Coverage Position / Denial Response (Policyholder) - Alaska

COVERAGE POSITION / DENIAL RESPONSE TOOLKIT — ALASKA

JURISDICTION NOTE: Alaska recognizes a common law tort of bad faith against first-party insurers. The foundational case is State Farm Fire & Casualty Co. v. Nicholson, 777 P.2d 1152 (Alaska 1989), which established that Alaska recognizes a cause of action for bad faith against a first-party insurer for breach of the implied covenant of good faith and fair dealing. The Alaska Unfair Claim Settlement Practices Act (AS 21.36.125) does not provide a private right of action for policyholders (subsection (b)) but defines the standard of conduct expected of insurers under subsection (a). The Alaska Division of Insurance has adopted the UCSPA Model Regulation at 3 AAC 26.010–26.300, which provides detailed claims handling standards relevant to establishing the standard of care. Bad faith actions are brought under common law, with compensatory and punitive damages available. Note: O.K. Lumber Co. v. Providence Washington Insurance Co., 759 P.2d 523 (Alaska 1988), addressed third-party bad faith (holding that a third-party claimant cannot bring a direct bad faith action against another person's insurer because the duty of good faith arises from the contractual relationship). The insured must establish that the insurer refused to honor a claim without a reasonable basis — it does not require the insured to establish fraudulent or deceptive conduct. Hillman v. Nationwide Mutual Fire Ins. Co., 855 P.2d 1321, 1326 (Alaska 1993).

PART ONE: FORMAL DENIAL RESPONSE LETTER

[LAW FIRM LETTERHEAD]

[__/__/____]

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED, AND EMAIL

[________________________________]
[________________________________]
[________________________________]
[________________________________]

Re: Response to Coverage Denial
Insured: [________________________________]
Policy Number(s): [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
Your Denial Letter Dated: [__/__/____]

Dear [________________________________]:

This firm represents [________________________________] ("Insured") in connection with the above-referenced insurance claim under Policy No. [________________________________] issued by [________________________________] ("Insurer" or "Company"). We write in response to your letter dated [__/__/____] in which you denied coverage. For the reasons set forth below, the denial is without merit, violates the standards of claim handling imposed by Alaska law, and must be reversed immediately.

I. IDENTIFICATION OF DENIAL AND STATED BASES

Your denial letter states that coverage is denied on the following grounds:

1. [________________________________]
2. [________________________________]
3. [________________________________]

We address each stated basis below and demonstrate that none constitutes a valid ground for denial under the Policy or Alaska law.

II. FACTUAL CORRECTIONS

Your denial letter contains the following material factual errors:

Misstatement 1: Your letter states: "[________________________________]"
Correct Fact: [________________________________] (See Exhibit [____])

Misstatement 2: Your letter states: "[________________________________]"
Correct Fact: [________________________________] (See Exhibit [____])

Misstatement 3: Your letter states: "[________________________________]"
Correct Fact: [________________________________] (See Exhibit [____])

These errors are material to the coverage determination and indicate that the claim was denied without a complete and accurate investigation, in violation of AS 21.36.125(a)(3) and (4).

III. COVERAGE ANALYSIS AND REBUTTAL

A. The Insuring Agreement Provides Coverage

The Policy's insuring agreement states in relevant part:

"[________________________________]"
(Policy, Section [____], p. [____])

The claimed loss falls within this insuring agreement because:

1. [________________________________]
2. [________________________________]
3. [________________________________]

Under Alaska law, insurance policies are contracts of adhesion and ambiguous terms are construed against the insurer. State Farm Fire & Cas. Co. v. Bongen, 925 P.2d 1042, 1046 (Alaska 1996). The insuring agreement must be given a broad reading to afford coverage.

B. The Cited Exclusion(s) Do Not Apply

Your denial relies on the following policy exclusion:

"[________________________________]"
(Policy, Section [____], p. [____])

This exclusion does not bar coverage for the following reasons:

☐ The exclusion is inapplicable on its face. The loss does not satisfy the elements of the exclusion because [________________________________].

☐ An exception to the exclusion restores coverage. The following exception applies: "[________________________________]" (Policy, Section [____], p. [____]).

☐ The exclusion is ambiguous. The term "[________________________________]" is susceptible to more than one reasonable interpretation. Under Alaska's rule of contra proferentem, the ambiguity must be resolved in favor of coverage. Bongen, 925 P.2d at 1046.

☐ The insurer bears the burden of proving the exclusion. Under Alaska law, the insurer bears the burden of establishing that a policy exclusion applies. National Indemnity Co. v. Flesher, 469 P.2d 360, 363 (Alaska 1970). The insurer has failed to meet this burden.

☐ The efficient proximate cause doctrine applies. Even if an excluded peril contributed to the loss, the efficient proximate cause was a covered peril, specifically [________________________________].

C. Policy Conditions Have Been Satisfied

☐ Timely Notice: The Insured provided notice on [__/__/____], which satisfies the Policy's notice requirements. Under Alaska law, the insurer must demonstrate actual prejudice from any untimely notice before it may deny coverage on that basis. Municipality of Anchorage v. Baugh Construction Engineering Co., 722 P.2d 919 (Alaska 1986).

☐ Cooperation: The Insured has cooperated fully with all investigation requests.

☐ Proof of Loss: A sworn proof of loss was submitted on [__/__/____].

☐ Examination Under Oath: The Insured appeared for an EUO on [__/__/____].

D. Duty to Defend (Liability Policies)

☐ The duty to defend is broader than the duty to indemnify under Alaska law. The insurer must defend if the complaint alleges facts that, if true, would potentially trigger coverage. Afcan v. Mutual Fire, Marine & Inland Insurance Co., 595 P.2d 638 (Alaska 1979). The underlying complaint alleges [________________________________], which triggers the duty to defend.

IV. DEMAND

Based on the foregoing, we demand the following:

1. Withdraw the denial and confirm coverage in writing within ten (10) days;
2. Pay the claim in the amount of $[________________________________] within [____] days;
3. ☐ Assign or approve defense counsel and commence defense immediately (liability claims);
4. Provide a complete copy of the claim file, including all adjuster notes, internal correspondence, and coverage opinions;
5. If you maintain the denial, provide a detailed written explanation citing specific policy language and facts supporting each basis, as required by AS 21.36.125(a)(14).

V. NOTICE OF POTENTIAL BAD FAITH LIABILITY

Be advised that the denial of this claim, if maintained without a reasonable basis, may constitute bad faith under Alaska common law. Under State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152 (Alaska 1989), an insurer that breaches the implied covenant of good faith and fair dealing in handling a first-party claim is subject to tort liability. The standard is whether the insurer refused to honor the claim "without a reasonable basis" — fraudulent or deceptive conduct is not required. Hillman v. Nationwide, 855 P.2d at 1326. Available damages include:

• Compensatory damages for all losses proximately caused by the bad faith
• Consequential damages, including damages beyond the policy limits
• Emotional distress damages
• Punitive damages, where the insurer's conduct is sufficiently egregious
• Attorney fees under Alaska Civil Rule 82

The Insured reserves all rights and remedies available under the Policy, at law, and in equity. Nothing in this letter constitutes a waiver of any right.

VI. CONCLUSION

Please respond in writing no later than [__/__/____]. If we do not receive a satisfactory response, we will pursue all available remedies, including filing a complaint with the Alaska Division of Insurance and commencing litigation.

Respectfully,

[________________________________]
[________________________________]
[________________________________]
[________________________________]

Enclosures:

• Exhibit A: [________________________________]
• Exhibit B: [________________________________]
• Exhibit C: [________________________________]

PART TWO: COVERAGE ANALYSIS FRAMEWORK

Step 1: Insuring Agreement Analysis

☐ Identify the specific insuring agreement at issue
☐ Parse the insuring agreement into its elements
☐ Determine whether each element is satisfied:

☐ Under Alaska law, ambiguous policy terms are construed against the insurer. Bongen, 925 P.2d at 1046.
☐ The insured's objectively reasonable expectations of coverage are relevant. Stordahl v. Government Employees Ins. Co., 564 P.2d 63 (Alaska 1977).

Step 2: Exclusion Analysis

☐ Identify each exclusion cited in the denial letter
☐ The insurer bears the burden of proving exclusion applicability under Alaska law
☐ Parse each exclusion into its elements:

Step 3: Exception to Exclusion Analysis

☐ Identify all exceptions to the cited exclusion(s)
☐ The insured bears the burden of proving an exception applies

Step 4: Condition Compliance Analysis

PART THREE: COMMON DENIAL REBUTTAL ARGUMENTS (ALASKA-SPECIFIC)

3.1 Late Notice Denial

☐ Alaska applies the notice-prejudice rule: the insurer must demonstrate actual prejudice from late notice before denying coverage. Municipality of Anchorage v. Baugh Construction Engineering Co., 722 P.2d 919 (Alaska 1986).

☐ Notice was timely provided on [__/__/____], within [____] days of the loss/claim.

☐ The insurer has not demonstrated any actual prejudice resulting from the timing of notice.

☐ The insurer received actual notice through [________________________________], which suffices.

☐ The insurer waived the late notice defense by investigating and adjusting the claim.

3.2 Exclusion-Based Denial

☐ Under Alaska law, exclusions are strictly construed against the insurer. Era Aviation, Inc. v. Seekins, 973 P.2d 1137 (Alaska 1999).

☐ The insurer bears the burden of establishing every element of the exclusion.

☐ Alaska courts apply the efficient proximate cause doctrine where multiple perils contribute to a loss.

☐ Any ambiguity in the exclusion language is resolved in favor of coverage.

3.3 Misrepresentation Defense

☐ Under Alaska law, the insurer must prove the misrepresentation was material and made with intent to deceive, or that the insurer relied on the misrepresentation. AS 21.42.110.

☐ The two-year contestability period (AS 21.45.090 for life insurance) may bar rescission.

☐ The misrepresentation was not material because [________________________________].

3.4 Failure to Cooperate / Comply with Conditions

☐ The insurer must demonstrate actual and substantial prejudice from any alleged non-cooperation before denying coverage.

☐ The Insured has cooperated fully, including [________________________________].

☐ Any non-cooperation was not willful or material.

PART FOUR: BAD FAITH NOTICE

[LAW FIRM LETTERHEAD]

[__/__/____]

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED

[________________________________]
[________________________________]

Re: Formal Notice of Bad Faith Claim Handling
Insured: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]

Dear [________________________________]:

This firm represents [________________________________]. We write to formally notify you that your company's handling of this claim constitutes bad faith under Alaska law.

Alaska Bad Faith Legal Standard

Under Alaska common law, an insurer owes a duty of good faith and fair dealing to its insured. State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152 (Alaska 1989). A breach of this duty gives rise to a tort action, permitting recovery of damages beyond the policy limits. The insured need only establish that the insurer refused to honor a claim "without a reasonable basis" — the insured is not required to prove fraudulent or deceptive conduct. Hillman v. Nationwide Mutual Fire Ins. Co., 855 P.2d 1321, 1326 (Alaska 1993).

The implied covenant requires the insurer to:

• Give at least as much consideration to the insured's interests as it does to its own
• Conduct a thorough, objective investigation before making a coverage determination
• Not deny a claim without a reasonable basis supported by investigation
• Not place its financial interests above the insured's contractual rights

Specific Violations

The following conduct constitutes bad faith:

☐ Failure to conduct a reasonable investigation. The claim was denied without adequate investigation, in violation of the standards set forth in AS 21.36.125(a)(3) and (4).

☐ Denial without a reasonable basis. The stated grounds for denial lack a reasonable foundation in law and fact. See Nicholson, 777 P.2d at 1157 (insurer must have reasonable basis for denial); Hillman, 855 P.2d at 1326.

☐ Unreasonable delay. The insurer failed to affirm or deny coverage within a reasonable time after proof of loss was submitted, in violation of AS 21.36.125(a)(5).

☐ Misrepresentation of policy provisions. The denial letter misrepresents the scope of the exclusion at [________________________________], in violation of AS 21.36.125(a)(1).

☐ Failure to provide a reasonable explanation. The insurer failed to provide a reasonable explanation for the denial, in violation of AS 21.36.125(a)(14).

☐ Compelling litigation. The insurer is compelling the Insured to litigate to recover amounts due by denying a valid claim, in violation of AS 21.36.125(a)(7).

Available Remedies Under Alaska Law

Under Alaska bad faith law, the Insured may recover:

• Compensatory damages for all losses caused by the bad faith denial, including consequential damages beyond policy limits
• Emotional distress damages where the insurer's conduct caused severe emotional distress
• Punitive damages where the insurer acted with malice, fraud, or reckless indifference. Hillman v. Nationwide Mutual Fire Insurance Co., 855 P.2d 1321 (Alaska 1993)
• Attorney fees under Alaska Civil Rule 82 (partial fee-shifting) and as consequential damages caused by the bad faith
• Pre-judgment interest from the date the claim should have been paid

Demand for Claim File

We demand production of the complete claim file, including:

• All adjuster notes and activity logs
• All internal and external correspondence
• All coverage opinions
• All expert reports and estimates
• The complete underwriting file
• All communications with third parties regarding this claim

Demand

We demand that you reverse the denial and pay the claim in full within fifteen (15) days. Failure to do so will result in the filing of a bad faith lawsuit and a complaint with the Alaska Division of Insurance.

Respectfully,

[________________________________]
[________________________________]

PART FIVE: ALASKA DIVISION OF INSURANCE COMPLAINT

[DATE: __/__/____]

Alaska Division of Insurance
P.O. Box 110805
Juneau, AK 99811-0805
Phone: (907) 465-2515
Email: [email protected]
Online Complaint Portal: https://naic.org/cis_consumer_information.htm (NAIC complaint system for Alaska)

Re: Consumer Complaint Against [________________________________]
Insured: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]

Dear Director:

I am filing a formal complaint against [________________________________] ("Insurer") for unfair claim settlement practices in violation of AS 21.36.125.

Facts

1. The Insured holds Policy No. [________________________________], a [________________________________] policy with effective dates of [__/__/____] to [__/__/____].

2. On [__/__/____], the Insured suffered a loss consisting of [________________________________].

3. The claim was reported on [__/__/____].

4. On [__/__/____], the Insurer denied the claim, citing [________________________________].

Regulatory Violations Under AS 21.36.125

The Insurer's conduct violates the following provisions:

☐ AS 21.36.125(a)(1) — Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue
☐ AS 21.36.125(a)(2) — Failing to acknowledge and act reasonably promptly upon communications regarding the claim
☐ AS 21.36.125(a)(3) — Failing to adopt and implement reasonable standards for prompt investigation
☐ AS 21.36.125(a)(4) — Refusing to pay the claim without conducting a reasonable investigation
☐ AS 21.36.125(a)(5) — Failing to affirm or deny coverage within a reasonable time
☐ AS 21.36.125(a)(6) — Not attempting in good faith to effectuate prompt, fair, and equitable settlement when liability is reasonably clear
☐ AS 21.36.125(a)(7) — Compelling the insured to litigate by offering substantially less than the amount ultimately recovered
☐ AS 21.36.125(a)(14) — Failing to provide a reasonable explanation for claim denial

Requested Relief

I respectfully request the Division:

1. Investigate the Insurer's handling of this claim;
2. Require the Insurer to re-evaluate and pay the claim;
3. Take appropriate enforcement action under AS 21.36.210;
4. Advise me of the Division's findings.

Enclosed Documents

☐ Copy of insurance policy
☐ Copy of denial letter
☐ Copy of response to denial
☐ All correspondence with insurer
☐ Supporting documentation
☐ Other: [________________________________]

Respectfully submitted,

[________________________________]
[________________________________]

PART SIX: DEMAND FOR RECONSIDERATION WITH SUPPLEMENTAL DOCUMENTATION

[LAW FIRM LETTERHEAD]

[__/__/____]

[________________________________]
[________________________________]

Re: Demand for Reconsideration with Supplemental Evidence
Insured: [________________________________]
Claim Number: [________________________________]

Dear [________________________________]:

We demand reconsideration of your denial dated [__/__/____] in light of the following supplemental documentation:

Supplemental Documentation

☐ Independent expert report from [________________________________], concluding [________________________________]. (Exhibit [____])

☐ Contractor/repair estimate of $[________________________________] confirming scope and cost. (Exhibit [____])

☐ Engineering report confirming [________________________________]. (Exhibit [____])

☐ Witness statement(s) from [________________________________]. (Exhibit [____])

☐ Photographs/video taken on [__/__/____]. (Exhibit [____])

☐ Other documentation: [________________________________] (Exhibit [____])

Impact on Denial Bases

1. As to [denial basis 1]: This evidence demonstrates [________________________________].
2. As to [denial basis 2]: This evidence proves [________________________________].
3. As to [denial basis 3]: This evidence establishes [________________________________].

Demand

We demand that you review this supplemental evidence and reverse the denial within fifteen (15) days. Failure to do so will confirm that the denial was maintained in bad faith, and we will pursue all available remedies.

Under Alaska law, an insurer's refusal to reconsider a denial in light of new evidence may constitute bad faith. See Nicholson, 777 P.2d at 1157; Hillman, 855 P.2d at 1326.

Respectfully,

[________________________________]
[________________________________]

PART SEVEN: LITIGATION PRE-FILING CHECKLIST (ALASKA)

7.1 Pre-Suit Requirements

☐ No statutory pre-suit notice requirement for bad faith in Alaska (unlike FL)
☐ Denial response letter sent and response deadline expired
☐ Bad faith notice sent (recommended but not required)
☐ Division of Insurance complaint filed (optional, recommended)
☐ Internal appeal exhausted (if applicable)

7.2 Statute of Limitations

☐ Breach of contract: Six (6) years from the date of breach. AS 09.10.050.
☐ Bad faith tort (common law): Two (2) years from the date of the wrongful denial or bad faith conduct. AS 09.10.070.
☐ Discovery rule: The limitations period may be tolled until the insured knew or should have known of the bad faith.
☐ Calendar all deadlines carefully — the contract and tort statutes of limitations differ significantly.

7.3 Causes of Action Available in Alaska

☐ Breach of insurance contract
☐ Breach of implied covenant of good faith and fair dealing (tort — Nicholson, 777 P.2d 1152)
☐ Declaratory judgment (coverage determination)
☐ Violation of AS 21.36.125 (administrative enforcement only — no private right of action, but evidence of standard of care)

Note: Alaska does not provide a private right of action under the Unfair Claim Settlement Practices Act (AS 21.36.125). However, violations of the statute are relevant evidence of the standard of care in a common law bad faith action.

7.4 Damages Available

☐ Contract damages: Full amount of the unpaid claim
☐ Consequential damages: All damages proximately caused by the bad faith, including damages beyond the policy limits
☐ Emotional distress: Available in bad faith tort claims
☐ Punitive damages: Available where the insurer acted with malice, fraud, or reckless indifference. Must be proven by clear and convincing evidence (AS 09.17.020(b)). Bifurcated proceedings required — separate proceeding before same fact finder to determine amount (AS 09.17.020(a), (c)). Caps: 3× compensatory or $500K, whichever greater; 4× compensatory / 4× financial gain / $7M if motivated by financial gain (AS 09.17.020(f)–(g)). IMPORTANT: 50% of any punitive award is paid to the State of Alaska general fund (AS 09.17.020(j)). Hillman v. Nationwide, 855 P.2d 1321 (Alaska 1993)
☐ Attorney fees: Under Alaska Civil Rule 82 (partial fee-shifting in all civil cases), and potentially as consequential damages in bad faith
☐ Pre-judgment interest: From the date the claim should have been paid. AS 09.30.070

7.5 Document Collection

☐ Complete policy (declarations, forms, endorsements, application)
☐ Denial letter and all correspondence
☐ All response letters
☐ Proof of loss and supporting documentation
☐ Estimates, reports, expert opinions
☐ Photographs and video
☐ Timeline of all events
☐ Phone and email logs
☐ Agent/broker communications
☐ Premium payment records

7.6 Venue and Jurisdiction

☐ Alaska Superior Court (general jurisdiction)
☐ Venue: judicial district where insured resides or loss occurred. AS 22.10.030.
☐ Federal court if diversity jurisdiction is met (amount in controversy exceeds $75,000, diverse citizenship)
☐ Consider removal risk if filing in state court

PART EIGHT: ALASKA-SPECIFIC PRACTICE NOTES

8.1 Key Alaska Bad Faith Cases

8.2 Alaska Unfair Claim Settlement Practices Act (AS 21.36.125)

Statutory Structure: Subsection (a) lists the prohibited practices; subsection (b) provides that the section does not create or imply a private cause of action.

Key Provisions (all under subsection (a)):

• AS 21.36.125(a)(1): Prohibits misrepresenting policy provisions
• AS 21.36.125(a)(2): Requires prompt acknowledgment of communications
• AS 21.36.125(a)(3): Requires reasonable standards for prompt investigation
• AS 21.36.125(a)(4): Prohibits denial without reasonable investigation
• AS 21.36.125(a)(5): Requires timely affirmation or denial of coverage
• AS 21.36.125(a)(6): Requires good faith settlement attempts when liability is clear
• AS 21.36.125(a)(7): Prohibits compelling litigation through lowball offers
• AS 21.36.125(a)(14): Requires reasonable explanation for denial

Enforcement: The statute is enforced by the Division of Insurance, not through private lawsuits. However, violations are admissible as evidence of the standard of care in common law bad faith actions.

8.2A Alaska UCSPA Regulations (3 AAC 26)

Alaska has adopted the UCSPA Model Regulation at 3 AAC 26.010 through 3 AAC 26.300, which provides detailed claims handling standards. These regulations are highly relevant to establishing the standard of care in bad faith litigation:

• 3 AAC 26.040 — File and record documentation standards
• 3 AAC 26.070 — Misrepresentation of policy provisions prohibited
• 3 AAC 26.080 — Failure to acknowledge pertinent communications
• 3 AAC 26.090 — Standards for prompt investigation and processing
• 3 AAC 26.100 — Standards for prompt, fair, and equitable settlement when liability is reasonably clear
• 3 AAC 26.110 — Standards for prompt, fair, and equitable settlement of automobile claims (specific timelines)
• 3 AAC 26.120 — Standards for prompt, fair, and equitable settlement of fire and first-party claims

Practitioners should cite specific 3 AAC 26 provisions alongside AS 21.36.125(a) to establish that the insurer's conduct fell below the regulatory standard of care.

8.3 No Private Right of Action Under UCSPA

Alaska does not provide a private right of action under AS 21.36.125. Subsection (b) expressly states: "The provisions of this section do not create or imply a private cause of action for a violation of this section." Bad faith claims must be brought under common law (Nicholson, 777 P.2d at 1157). However, violations of the statute and the 3 AAC 26 regulations are relevant evidence of the standard of care in a common law bad faith action.

8.4 Attorney Fees in Alaska

Alaska Civil Rule 82 provides for partial attorney fee shifting in all civil cases. The prevailing party in a bad faith action is entitled to recover a percentage of actual attorney fees. In addition, attorney fees may be recoverable as consequential damages caused by the insurer's bad faith conduct.

8.5 Punitive Damages Standards

Alaska permits punitive damages in bad faith cases where the insurer's conduct was motivated by malice, fraud, or reckless indifference. Hillman, 855 P.2d at 1327.

Evidentiary standard: The plaintiff must prove by clear and convincing evidence that the defendant's conduct was outrageous or evidenced reckless indifference to the rights of others. AS 09.17.020(b). This is a heightened burden — mere unreasonableness is insufficient.

Bifurcated proceedings: Under AS 09.17.020(a) and (c), if punitive damages are allowed, a separate proceeding shall be conducted before the same fact finder to determine the amount of punitive damages. The amount of punitive damages is not submitted to the jury until after it has made an initial finding that punitive damages are warranted. This affects trial strategy and must be planned for.

Caps: AS 09.17.020(f)–(g) limits punitive damages to the greater of three times compensatory damages or $500,000. Where the conduct was motivated by financial gain, the limit is the greater of four times compensatory damages, four times the aggregate of financial gain, or $7,000,000.

50% payment to the state: Under AS 09.17.020(j), fifty percent (50%) of any punitive damage award is paid to the State of Alaska general fund. This is a critical client-counseling issue — a client awarded $500,000 in punitive damages will actually receive only $250,000. Counsel must advise clients of this at the outset to manage expectations regarding potential recovery.

8.6 Third-Party Bad Faith

Under O.K. Lumber, 759 P.2d at 528, third-party claimants (non-insureds) cannot bring a direct bad faith action against another person's insurer because "a contractual relationship did not exist" between them. The duty of good faith arises exclusively from the contractual relationship between the insurer and its insured. However, the insured may assign the bad faith cause of action to the third-party claimant. See also Whitney v. State Farm, 258 P.3d at 119–20 (discussing insurer's obligation to tender maximum policy limits when there is a substantial likelihood of an excess verdict).

SOURCES AND REFERENCES

• Alaska Statutes Title 21 (Insurance): https://www.akleg.gov/basis/statutes.asp#21
• AS 21.36.125 (Unfair Claim Settlement Practices): https://www.akleg.gov/basis/statutes.asp#21.36.125
• 3 AAC 26 (UCSPA Regulations — Claims Handling Standards): https://www.akleg.gov/basis/aac.asp#3.26
• Alaska Division of Insurance: https://www.commerce.alaska.gov/web/ins/
• Alaska Division of Insurance Consumer Complaints: https://www.commerce.alaska.gov/web/ins/Consumers.aspx
• Alaska Civil Rule 82 (Attorney Fees): https://courts.alaska.gov/rules/civil.htm
• AS 09.17.020 (Punitive Damages Limitations): https://www.akleg.gov/basis/statutes.asp#09.17.020
• State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152 (Alaska 1989): First-party bad faith cause of action
• Whitney v. State Farm Mutual Auto Ins. Co., 258 P.3d 113 (Alaska 2011): Insurer's investigation and settlement obligations
• Hillman v. Nationwide Mutual Fire Ins. Co., 855 P.2d 1321 (Alaska 1993): Bad faith standard and punitive damages

This template is provided for informational purposes only and does not constitute legal advice. It must be reviewed and customized by a qualified attorney licensed in Alaska before use. Alaska insurance law is governed by statutes, regulations, and case law that may have changed since publication.

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