A Washington appeals court has closed a loophole insurers leaned on for more than a decade. On June 16, 2026, Division Two of the Washington Court of Appeals ruled in Labeaume v. First National Insurance Company of America that an auto insurer cannot escape an Insurance Fair Conduct Act (IFCA) bad-faith lawsuit simply by paying an underinsured motorist award after dragging the claim through arbitration.
Washington's Court of Appeals ruled on June 16, 2026 that paying a UIM benefit in full, after an arbitrator sets the amount but before the policyholder files an IFCA notice, does not automatically bar a bad-faith lawsuit. The decision in Labeaume v. First National gives Washington drivers who face lowball or delayed underinsured motorist claims a clearer path to treble damages, attorney fees, and payment for the harm a stalled claim causes.
- Labeaume v. First National, decided June 16, 2026, is the first published Washington appellate ruling to reject the "we paid, so you can't sue" defense
- An arbitrator awarded Jane Labeaume $94,822.80, more than double what First National valued her UIM claim at
- IFCA (RCW 48.30.015) lets policyholders recover triple their actual damages plus attorney fees for an unreasonable denial
- Delay counts only when it amounts to an effective denial, not when it grows out of a good-faith dispute over value
What the Court Decided
Jane Labeaume was injured in a crash caused by another driver, then settled with that driver before turning to her own insurer for underinsured motorist coverage. First National reviewed only the records she had already submitted, ran no independent investigation of its own, and concluded the earlier settlement had fully compensated her. The insurer paid zero UIM benefits.
Forced to sue, Labeaume took the dispute to arbitration. The arbitrator valued her damages at more than double First National's figure and awarded her $94,822.80, which the insurer paid in full within days. Only after that payment did she serve her IFCA notice, arguing the long delay had operated as a denial of benefits.
First National asked for summary judgment on a tidy theory: it had already paid every dollar the arbitrator ordered before any IFCA claim was filed, so nothing remained to litigate. The three-judge panel rejected that argument. Paying the full benefit after a damages determination but before the IFCA notice does not automatically bar an IFCA claim, the court held at pages 28 through 30 of its published opinion.
"This is the first published Washington appellate decision to confront the insurer's 'we paid, so you can't sue under IFCA' theory head-on and reject it," wrote Shannon Kilpatrick, a partner at Stritmatter Law who analyzed the ruling.
What It Means for Washington Drivers
If you carry underinsured motorist coverage in Washington and your insurer stalls or lowballs a payout, this ruling strengthens your hand. UIM coverage pays the gap when an at-fault driver's liability limits fall short of your injuries, and your own carrier writes that check. That structure builds in a conflict, because the company paying you also decides what your claim is worth.
Before Labeaume, a Washington insurer could deny a valid UIM claim, push you through months of litigation, then write a check for the arbitrator's number and walk away from any bad-faith exposure. That check no longer buys immunity. Under IFCA, and drawing on the earlier Beasley v. Geico ruling, you can still recover the personal harm an unreasonable denial causes, including emotional distress, unpaid medical bills that stacked up, and the lost use of money you were owed, on top of treble damages and attorney fees.
The ruling does not turn every slow payment into a lawsuit. Division Two separated an effective denial, such as an offer no reasonable review of the facts could support, from a good-faith disagreement over the dollar value of a claim. Only the first kind triggers IFCA.
The Two Cases That Draw the Line
Two earlier Safeco disputes mark the boundary the court applied.
| Case | Insurer's Offer | Award | Court's Verdict |
|---|---|---|---|
| Morella v. Safeco | $1,500 (claim valued over $10,000) | $62,000 | Effective denial, IFCA applies |
| Young v. Safeco | Coverage accepted, repair estimate disputed | Never resolved by the insured | Good-faith dispute, IFCA does not apply |
Source: Labeaume v. First National, published opinion pages 22 through 24, citing Morella v. Safeco and Young v. Safeco. Figures reflect the insurers' offers and the arbitration awards described in those Washington opinions.
The Bigger Picture
Washington's federal courts split on this exact question for more than ten years, and no state appellate court had answered it until now. The Court of Appeals noted the issue would benefit from Washington Supreme Court review, so First National could still ask the higher court to weigh in.
The decision lands as underinsured motorist disputes draw sharper scrutiny nationwide. Farmers agreed to a $1.2 million underinsured motorist settlement in New Mexico earlier in 2026, and State Farm agreed to pay $15.6 million to Arkansas drivers over total-loss underpayments. Regulators and courts across several states are tightening how carriers value and pay first-party claims.
Document Every Step
Save each email, letter, and adjuster note, and log the date and dollar figure of every offer. Labeaume turned on First National skipping an independent investigation, so a paper trail matters. Our guide on how to file a car insurance claim walks through the records to keep.
Get an Independent Valuation
Ask a provider or attorney for a written damages estimate. Labeaume's arbitrator put her injuries at more than double the insurer's number, which reframed the entire dispute.
Send the 20-Day IFCA Notice
File written notice with your insurer and the Washington Office of the Insurance Commissioner at least 20 days before suing. Mail it to IFCA Claim Notification, P.O. Box 40255, Olympia, WA 98504-0255.
Talk to a Lawyer Before You Sign
IFCA allows three times your actual damages plus attorney fees, so consult a Washington bad-faith attorney before accepting a payout you believe is too low.
This article explains a court ruling for general information and is not legal advice. Consult a licensed Washington attorney about the facts of your own UIM or bad-faith claim.
Looking Ahead
First National has not said whether it will petition the Washington Supreme Court, and the case still returns to trial on whether its conduct crossed from a dispute into a denial. For now, Labeaume stands as the controlling appellate authority statewide, and it raises the price of stonewalling a UIM claim. Drivers renewing coverage this year can compare city-level rates and coverage options on our Washington car insurance page.
Frequently Asked Questions
IFCA (RCW 48.30.015) is a Washington law that lets a first-party policyholder sue their own insurer for unreasonably denying a claim for coverage or benefits. A winning claimant can recover up to three times their actual damages, plus attorney fees and costs.
No. The court separated an effective denial, such as an offer no reasonable review of the facts supports, from a good-faith dispute over value. Only an effective denial triggers IFCA, and a genuine disagreement over the dollar amount does not.
An arbitrator awarded Jane Labeaume $94,822.80, more than double what First National valued her underinsured motorist claim at. First National paid the full award within days, before she filed her IFCA claim.
Before filing an IFCA lawsuit, a Washington policyholder must give the insurer and the Office of the Insurance Commissioner 20 days written notice and a chance to fix the problem. The notice goes to IFCA Claim Notification, P.O. Box 40255, Olympia, WA 98504-0255.
IFCA covers first-party claims against your own insurer, including underinsured motorist coverage. It does not cover claims you file against the at-fault driver's insurer, and it excludes most health insurance disputes.
- Washington Courts - Labeaume v. First National Insurance Co., Published Opinion (Div. II, No. 60380-2-II)
- Washington Office of the Insurance Commissioner - Insurance Fair Conduct Act (IFCA)
- Washington State Legislature - RCW 48.30.015
- Stritmatter Law - Analysis of the Labeaume Ruling
- Law360 - Wash. Panel Says UIM Payment Doesn't Block IFCA Claim
- Smith Freed Eberhard - Washington Case Law Update on Labeaume