In Burnett v. GEICO, 389 P.3d 27 (2017) the Alaska Supreme Court, as a matter of first impression, held that a liability insurer can owe a tort duty to a third-party claimant when the insurer’s claims handling actions affirmatively create a new and independent duty to the claimant. In Burnett, GEICO’s insured crashed into a cabin which caused, in part, a fuel leak. The fuel leak was required to be remediated environmentally in accordance with the Alaska Department of Environmental Conservation (DEC) standards. GEICO hired a contractor to perform an environmental site assessment and to coordinate the necessary clean-up of the spill. However, GEICO delayed in the remediation effort. As a result, the fuel spill spread underneath the cabin itself. Because of this, the cabin owner sued not only the GEICO insured for the accident, but also GEICO for its negligent activities in timely cleaning up the environmental spill.
The Alaska Supreme Court held that GEICO undertook an independent duty to the cabin owner to reasonably perform the clean-up which, in turn, created an independent tort duty to the cabin owner.