How Will Court's Decision Affect Insurance Consumers?

On June 11, our Supreme Court unraveled significant progress this State has made in recent years to improve West Virginia's insurance climate. In 2005, the West Virginia Legislature repealed a law that enabled a third party to sue an insurance company under a contract to which it is not a party. Earlier this month, the West Virginia Supreme Court of Appeals, in its decision in Michael v. Appalachian Heating, LLC, No. 35127 (June 11, 2010), held that third parties can sue insurance companies under the West Virginia Human Rights Act.

By way of background, in 1981, the West Virginia Supreme Court gave third parties the right to sue insurance companies under the Unfair Trade Practices Act (UTPA). This created a fundamental problem for insurance companies doing business in our State because they were no longer able to accurately underwrite -- or price -- the risk of a particular policy. This drove consumers' prices up