The Washington Court of Appeals found the insurer was exposed to extracontractual damages after paying Under Insured Motorist (UIM) benefits. Labeaume v. First Nat’l Ins. Co. of Am., 2026 Wash. App. LEXIS 1336 (Wash. Ct. App. June 16, 2026).

Jane Labeaume was injured in a car crash with another vehicle. The driver of the other vehicle was 100 percent at fault. The at fault driver’s policy limit was $100,000.

Under Washington law, insurers were required to provide UIM benefits to cover their insureds where another driver’s insurance coverage did not fully compensate the insured person for their damages.

After the crash, Labeaume’s attorney wrote to her insurer, First National, stating, “This letter is . . . written to advise you that our client will be making an uninsured motorist/underinsured motorist claim.” First National responded, “If you find that the at-fault carrier does not have enough limits, please contact us and we will review at that time.”

Under Washington law, Labeaume could maintain that damages amounted to more that $100,000 but waive any claim in excess of $100,000 for purposes of arbitration. Labeaume engaged in arbitration with the at-fault driver. Labaume’s attorney signed a statement of arbitrability noting that Labeaume “contends that the claim exceeds $100,000 but hereby waives any claim in excess of $100,000 for the purposes of arbitration.”

Labeaume received an arbitration award against the at-fault driver for $85,929.35. Labeaume and the at-fault driver reached a settlement for the full amount of the arbitration awarded in lieu of a request for trial de novo in the superior court. Labeaume notified First National that she had settled with the at-fault driver’s insurer for $85,929.25. She further stated that her injuries exceeded the amount of the at-fault driver’s policy limits, so she was making a UIM claim.

First National determined that based on Labeaume’s medical records, she was entitled to $77,214.46 in damages. Because this amount was less that the settlement with the at-fault driver, First National determined she was fully compensated for her injuries.

Labeaume filed suit against First National. The case was submitted to arbitration. The arbitrator determined that Labeaume’s total damages from the crash was $205,590. The arbitrator awarded Lebeaume $84,822.80 in UIM damages from First National, the total amount of damages from the crash offset by the personal injury protection coverage First National had already paid and the $100,000 policy limit from the at-fault driver’s insurance. First National paid Labeaume $94,822.80, the full amount of the arbitration award.

Labeaume then amended her complaint to add a claim under Washington’s Insurance Fair Conduct Act, alleging that First National unreasonably denied payment of UIM benefits. She sought direct and consequential damages flowing from First National’s violation of the Act. First National moved for summary judgment contending that because of the waiver statement in the arbitration with the at-fault driver, Lebeaume was not entitled to recover any more that the $100,000 of the at-fault driver’s insurance policy. Further, First National argued that Labeaume’s claims under the Act should fail because it paid her the full amount of the $94,822.80 arbitration award within the required period.

The trial court denied First National’s motion for summary judgment. There was no authority to support that the prior arbitration estopped Labeaume’s current claim.

On appeal, the Washington Court of Appeals affirmed. There was at least a dispute of material fact as to whether the waiver or mandatory arbitration proceedings became binding on Labeaume and precluded her from later requesting UIM coverage. The waiver occurred in the context of a “statement of arbitrability” between Labeaume and the at-fault driver where Labeaume waived claims above $100,000 “for the purposes of arbitration” in that case. The wavier was limited to the arbitration between the at-fault driver and Labeaume, and it did not reach any subsequent UIM claim.

Under current Washington law, a plaintiff making a claim under the Act could recover both the benefits due under their policy’s UIM coverage and other extracontractual damages arising from the insurer’s decision to deny a claim or effectively deny a claim by offering only an unreasonably minimal settlement.