Binding Arbitration Agreements In Insurance Contracts Are Void In Washington

In Washington State Department of Transportation v. James River Insurance Company, Wash. No. 87644-4 (January 17, 2013), the Washington Supreme Court declared binding arbitration agreements in insurance contracts void and unenforceable. The court explained that binding arbitration frustrates legislative intent to protect Washington policyholders' rights to sue insurers in Washington courts for coverage disputes over subjects located, resident or to be performed in Washington.

Background Facts

James River Insurance Company issued two surplus lines insurance policies - one primary and one excess - that provided certain coverages related to a highway project. The Washington State Department of Transportation (WSDOT) was an insured on the policies.