Washington’s Senate Invoice 6031championed 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 important fines.
On its face, this seems to be a robust, fashionable step towards combating fraud within the insurance coverage market. The invoice offers:
An individual is responsible of insurance coverage fraud if the individual 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 every other doc that misrepresents the scope of damages or prices of repairs related to a property insurance coverage declare.
That isn’t slim 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 workers. 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 injury in an effort to scale back fee to a policyholder, does that fall inside this definition? Based mostly strictly on the language above, it may.
There may be, in fact, an vital authorized distinction between a professional 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 sincere distinction of opinion. However they don’t seem to be allowed to knowingly misrepresent.
Prison fraud requires proof of intent. It requires exhibiting that the submitted doc was materially false, that the individual submitting it knew it was false, and that the individual meant to deceive. That could be a excessive bar, and it must be.
Nonetheless, if proof ever demonstrated that an estimate was intentionally altered to misstate the scope of injury or the price of restore, not due to knowledgeable disagreement however due to an intent to underpay by means of deception, or ordered with out justification by a superior desk adjuster, the statutory language doesn’t exempt the claims division.
The following query is whether or not an insurance coverage firm itself may face publicity. Below normal rules of company felony legal responsibility, an organization could be held accountable when workers 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 important on this invoice. It expands the definition of “sufferer” to incorporate insurance coverage clients and beneficiaries, making them eligible for felony restitution. That is a vital recognition that fraud within the insurance coverage world doesn’t solely transfer in a single route.
Fraud is fraud. If an estimate or knowledgeable report is knowingly manipulated to misrepresent the quantity or trigger of injury in an effort to cheat a policyholder, the statute’s plain language means that can also be fraud.
The actual check shall be enforcement. Will the regulation be utilized evenly? Will this regulation, 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 moderately than a sword wielded selectively?
Insurance coverage is constructed on belief. When that belief is deliberately damaged, the implications mustn’t rely upon who dedicated the act. Washington has written robust phrases into this invoice. I hope it will definitely turns into regulation.
My guess 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 have to be for each.”
—Eleanor Roosevelt
1 Insurance coverage fraud modernization invoice passes state Senate. Workplace of the Ins. Commissioner, Washington State. Feb. 17, 2026.
