Burnett v. Government Employee Insurance Company, 389 P.3d 27

In Nov. 2011 a driver crashed into Charles Burnett’s cabin, damaging a heating oil tank and causing a fuel spill that migrated under the cabin and injured Burnett.
GEICO, the driver’s liability insurer, hired a contractor to assess and coordinate cleanup under DEC standards but initially did not complete the cleanup; Burnett alleged GEICO told him not to clean up and that GEICO would do so.
No cleanup occurred in 2012; GEICO’s contractor performed cleanup in Oct. 2013, nearly two years after the accident; Burnett alleged reliance on GEICO’s promises and worsening harm during the delay.
Burnett sued both the driver and GEICO; GEICO obtained summary judgment in the superior court, relying on O.K. Lumber to argue an insurer owes no duty to third-party claimants regarding claims handling.
The Alaska Supreme Court reversed, holding that an insurer can owe an independent tort duty to a third-party claimant when it affirmatively undertakes to perform services (citing Restatement §323) and that genuine factual disputes precluded summary judgment.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a liability insurer can owe a tort duty to a third-party claimant arising from claims-handling/cleanup conduct	Burnett: GEICO told him not to remediate, promised to clean up, and thus undertook an independent duty to perform cleanup reasonably and timely	GEICO: O.K. Lumber bars third parties from suing insurers for claims-handling; any duty runs to the insured, not third parties	An insurer may owe a tort duty to a third-party when it affirmatively undertakes a new, independent obligation to that third party; not categorically barred
Whether O.K. Lumber prevents any tort claim by a third party against an insurer for claims-handling conduct	Burnett: O.K. Lumber did not resolve tort theories independent of the contractual insurer–insured relationship	GEICO: O.K. Lumber precludes any such third-party claims against insurers	Court: O.K. Lumber did not decide independent tort liabilities; it does not categorically preclude claims when insurer assumes an independent duty
Whether summary judgment was appropriate on duty ground	Burnett: Factual dispute exists (promises, reliance, increased harm) sufficient to defeat summary judgment	GEICO: As a matter of law it owed Burnett no duty; facts show it acted within duty to insured	Summary judgment reversed—genuine factual disputes exist about whether GEICO undertook an independent duty under Restatement §323

O.K. Lumber Co. v. Providence Washington Ins. Co., 759 P.2d 523 (Alaska 1988) (held third-party claimant may not recover based on insurer’s contractual duty to insured; court expressed concern about dual fiduciary duties)
Howton v. State Farm Mut. Auto. Ins. Co., 507 So.2d 448 (Ala. 1987) (recognizes insurer may assume new, independent obligation to third-party claimants and be liable for breaches)
Hurn v. Greenway, 293 P.3d 480 (Alaska 2013) (existence of duty is a legal question requiring consideration of factual context at summary judgment)
Jackson v. Am. Equity Ins. Co., 90 P.3d 136 (Alaska 2004) (discusses insurer duties and remedies for breach of covenant of good faith and fair dealing)