Alaska Insurance Bad Faith Lawyers

Serving all of Alaska · Free consultation · Contingency fee — no fee unless we win

Quick answer

Alaska law requires insurance companies to treat their policyholders fairly — every policy includes an implied "covenant of good faith and fair dealing." When your own insurer unreasonably denies, delays, or underpays a valid claim, that can be insurance bad faith, and the Alaska Supreme Court has held it is a tort (not just a broken contract), which can open the door to added damages (State Farm Fire & Cas. Co. v. Nicholson, 1989). Bad faith can include denying a claim without a reasonable investigation, ignoring your communications, unreasonable delay, or lowball offers. In serious cases, you may recover the benefits owed, additional (tort) damages, compensation for emotional distress, and — in egregious cases — punitive damages (AS 09.17.020). Deadlines are short (generally two years for the tort claim, AS 09.10.070), so act quickly. Choate Law Firm has held insurers accountable for Alaskans since 1980, from our Juneau office, statewide. Consultations are free and we are paid only if we recover for you. Call (907) 586-4490.

What is insurance bad faith in Alaska?

Insurance bad faith is an insurer's unreasonable failure to honor its obligations to a policyholder. Alaska courts recognize that every insurance contract contains an implied covenant of good faith and fair dealing (Guin v. Ha, 1979; Continental Ins. Co. v. Bayless & Roberts, 1980). Because of the special, trust-based relationship between an insurer and its insured, the Alaska Supreme Court held that an insurer's bad-faith handling of its own policyholder's claim is a tort — meaning damages can go beyond the policy benefits (State Farm Fire & Cas. Co. v. Nicholson, 1989). Importantly, bad faith is more than a mistake or negligence: it means the insurer acted unreasonably in denying, delaying, or refusing to pay a valid claim.

First-party vs. third-party bad faith

There are two situations, and they work differently in Alaska:

  • First-party bad faith is when your own insurer mishandles your claim — for example, your uninsured/underinsured motorist (UM/UIM), health, homeowner's, or disability coverage. Alaska treats this as a tort you can pursue directly (Nicholson).
  • Third-party bad faith is when a liability insurer fails to settle within policy limits and exposes its own insured to an excess judgment. That duty runs to the insurer's policyholder — not to the injured claimant. In Alaska, an injured person generally cannot sue the at-fault party's insurer directly for bad faith (O.K. Lumber Co. v. Providence Washington Ins. Co., 1988); instead, the insured's bad-faith claim can sometimes be assigned to the injured party. We can explain which path fits your situation.

What does insurance bad faith look like?

Alaska's Unfair Claim Settlement Practices statute (AS 21.36.125) lists conduct regulators treat as improper, and it is a useful guide to what bad faith can look like:

  • Denying a claim without conducting a reasonable investigation
  • Failing to acknowledge or act promptly on claim communications
  • Unreasonable delay in accepting or denying coverage or paying
  • Refusing to make a fair, prompt settlement when liability is reasonably clear
  • Offering substantially less than a claim is worth to force you to sue
  • Misrepresenting policy terms, or failing to explain a denial

Note: AS 21.36.125 is enforced by the state Division of Insurance and does not by itself create a private lawsuit. Your private remedy for these behaviors is the common-law bad-faith claim.

What damages can I recover for insurance bad faith?

When bad faith is proven, recovery can go well beyond the original claim. Depending on the facts, damages may include:

  • The policy benefits you were wrongly denied, plus interest
  • Tort damages flowing from the insurer's conduct
  • Emotional distress caused by the mishandling
  • Punitive damages in egregious cases

Punitive damages in Alaska require proof by clear and convincing evidence that the insurer's conduct was outrageous or showed reckless indifference, and they are capped by statute — generally the greater of three times the compensatory damages or $500,000, with a higher limit in narrow cases involving financial motivation (AS 09.17.020). Results depend heavily on the specific facts; we can give you a realistic assessment.

How long do I have to file?

Deadlines are short and depend on the legal theory. A bad-faith tort claim is generally subject to Alaska's two-year deadline (AS 09.10.070), while a breach-of-contract theory on the policy can run up to three years (AS 09.10.053). Because the applicable deadline and its start date depend on the facts, do not wait — talk to a lawyer promptly. See our Alaska statute of limitations guide.

You can also file a complaint with the Division of Insurance

Alaska's Division of Insurance accepts consumer complaints about insurers at commerce.alaska.gov/web/ins. A regulatory complaint is a useful step, but it is separate from a lawsuit and does not, by itself, recover damages for you. It can be pursued alongside a legal claim, not as a replacement for one.

Why Choate Law Firm

Since 1980, Choate Law Firm has taken on insurance companies on behalf of Alaskans, from our office in Juneau and across the state. Founder Mark Choate (J.D., Seattle University School of Law, 1980; graduate of the Gerry Spence Trial Lawyers College) has tried hundreds of cases to Alaska juries. Partner Jon Choate (J.D., Harvard Law School, 2010; former Manhattan Assistant District Attorney) adds further trial depth. We handle bad-faith cases on a contingency fee and answer calls promptly. Call (907) 586-4490.

Frequently asked questions

Does Alaska recognize insurance bad faith? Yes. Every policy includes an implied covenant of good faith and fair dealing, and first-party bad faith is a tort in Alaska (Nicholson, 1989).

Can I sue the other driver's insurance company for bad faith? Generally no — in Alaska, the bad-faith duty runs to the insurer's own policyholder, not to an injured claimant (O.K. Lumber, 1988). The route is usually a first-party claim against your own insurer or an assigned claim. We can explain your options.

What counts as bad faith? Unreasonably denying a valid claim, failing to investigate, unreasonable delay, lowball offers, or refusing to settle when liability is clear — not mere mistakes or negligence.

Can I get punitive damages? Possibly, in egregious cases, with clear and convincing evidence and subject to statutory caps (AS 09.17.020). Results vary.

How long do I have? Generally two years for the tort claim (AS 09.10.070); a contract theory can run three years (AS 09.10.053). Don't wait.

What does it cost? Nothing up front — contingency fee, paid only if we recover for you.

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Disclaimer

This page is general information, not legal advice, and does not create an attorney-client relationship. Outcomes depend on the specific facts of each case. Attorneys at Choate Law Firm LLC are licensed in Alaska, California, Hawaii, New York, and Washington (specific jurisdiction varies by attorney).

 

Attorneys in our firm are licensed in Alaska, California, Hawaii, New York, and Washington (specific jurisdiction varies by attorney). Content on this website is for informational purposes only and does not constitute legal advice. Every legal claim is unique and there is always risk involved in litigation. The statements on this site are not a guarantee that we will agree to represent you, pursue a specific litigation strategy, or achieve a particular result. Communications to Choate Law Firm LLC for the purpose of obtaining legal representation are protected by applicable attorney-client privilege, however there is no attorney-client relationship until a written agreement is signed by both you and Choate Law Firm LLC. All photographs ©2016 by Jon Choate. 

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