• Couple looking at insurance rate hikes

    Almost everyone in the state of Washington pays for insurance in one form or another. Whether it is auto insurance or home insurance, we have all experienced significant insurance rate hikes in 2024, yet we have not always been given clarity by insurers as to the reasons for these increases. That will now change starting June 1, 2024, with a law introduced by the Washington Office of the Insurance Commissioner (OIC) that requires insurance companies to give specific reasons why premiums have increased.

    WAC 284-30A-020: explains the new law, and the requirements for both insurance customers and companies. Not surprisingly, it is important to read the “fine print” to have a better understanding of how the law works. Here are the highlights:

    • The law applies to insurance policies renewed on or after June 1, 2024;
    • The law covers personal auto, homeowner’s, and renter’s insurance;
    • The law does not apply to insurance covering boats, motorcycles, off-road vehicles, antique or “collector” vehicles, or other “specialty” vehicles;
    • Health, disability, life, umbrella, and long-term care insurance are also not included under this law;
    • Only policy renewals are included, not the purchase of a new policy;
    • If an insured person (not an insurance company) makes changes to their policy’s coverages or premiums, the law does not apply.

    From June 1, 2024 through June 1, 2027, anyone wanting an explanation for an increase in their premiums will have to make a formal request to their insurance company, and give the insurer 20 days to respond. After June 1, 2027, insurers must automatically provide the information to customers at least 20 days before a policy renewal if the increase is over 10%.

    While the new law is a step in the right direction to reduce insurance rate hikes, and a win for consumers, insurers do not have to disclose everything. For example, if a company uses credit-based scoring to determine what it charges customers, or, uses “insurance company trade secrets,” the company does not have to provide an explanation. One such confidential method is the “usage-based insurance” model, where, for example, driver’s vehicles are monitored for their driving habits, and rates are set according to how safely a person drives. This information can remain undisclosed. Lastly, the law does not specify any penalties if insurers do not comply with the request, though customers are encouraged to file a complaint online with the OIC.

    Finally, new law aside, it is worth a reminder that if someone uses their own auto insurance benefits to pay for damages to their vehicle or their health after a motor vehicle collision that they did not cause, insurers in Washington state are forbidden from increasing premiums in retaliation. This is a common concern among my clients who must use their own benefits because the at-fault person was either uninsured, or was insufficiently insured.

    We will continue to closely monitor these and other changes in Washington’s insurance legal landscape, and provide updates.


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