Bad Faith Insurance Claims

Bad Faith Insurance Laws in Pennsylvania

In Pennsylvania, bad faith insurance litigation involves a lawsuit by an individual against their own insurance carrier. A fiduciary relationship is created when the insurance carrier issues an insurance policy to the individual. The insurance carrier now has a contractual good faith duty to handle claims and control settlements on behalf of the insured based on the terms of the insurance policy.

Under Pennsylvania law, bad faith insurance claims are governed by Statute 42 Pa. C.S. Section 8371 and by case law that interprets this Statute. According to this Statute, an insurance company engages in bad faith under three circumstances:

1. Refusal to pay for frivolous or unfounded reasons
2. Failure to investigate the facts of a claim
3. Failure to communicate with the insured

According to Pennsylvania’s bad faith insurance claim Statute, in order for the insured to be paid for damages, the insured has to prove two things:

1. The insurer did not have any legitimate reason for denying the claim
2. The insurer knew they did not have any evidence of a reasonable basis for denying the claim

In addition to the insurance carrier delaying or not paying a claim, bad faith can involve the insurance carrier’s failure to defend the insured and using pending litigation as an excuse for delaying or failing to fulfill its contractual obligations.

If an insurance company is found guilty of acting in bad faith toward its insured clients, the insured will receive compensation for damages. This compensation will include interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%. The insured will also be awarded punitive damages against the insurance carrier and compensation to cover the court costs and attorney’s fees.

If an insurance carrier has acted in bad faith on a claim regardless of the type of claim it is, a claim may be able to be filed against the insurance carrier for bad faith damages. If you are a Pennsylvania resident and you suspect your car insurance company of acting in bad faith, contact Pennsylvania Car Accident Lawyers today.

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