Philadelphia Business Lawyers
Philadelphia Bad Faith Insurance Claims
Insurance companies have a contractual, good faith duty to provide compensation for legitimate claims brought by insured parties. Under Pennsylvania law, an insurance company’s denial of payment of insurance benefits or the delayed payment of insurance claims is known as bad faith. Bad faith is established by showing that: 1. The insurer did not have a reasonable basis for denying benefits under the policy; and 2. The insurer knew or recklessly disregarded its lack of a reasonable basis for denying the claim. Terletsky v. Prudential Prop. and Cas. Ins. Co., 649 A.2d 680 (Pa. Super. Ct. 1994).
It is not necessary for a plaintiff to show that the denial was fraudulent – just that the conduct imports a dishonest purpose and means of a breach of a known duty through some motive of self-interest or ill will. Adamski v. Allstate Ins. Co., 738 A.2d 1033, 1036 (Pa. Super. Ct. 1999).
Who May Bring a Bad Faith Insurance Claim in Pennsylvania
Generally, only the insured or a direct claimant for benefits on the insured’s policy are entitled to bring an action under section 8371. The insured may assign his rights to bring a bad faith action against the insurer to third parties. However, third parties with claims against the insured, who would be recompensed by the payment of the policy, are not entitled to bring bad faith actions against the insurer.
When to File a Bad Faith Insurance Claim in Pennsylvania
The Supreme Court of Pennsylvania held in 2007 that an action under § 8371 is a statutorily-created tort action, and therefore, such an action is subject to the two-year statute of limitations under 42 Pa.C.S. § 5524.2. Ash v. Cont’l. Ins. Co., 593 Pa. 523, 932 A.2d 877 (2007)
Types of Bad Faith Claims under Pennsylvania Statute
40 P.S. § 1171.5 states that bad faith by an insurance company includes, but is not limited to, the following:
- Misrepresentation of the benefits, conditions, or terms of an insurance policy;
- Discrimination in the rates and payment of insurance benefits to members on the basis of race, religion, nationality or ethnic group, age, sex, family size, occupation, place of residence or marital status;
- Failure to acknowledge and act promptly upon written or oral communications with respect to claims arising under insurance policies;
- Refusing to pay claims without conducting a reasonable investigation based upon all available information;
- Attempting to settle claims for less than the amount to which a reasonable person would have been entitled by reference to advertising material accompanying or made part of an application.
Types of Bad Faith Claims under Pennsylvania Common Law
Pennsylvania courts have held the following (non-exclusive) as potential acts of bad faith:
- Insurer acted in bad faith by mismanaging the processing, loss control, loss prevention and loss reporting aspects of its workers’ compensation policies;
- Refusal to settle an uninsured motorist’s claim prior to arbitration;
- Non-renewal of a policy ;
- Fraudulent misrepresentation which induced the insured to enter into the purchase of a policy;
- Insurer engaged in obstructive conduct and induced insured to discontinue his state court suit by misrepresenting its intent to evaluate and settle his claim.
Successful Bad Faith Lawsuits in the Philadelphia Region
Pennsylvania Courts broadly interpret the scope of the statutory definition of “bad faith” as to include “all instances of bad faith conduct by an insurer, whether occurring before, during, or after litigation.” Hollock v. Erie Ins. Exch., 2004 PA Super 13, 842 A.2d 409, 415 (Pa. Super. Ct. 2004).
A successful bad faith claimant may be entitled to full payment of the claim plus an award of an amount equal to the prime rate of interest plus 3% and punitive damages. 42 Pa.C.S.A. § 8371.
Contact Philadelphia Bad Faith Insurance Lawyers at Sidkoff, Pincus & Green
If you have a legitimate claim that was denied or reduced by your insurance company in bad faith, you may be able to bring a bad faith insurance lawsuit in Philadelphia immediately. Our firm can help you secure all the income to which you may be entitled. Contact a Philadelphia bad faith insurance lawyer at Sidkoff, Pincus & Green today at (215) 574-0600 or contact us online.
SIDKOFF, PINCUS & GREEN
2700 ARAMARK TOWER
1101 MARKET STREET
PHILADELPHIA, PA 19107
ph: (215) 574-0600
fax: (215) 574-0310