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Here is the failure to yield law.
Here is the light law as well as the "hours of darkness" definition.
These standards will serve as your defense to the citation as well as your claim against the other driver for the damages to your vehicle. I strongly recommend you contact your insurance carrier and let them know these circumstances and urge them to assist you in assigning fault to the other driver. You will also want to consult a local attorney about filing a lawsuit. The police's decision to cite you is not a judicial determination of relative fault or negligence.
Please reply if I can help further.
Your insurance company's response isn't surprising. However, if this other driver was not visible for 500 feet due to the weather and lighting conditions then you are correct that his violation would be considered a proximate cause of the accident (you cannot yield to something that you cannot see).
Obviously we need to focus on the 500 feet visibility requirement.
I run a few case law searches and supplement this post with the results shortly.
Unfortunately I cannot link you to this case as I have been unable to find it on any general internet site. However, here are two quoted sections I think you will find helpful in your assessment from the Washington Supreme Court's decision in Sanders vs. Crimmins, 388 P.2d 913 (Wash. 1964).
"The fact that two cars collide within an intersection establishes that they were simultaneously approaching a given point within the intersection, within the meaning of the statute; and the disfavored driver may not escape liability for his failure to yield the right of way unless he proves that, as a reasonably prudent driver, he was deceived by the wrongful operation of the vehicle on his right"
"The duty imposed by the statute on the operator of a motor vehicle to drive with adequate lights at night is not merely for the benefit of such operator to enable him to see and avoid injury to others, but for benefit of others to enable them to avoid injury from approaching motor vehicles."
Though the above quote uses "at night" the court did also mention the five hundred feet requirement. The same standard would apply. The case law has held that failing to use headlights as required by Washington statute constitutes negligence and imposes liability for any resulting accident.
I think your biggest issue will be whether or not the visibility was poor enough to require headlights and whether or not you can prove the other driver had no lights in operation. I would also address the other driver's speed in conjunction with the other aspects of the accident to determine fault and liability.
Please reply if I can help further.
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