Insurance And Attorney Fees

June 28, 2022

Idaho’s attorney fee rules begin with the principle that everyone pays for their own attorney. Stated another way, “Idaho follows the ‘American Rule’ of attorney fees, which requires a party requesting attorney fees on appeal to cite either statutory or contractual authority in support.” Mortensen v. Stewart Title Guar. Co., 149 Idaho 437, 447–48, 235 P.3d 387, 397–98 (2010). Under this rule, the only way a party may get attorney fees is if they can find a statute or a contract provision that allows for an award of attorney fees. Without either of those, attorney fees are generally not available. 

There is no attorney fee statute that applies in every case involving insurance. That being said, the two statutory provisions most likely to apply where insurance is involved are Idaho Code §§ 12-120(4) and 41-1839(1). Idaho Code § 12-120(4) applies in personal injury cases where there is a pre-suit demand of $35,000.00 or less. The demand must be made on the insurer at least 60 days before the suit is filed, and must include an itemized statement of damages, a good faith estimate of future medical bills, information regarding lost income (past and future), and any related property damage. The demand must also include copies of the related medical bills. The statute also indicates that if the insurer tenders at least 90% of the amount awarded to the plaintiff prior to the suit being filed, then no attorney fees may be awarded. 

There are several substantial concerns with this statute. First is that that the plaintiff is not limited to obtaining $35,000.00 in damages at trial. If a pre-suit demand is made for $35,000.00, and the plaintiff wins more than that at trial, attorney fees are still available. Second, the statute requires a tender or payment, not an offer. A tender means either payment is made, or that there is an unconditional indication that the tenderer is ready, willing, and able to pay. Thus, no settlement agreement may be required as part of the payment process. In other words, an “offer” is not good enough. Third, this statute is possibly unconstitutional. Under the terms of the statute, notice must be given to the insurer. However, third-party claims against insurers are not allowed in Idaho. Thus, if attorney fees are awarded, they are awarded against the insured, not the insurer. In effect, this statute creates liability for attorney fees against the insured with the possibility of the insured never getting notice of the potential for fees against them. This, in turn, could result in potential claims against the insurance company for bad faith. These are issues of which insurers should be aware. 

As for Idaho Code § 41-1839(1), this statute applies to most first-party claims. Under this statute, an insurer must pay any amounts “justly due” to an insured within 30 days of proof of loss being provided, or 60 days if the claim is for UM or UIM benefits. If payment is not made within that time period, attorney fees are available. There are several problems with this statute as well. First, the amount “justly due” is not always clear, and that phrase is undefined. Second, the statute also fails to define what constitutes a “proof of loss.” There is case law suggesting that a proof of loss may be whatever is required in the policy to make a claim. Some insurers require a particular form to be filled out, others require statements to be made under oath, and some have no specific requirements as to what constitutes a proof of loss. Idaho case law suggests that whenever the insurer has been provided enough information to be able to sufficiently investigate a claim, that will likely constitute a satisfactory proof of loss (unless the policy requires specific information/forms). 


We recommend that insurers exercise caution when it comes to this statute and make payment of any undisputed amounts as soon as possible. As to whether a sufficient proof of loss has been provided, insurers should be careful to document when information and documents are received and begin investigating the claim as soon as documents are received. Once an insurer has sufficient information to analyze a particular claim or element of damages, that will likely constitute a proof of loss as to that issue, and the time will begin running. There may be multiple proofs of loss. However, it is recommended that the insurer avoid making additional payments without receiving additional information, as that could be utilized as proof that the insurer had sufficient information to evaluate damages but ignored the relevant timelines. 

Please contact a Gjording Fouser lawyer at 208.336.9777 if you would like any additional information about this topic or any other issues facing your company.