Prosecuting Bad Faith Claims against Insurance Companies Makes Me Proud To Be a Lawyer
I am currently involved in an exciting case against one of the nation’s major insurance carriers who we feel has breached their fiduciary obligation to their insured in failing to handle a claim in good faith. Since 1957 through the present, there has been a stream of cases in Pennsylvania highlighting the progression of bad faith law. 42 Pa C.S. '8371 sets forth that the term bad faith concerns the duty of good faith and fair dealing by an insurance company in the party’s contract and the manner by which an insurer discharges its obligation of defense and its obligation to pay for a loss.
The Supreme Court of Pennsylvania has held that while an insurer has no absolute duty to settle a claim, the insurer “must act within the utmost good faith” when handling a claim against its insured and if it does not and an excess verdict results, the insurer may be held liable. The Pennsylvania statute notes that in an accident arising under an insurance policy, if the court finds that an insurer has acted in bad faith towards the insured, the court make take all of the following actions:
1. Award interest on the amount of the claim from the date the claim was made by the insured in the amount equal to the prime rate of interest plus 3%.
2. Award punitive damages against the insurer.
3. Assess court costs and attorneys’ fees against the insurer.
The burden of proof under the bad faith statute is “clear and convincing” evidence and reckless behavior which can constitute bad faith. The Seventh Amendment of the United States Constitution guarantees one to the right to a jury trial for bad faith claims in Federal Court. Attorneys’ fees may be awarded in bad faith cases not as punishment but to make a successful plaintiff completely whole. When one purchases a policy of insurance from an insurance company one has the right to expect that the insurance company will perform its obligations under the policy in good faith and will not utilize unfair or deceptive practices in soliciting the purchase of the policy nor handling the claim. Unfortunately, according to a study by The American Association of Justice last summer, many of the insurance companies have taken a delay, deny, defend tactic when it comes to paying claims, putting profitability of their bottom line before their insureds’ interests.
The insurance company cannot arbitrarily deny a claim that it does not feel like paying. When you purchase a policy of insurance with an insurance company you enter a contract and that contract implores the company to act in good faith in a reasonable and honorable fashion. In our practice, many times we see insurance companies denying valid claims, denying payments on claims, denying investigation of claims and only paying partial benefits utilizing the tactic that it will cost more for the client to hire a lawyer and go to court and therefore they should take what is offered. In fact, adjusters have stated the same to my clients before they hired a lawyer. Many times, they try to fool the people and confuse them with ambiguous language in the policy. Many times this even extends to the insurance agent. Sometimes after an accident, they may send a minimal drop check worth a fraction of the true value or an unscrupulous claims adjuster to the home to try to resolve the case before the claimant hires an attorney or has full knowledge of the true value of his case.
Pennsylvania legislature and courts have recognized this predicament and if you feel you are the victim of an unscrupulous insurance company, please feel free to contact on of our experienced unfair insurance claims practices or experienced bad faith insurance lawyers to help you step to the plate and get a big bite of the apple.
