conducting Examinations Under Oath;

5. Follow-up investigation;

6. Making the coverage decision.

In addition to briefly describing these investigative steps below, several of these steps are discussed in more detail in the section regarding “Using the Policy’s Contractual ‘Tools’.”

1. The Initial Report

The local claims adjuster is usually the first insurance company representative to receive information and potentially to notice suspicious circumstances (red flags). Red flags may be something as subtle as a suspicious inconsistency, or as blatant as a statement the claims adjuster know is false.

Many times red flags are not obvious without a detailed review. For example, a business interruption loss claim, because it is based upon projected losses, may be especially easy to exaggerate. Fire losses are also susceptible to possible misrepresentation because in many cases the only verification of the loss was destroyed in the fire. It is a good idea to be aware of losses that by their nature are difficult to verify and easy to misrepresent.

In other instances, information initially known to the insurance representative does not raise any red flags until a later date when other facts become known. For instance, an initial comment to the claims representative that the insured was at a restaurant at the time of loss may appear to be of no real significance until the same insured tells the adjuster that he was not at the restaurant at the time of loss. For this reason, all phone calls, communications and conversations with the insured should be clearly documented in the claim’s log entry at the time of the conversation. This may also prevent an insured from later changing his or her story to “fit” with evidence that is turned up in the investigation. Detailed log notes of conversations with the insureds (and other witnesses) may be as valuable as a recorded statement.

2. Preliminary Investigation

Following the first signs of red flags, either the claims representative or investigator should conduct a preliminary investigation. The purpose of this preliminary investigation is usually to determine whether the claim warrants further investigation. This may include verifying documentation of the loss, conducting recorded statements and interviewing witnesses. Often times there is a legitimate and innocent explanation for what may otherwise appear to be a suspicious claim. It is within the insurance company’s good faith duty to investigate these red flags to determine whether there is an innocent explanation for a questionable claim. No claim should ever be denied based solely upon red flags — doing so is an invitation to later claims of a bad faith investigation. An objective investigation is required. It will either support the insured, clarifying what appeared to be suspicious circumstances, or it may lead to objective evidence of a policy violation.

In instances of suspicious larger claims, the investigation may proceed from the first recognition of red flags straight to a full investigation. This is common in cases of suspected arson losses where it is imperative to preserve evidence at the fire scene, rather than having to attempt to reconstruct the fire’s circumstances at a later date. It is important that such early intensive investigations be well organized and coordinated. Having a designated “point person” to coordinate all facets of the investigation, and to communicate with the insured, is recommended. This ensures that the insured receives the same information from one person rather than different information or instructions from a number of different insurance company representatives.

3. Invoking Contractual Duties

Following the recognition of red flags and initial investigation, and assuming the preliminary investigation indicates further formal investigation is warranted, the insurance company may invoke the “Duties in the event of loss” provision of the insurance policy, and specifically, the right to Examination Under Oath.

4. Examination Under Oath

Often times, depending on the circumstances of the claim, the insurance company’s right to Examination Under Oath is asserted. The right to an Examination Under Oath is possibly the single most important tool the insurance company has in its investigation of a claim. It can provide invaluable sworn information directly from the insured about the circumstances of the claim. It is also an opportunity for an insured to dispel suspicions and bring to light important information.

5. Further Investigation

Following the Examination Under Oath, it is important that new information and leads be investigated. Any further documents helpful to the resolution of the claim should be requested from the insured at this time. Keeping in mind that the insurance company’s interests should not be held above those of the insured, it is just as important to investigate any innocent explanations provided by the insured during the Examination Under Oath.

6. The Decision

Once the investigation is concluded, the coverage decision should be made. This decision should objectively consider all relevant and material information gathered during the investigation, recorded statements, Proof of Loss, and Examination Under Oath.

IV. Using the Policy’s Contractual ‘Tools’

The invocation of the contractual “Duties in the event of loss” sets the parameters for the investigation and provides a number of “tools” for a thorough good faith investigation.

A typical “Duties in the event of loss” provision states:

“DUTIES IN THE EVENT OF ‘LOSS’

You must see that the following are done in the event of ‘loss’ to Covered Property:

a. Given us prompt notice of the ‘loss’. Include a description of the property involved.

b. As soon as possible, give us a description of how, when and where the ‘loss’ occurred.

c. Take all reasonable steps to protect the Covered Property from further damage by a Covered Cause of Loss. If feasible, set the damaged property aside and in the best possible order for examination. Also keep a record of your expenses for emergency and temporary repairs, for consideration in the settlement of the claim. This will not increase the Limit of Insurance.

d. At our request, give us complete inventories of the damaged and undamaged property. Include quantities, costs, values and amount of ‘loss’ claimed.

e. Permit us to inspect the property and records proving the ‘loss.’

f. If requested, permit us to question you under oath at such times as may be reasonably required about any matter relating to this insurance or your claim, including your books and records. In such event, your answers must be signed.

g. Send us a signed, sworn statement of ‘loss’ containing the information we request to investigate the claim. You must do this within 60 days after our request. We will supply you with the necessary forms.

h. Cooperate with us in the investigation or settlement of the claim.”

At this time, and if not asserted earlier, it is paramount that a reservation of any and all rights and defenses be asserted.14 The reservation of rights should preserve the insurance company’s rights and possible defenses, then known and unknown, to prevent any waiver of rights and later arguments of estoppel.15 An early reservation of any and all rights and defenses should also help prevent a later claim of bad faith where the insurance company does not learn of a possible defense until late in the investigation and then asserts that defense at that time. The reservation of rights should be made in writing and should be reasserted thereafter in every written communication to the insured.

If a blank Proof of Loss form has not already been provided to the insured, the letter invoking the “Duties in the event of loss” (and stating the insurance company’s reservation of rights) should usually include a blank Proof of Loss form for the insured to complete.

The “Duties in the event of loss” provision provides a number of valuable tools to use in the investigation. A good faith investigation should use these tools. Failure to use these tools prior to making a claims decision can only provide “ammunition” to the insured in a subsequent bad faith lawsuit. For instance, if fraud/misrepresentation is suspected, and the insurance company denies coverage without taking an examination under oath, the insured can argue that the insurance company had already made up its mind about the claim without ever having used its own investigative tools set out in the policy.

1. The Proof of Loss

The Proof of Loss is intended to objectively tell the insurance company exactly what the claim is in all regards. By requiring the Proof of Loss to be sworn, the insurance company should be able to rely upon its veracity and truthfulness. An insured can be held criminally liable for intentionally submitting a fraudulent Proof of Loss.

Because the Proof of Loss is the basis of the insurance claim, the insurance company should be sure that all documentation, information, and examinations under oath are requested “as a part of the Proof of Loss.” Many policies require the insurance company to make a final decision on the claim within 30 or 60 days of acceptance of the Proof of Loss. By clearly stating that all requests for records, examinations under oath and other information are requested “as a part of the Proof of Loss,” the insurance company should not be in the position of having to make a decision on the claim before all follow-up information is obtained and the investigation completed.

Where the insured does not substantially comply with the requirements of the Proof of Loss, it should be rejected as defectively incomplete and a new blank Proof of Loss should be provided for the insured to fully and accurately complete. Be aware that many state regulations prohibit an insurance company from requiring an insured to unnecessarily fill out repetitive forms.16 It is important that these requirements not be waived — the Proof of Loss is the tool the insurance company uses to know just how much the claim is and how much reserves should be set at.

2. The Inventory

Usually incorporated into the Proof of Loss, the inventory is intended to be a definitive list of the items claimed as damaged. It should list each item separately with the value of each item claimed and the date of purchase. The inventory can provide the basis for the investigation of the property values and whether the items claimed are covered by the policy.

The inventory should be carefully reviewed and cross referenced with documents, bills and receipts submitted in support of the items listed. Unexplained inconsistencies should be further investigated to determine whether they are innocent inconsistencies or evidence that the claim is not covered by the policy.

3. Inspection of the property and records

The duty requiring the insured to allow the insurance company to inspect the property and records evidencing the claimed loss allows the insurance company to have reasonable access to any and all documents pertinent to the claim. Some policy provisions may also include language allowing the insurance company to make copies of all such documents.

In general, the insured’s duty to produce documents relevant to the claim is broader than discovery rules.17 The only limitation on the scope of documents to be produced pursuant to an insurance claim is that the information be “reasonably related” to the circumstances of the claim.18 Courts have held, for instance, that the insured’s refusal to provide financial information to verify the insured’s ability to purchase the claimed property violates the insured’s duties after loss and voids coverage.19

Although most insurance companies have form letters requesting a number of documents from an insured, the insurance company should briefly review the circumstances of the claim prior to requesting documents so that the request can be specifically tailored to the individual claim.

A personal inspection of the physical location of the loss should be conducted whenever possible. Personally viewing the scene can clarify logistical questions and greatly aid the understanding of how the loss occurred.

Diagrams of the scene are also helpful for later recollection of the scene and to aid others in understanding the circumstances of the loss. Whenever possible, take photographs of the loss location. These photographs should be clearly dated and described so that other persons can understand what the photos depict. Avoid using Polaroid photographs — because there is no negative the photographs cannot be clearly reproduced or enlarged.

4. The Examination Under Oath

The Examination Under Oath of the insured is possibly the single most important investigative tool available to the insurance company. An Examination Under Oath should be utilized when appropriate. It allows the insurance company to personally ask the insured questions relating to the claim, review documents submitted in support of the claim, and to evaluate the credibility and demeanor of the insured. Recorded statements and written answers to questions are no substitute for an Examination Under Oath.20

The timing of the Examination Under Oath is usually coordinated to occur after the Proof of Loss and supporting documentation is received. This allows the attorney conducting the questioning to have a more thorough understanding of the claim, the relevant coverage issues, and potential inconsistencies.

The Examination Under Oath also allows the insurance company to hear the insured’s explanation of the claim and to put his or her best foot forward. Allowing an insured to present his or her explanation of the events is important to a good faith investigation. Should the insured later try to change or add to the circumstances surrounding the claim, the Examination Under Oath transcript can also be used to show that the insured’s story was different at the time of the Examination Under Oath. For this reason, the requirement that “your answers must be signed” should not be waived. By having the insured review, correct and sign off on the Examination Under Oath transcript, the accuracy of the transcript for both the insured and the insurance company is guaranteed.

V. Follow-Up Investigation

An Examination Under Oath will often raise a number of issues not known about the claim prior to the Examination. These new issues may include a new version of events or circumstances surrounding the claim, new witnesses or a possible alibi. To the extent the investigation to date has not objectively proven or disproved the new information, it is important that the new information be investigated promptly. Failure to conduct an adequate follow-up investigation of new issues may subject the insurance company to claims of bad faith investigation. This is not to suggest that an adequate follow-up investigation will prevent claims of bad faith. But in the event a claim is denied after a thorough investigation, having objective information in support of the reasons for denial of a claim will go a long way in quickly disposing of frivolous bad faith claims.

It is important that this follow-up investigation be conducted quickly. There is a dangerous tendency to assume that once the Examination Under Oath is complete, then the investigation is complete. As a result, important follow-up investigations are sometimes overlooked or given a low priority, and the final decision on the claim is unnecessarily delayed. A good Examination Under Oath should be intended to discover information not previously known to the insurance company. The insurance company’s implied good faith duty to investigate a claim requires the investigation to promptly pursue this new information and determine whether it is material to the claim.

VI. Making The Coverage Decision

The decision on the claim should be a separate step in the investigation process, and should not be made prematurely. Although it may be human nature to form a personal opinion based upon an early investigation, take care to refrain from letting this initial tentative opinion become a premature “final” decision. Early notes in a claim file about how the claim will “probably” be decided or notes of personal opinions on the claim prior to the investigation being completed are inappropriate. Such notes and opinions can later be used to argue that the claims representative never intended to in good faith base its opinion upon the objective information gathered during the investigation, and that the coverage opinion had been made without the benefit of the results of the investigation.21 The claims decision should be objective and the file should reflect that objectivity.

In some cases it becomes evident when there is enough information on which to base a final coverage decision; all possible issues have been satisfactorily resolved and the claim appears to be covered, or possibly a clear misrepresentation has been revealed that voids coverage. However, in other claims the “end” is not so clear. At what point can the insurance company conclude the investigation and make a decision on the information made available during the investigation? Although the answer to this question may be simple in some claims, many claims can continue indefinitely and it is not always clear when enough is enough. The answer in most cases is a judgment call.

As noted at the beginning of this article, it is a good practice to keep in mind during the investigation how the steps in the investigation will appear to a reasonable third party using 20/20 hindsight. This is also a good rule of thumb to use in determining when to make a final decision on the acceptance or denial of the claim. In evaluating whether an insurance company has conducted a thorough good faith investigation, a judge or jury will analyze whether the insurance company was putting its own interests above those of the insured. If there is enough information to make a reasonable and objective determination of coverage, then there is enough information to make a coverage decision. If there are lingering questions that can be answered through reasonable investigation, then further investigation is needed. A factfinder will analyze the insured’s position as if he or she were in the insured’s shoes. Prior to concluding the investigation, the insurance company should try to reasonably answer all potential issues and questions.

VII. Conclusion

Most jurisdictions have now held that an insurance company has an implied extracontractual duty to promptly investigate an insured’s claim in good faith. Failure to thoroughly investigate a claim in good faith may subject the insurance company to tortious allegations of bad faith. In conducting a thorough investigation of a claim, a good question to keep in mind is how the investigation could later be looked upon by a neutral third party using 20/20 hindsight. The investigative tools provided in the insurance policy’s section regarding “Duties in the event of loss” are invaluable resources that should be utilized whenever possible. All reasonable leads should be tracked down, both in an effort to determine whether coverage exists and to verify any explanation given by the insured.

ENDNOTES

1. See, Gruenberg v. Aetna Ins. Co., 510 P.2d 1032 (Cal. 1973); The Best Place Inc. v. Penn America Ins. Co., 920 P.2d 334 (Haw. 1996).

2. Id.; Coleman v. United Fire and Cas. Co., 767 P.2d 761, certiorari denied, 782 P.2d 1198 (Colo. App. 1988).

3. Egan v. Mutual of Omaha Ins. Co., 620 P.2d 141, certiorari denied 100 S. Ct. 1271, (Cal. 1979); O.K. Lumber Co., Inc. v. Providence Washington Ins. Co., 759 P.2d 523 (Alaska 1988); Coleman v. United Fire and Cas. Co., 767 P.2d 761, certiorari denied, 782 P.2d 1198 (Colo. App. 1988); Linthicum v. Nationwide Life Ins. Co., 723 P.2d 703, affirmed in part, reversed in part 723 P.2d 675 (Ariz. 1985).

4. Linthicum v. Nationwide Life Ins. Co., 723 P.2d 703, affirmed in part, reversed in part 723 P.2d 675 (Ariz. 1985); Gruenberg v. Aetna Ins. Co., 510 P.2d 1032 (Cal. 1973); Turner v. State Farm Fire & Cas. Co., 614 So.2d 1029 (Ala. 1993).

5. Coventry Associates v. American States Ins. Co., 961 P.2d 933 (Wash. 1998).

6. This article will not discuss issues regarding the duty to defend a claim against an insured. In most states, determining whether there is a duty to defend consists of comparing the allegations with the coverage provided by the insurance contract. Most states do not look outside “the five corners” of the policy and complaint, and an investigation of the claim is in most instances not necessary.

7. Idaho Code 41-1329(4).

8. Washington Annotated Code 284030-330 et seq.

9. Alaska Statutes 21.36.125 (14); Sauer v. Home Indemnity Co., 841 P2d 176, 182 (Alaska 1992).

10. The 165 lines standard fire policy states in relevant part:

“This entire policy shall be void if, whether before or after a loss, the insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.”

11. See, e.g., Oregon Revise Statute 742.013, “Representations in Applications,” which states:

“(1) All statements and descriptions in any application for an insurance policy by or in behalf of the insured, shall be deemed to be misrepresentations and not warranties. Misrepresentations, omissions, concealments of facts and incorrect statements shall not prevent a recovery under the policy unless the misrepresentations, omissions, concealments of fact and incorrect statements:

(a) Are contained in a written application for the insurance policy, and a copy of the application is indorsed upon or attached to the insurance policy when issued;

(b) Are shown by the insurer to be material, and the insurer also shows reliance thereon; and

(c) Are either:

(A) Fraudulent; or

(B) Material either to the acceptance of the risk or to the hazard assumed by the insurer.”

12. In a recent claim handled by the author, the insured submitted a claim for a number of items that the insured swore, in divorce affidavits filed three months before the claim, he had never possessed!

13. See, e.g., Oregon Revised Statutes 742.240, expanding the time in which suit may be brought against the insurance company to 24 months.

14. A suggested form of reservations of rights is:

“The insurance company must respectfully reserve all of its rights and defenses which may now exist or which may arise in the future, specifically including but not limited to the right to Proof of Loss, Examinations Under Oath as a part of the Proof of Loss, and suit and time limitation periods. No waiver or estoppel of any kind is intended nor should any be inferred.”

15. See, e.g., Zumbrun v. United Services Automobile Ass’n., 719 F. Supp. 890 (E.D. Cal. 1989).

16. See, eg., Washington Annotate Code 284-30-330(12); Oregon Revised Statutes 746.230(1)(K).

17. Williams v. American Home Assurance Co., 468 N.Y.S.2d 341 (App.Div. 1983).

18. Pilgrim v. State Farm Fire & Cas. Ins. Co., 950 P2d 479 (Wash.App.Div. 1 1997).

19. Tran v. State Farm Fire & Cas. Ins. Co., 961 P2d 358 (Wash. 1998).

20. Yeo v. State Farm Ins. Co., 555 NW.2d 893, (Mich.App. 1996), appeal dismissed 558 NW.2d 725 (Mich. 1997); Goldman v. State Farm Fire Gen. Ins. Co., 660 So.2d 300 (Fla.App. 1995).

21. For an example of a case discussing bad faith allegations based upon an insurance company’s denial of a claim prior to the investigation being completed, see Chowdbury v. LMI Ins. Co., 1996 W.L. 53804 (U.S.D.C. E.D. Penn.) (applying New Jersey and Pennsylvania law).