Key Takeaways
- The Washington Insurance Code (RCW 48.30) prohibits misrepresentation, false advertising, and unfair claims practices
- Rebating is prohibited in Washington with limited exceptions for legitimate discounts and dividends
- Twisting and churning are prohibited practices subject to license revocation and fines
- Washington has specific timelines for claims handling and fair claims settlement practices
- Unfair discrimination in underwriting is prohibited except for actuarially justified factors
Last updated: January 2026
Unfair Trade Practices
The Washington Insurance Code (RCW 48.30) prohibits various unfair or deceptive practices in the P&C insurance industry.
Misrepresentation
Producers and insurers are prohibited from:
False Statements
- Making false statements about policy terms or benefits
- Misrepresenting the financial condition of an insurer
- Using misleading policy illustrations
- Making false statements about competitors
- Misrepresenting the nature of insurance transactions
Examples of Misrepresentation
| Prohibited Statement | Why It's Misrepresentation |
|---|---|
| "This policy covers everything" | No policy covers all losses |
| "Your rates will never increase" | Rates can and do change |
| "This is the only policy you need" | May not be true |
| "You must buy today or lose rate" | False urgency |
| "The FAIR Plan is just as good" | Coverage is more limited |
False Advertising
Washington prohibits deceptive insurance advertising:
- Ads must be truthful and not misleading
- Must clearly identify as insurance advertisement
- Cannot use testimonials that are not genuine
- Cannot imply government endorsement
- Must include insurer's name
- Cannot guarantee claims payment beyond policy terms
Rebating
Rebating is offering inducements not specified in the policy:
Prohibited
- Returning part of premium to insured
- Offering gifts of substantial value
- Paying for referrals to unlicensed individuals
- Sharing commission with non-licensed persons
Permitted
- Premium financing arrangements
- Legitimate filed discounts
- Marketing items of nominal value
- Policy dividends as specified in contract
Twisting and Churning
Twisting
Making misrepresentations to induce replacement:
- Falsely claiming existing policy is inadequate
- Misrepresenting policy values
- Hiding costs of replacement
- Exaggerating benefits of new policy
Churning
Excessive replacement of policies to generate commissions:
- Multiple replacements for same client
- Pattern of replacements in book of business
- Ignoring client's best interests
Penalties
| Violation | Potential Penalty |
|---|---|
| First offense | Warning to suspension |
| Per violation | Monetary fine |
| Pattern of violations | License revocation |
| Consumer harm | Restitution required |
Unfair Claims Practices
Washington has specific claims handling requirements under RCW 48.30.015:
Fair Claims Settlement Practices
- Affirm or deny coverage within a reasonable time
- Provide reasonable explanation for claim denial
- Not require unnecessary documentation
- Attempt good faith settlement when liability is clear
- Not delay settlement to pressure lower payment
Prohibited Claims Practices
- Misrepresenting policy provisions to claimants
- Failing to acknowledge claims promptly
- Failing to communicate claim decisions
- Denying claims without reasonable investigation
- Offering substantially less than reasonable value
- Delaying payment to force settlement
- Not attempting good faith settlement when liability clear
Unfair Discrimination
Washington prohibits unfair discrimination in P&C insurance:
Prohibited Basis
| Protected Class | Examples |
|---|---|
| Race | Cannot use race in underwriting |
| Religion | Cannot use religion |
| National Origin | Cannot use nationality |
| Gender | Limited use in some lines |
| Disability | Limited use, ADA considerations |
Permitted Underwriting Factors
- Driving record
- Claims history
- Property condition
- Location/territory (if actuarially justified)
- Credit information (with limitations)
Test Your Knowledge
What Washington statute governs unfair trade practices in insurance?
A
B
C
D
Test Your Knowledge
Which of the following is considered rebating in Washington?
A
B
C
D
Test Your Knowledge
What is "twisting" in Washington insurance law?
A
B
C
D