Insurers may be liable to their insureds for attorney fees

Welcome to “Notes on the Law.” We offer this as an educational feature to highlight areas of the law. It is not intended to be legal advice.

Oregon Revised Statute 742.061 provides that:

“If settlement is not made within six months from the date proof of loss is filed with an insurer and an action is brought in any court of the state upon any policy of insurance of any kind or nature, and the Plaintiffs recovery exceeds the amount of any tender made by the Defendant in such action, a reasonable amount to be fixed by the court as attorneys fees shall be taxed as part of the costs of the action and any appeal thereon.”

Oregon Revised Statute 742.061 encourages insurance companies to settle fairly with their insureds or risk attorneys fees in addition to any payment on the loss if the claim is unjustly handled.

In PIP, uninsured motorist or underinsured motorist cases, the insurance company may be able to avoid the attorney fee risk. However, to do that it must, within the six months from the date proof of loss is filed, admit there is coverage for the loss and consent to binding arbitration if the insured and the insurer cannot agree on the value of the claim. If the insurer fails to concede those two points within six months from the date proof of loss is filed, it is liable for the insured’s attorney fees if the insured’s recovery in court exceeds any tender.

Oregon Revised Statute 742.061 does not apply to personal injury actions where an injured claimant sues the actual defendant who caused his injuries. However, the statute is an important consumer protection law that benefits insureds who need to directly sue their own insurance company for not paying fair value on a claim.

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