In 1990, the Pennsylvania Legislature enacted the “bad faith statute.” Essentially, the statute requires that an insurance company take reasonable steps in dealing with an insurance claim under a contract of insurance, such as auto or homeowner’s policy. This relatively new legislation provides an opportunity for a “private cause of action” against the insurance provider; this provides the courts to award the following (source: Jamiolkowski, Alexander J., 2008):
Award 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 plus 3%.
Award punitive damages against the insurer.
Assess court costs and attorneys fees against the insurer
Bad faith is a very complex area of the law. This article describes how bad faith obtains in the context of different types of insurance policies (e.g., automobile insurance, homeowner insurance, life insurance, property insurance, and disability insurance).
Fellerman & Ciarimboli has been successful in forcing insurance companies to pay money to their insureds for mishandling their claims. If your insurance company has failed to fairly handle your claim and/or hasn’t exhibited good faith practices in managing your policy, consider scheduling a free consultation with our attorneys.
Automobile insurance policies typically cover property damage, personal injury and other losses specifically covered by your policy. The insurance company has an obligation to investigate and pay your claim within a reasonable amount of time. If your insurance company fails to pay, or pays an inadequate amount under the policy, they may be acting in bad faith.
Homeowner insurance policies require an insurance company to cover losses for fire, theft, and liability. If your insurance company refuses to pay benefits for damages due to the loss to your home or its contents; or if your insurance company refuses to fairly and properly investigate and pay your claim, the insurance company might be acting in bad faith.
Life insurance is a protection against the loss of income that would result if the insured passed away. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured. Bad faith claims arise when insurers fail to pay life benefits as they are contracted to do for the designated beneficiary.
When the insurance company does not pay a reasonable amount for damages within a reasonable time, it may amount to bad faith. These are often claims that have been denied or that have been offered unreasonably low settlements for claims involving roof damage, hail damage, mold, fire, theft of personal property, injury or more.
Insurers who refuse to pay disability benefits can be liable for the benefits owed, damages for emotional distress and punitive damages in order to punish fraudulent conduct.
References and additional resources
- Jamiolkowski, Alexander J. (2008) “Insurance Company Liability for Bad Faith in Pennsylvania: Plaintiff’s Perspective.” Corporatefindlaw.com: 26 March 2008. Retrieved 20 Sept. 2012 from http://corporate.findlaw.com/corporate-governance/insurance-company-liability-for-bad-faith-in-pennsylvania.html
With more than 40 years of combined experience, the personal injury attorneys at Fellerman & Ciarimboli strive to provide the best service to clients in Philadelphia, Northeast Pennsylvania, and throughout the Keystone State.