Bad Faith Of An Insurer In Pennsylvania

Insurance policies are supposed to provide protection during some of the most stressful moments in a person’s life. Whether the policy covers healthcare, auto, homeowners, or disability insurance, or commercial liability protection, policyholders pay premiums with the expectation that their insurer will act fairly when a claim arises.

Sometimes, however, insurance companies do not meet this expectation. They may delay investigations, deny legitimate claims, refuse to defend insured parties, or value profits over contractual responsibilities. When this happens, it can constitute insurance bad faith.

If an insurer acts unreasonably and knowingly, or recklessly disregards its lack of a reasonable basis, it may face liability under Pennsylvania’s bad-faith statute.

What Is Insurance Bad Faith?

Insurance bad faith occurs when an insurer fails to fulfill its legal obligations to a policyholder in a dishonest, unreasonable, or unfair manner. Examples of bad faith include when an insurance company:

• Denies a valid claim without a reasonable basis
• Fails to properly investigate a claim
• Unreasonably delays payment
• Misrepresents policy language
• Refuses to defend a covered claim
• Ignores evidence supporting coverage
• Fails to communicate with policyholders
• Places its own financial interests above its insured’s interests

Bad-faith disputes can arise in many types of insurance cases, including homeowners’, automobile, disability, commercial, and other insurance disputes.

What Is Pennsylvania’s Bad Faith Statute?

Pennsylvania has a specific statute governing insurance bad faith claims. Unlike some states that rely primarily on common-law bad-faith doctrines, Pennsylvania provides statutory remedies when insurers act in bad faith toward clients. Under Pennsylvania law, courts may award:

• Interest on the amount of the claim
• Punitive damages
• Attorney’s fees and court costs

These remedies can significantly increase an insurer’s financial exposure when bad faith is proven. To succeed on a Pennsylvania bad-faith claim, a policyholder generally must show that the insurer lacked a reasonable basis for denying benefits or refusing coverage and that the insurer knew of or recklessly disregarded its lack of a reasonable basis.

When Insurance Companies Wrongfully Refuse To Defend

Many insurance policies require insurance companies to provide a legal defense when a covered claim or lawsuit is filed against the policyholder. In Pennsylvania, insurers may have a duty to defend if the allegations in the lawsuit potentially fall within the policy’s coverage.

Problems can arise when insurance companies deny coverage too quickly, rely on questionable interpretations of policy language, ignore facts supporting coverage, or refuse to provide a defense without a reasonable basis. In some situations, these actions may support a bad-faith claim under Pennsylvania law.

Bad-faith disputes involving a refusal to defend often focus on the language of the insurance policy, the allegations in the underlying lawsuit, and the insurance company’s handling of the claim.

What Are Refusal-to-Defend Claims in Pennsylvania?

Insurance companies may act in bad faith when they refuse to defend a policyholder without a reasonable basis. These disputes often involve disagreements over policy language, exclusions, or whether the allegations in a lawsuit potentially fall within the policy’s coverage. Pennsylvania courts closely examine both the insurance policy and the insurer’s conduct during the claims process when evaluating these claims.

What Should Policyholders Do After A Coverage Denial?

If your insurer refuses to defend or denies coverage in Pennsylvania, taking immediate action may help protect your rights. Here are the steps you should take:

• Request a written denial: Ask the insurer to provide a written explanation identifying the policy provisions supporting the denial.
• Review the denial carefully: Compare the insurer’s explanation with your policy language and the facts of the claim.
• Preserve all communications: Keep copies of emails, letters, claim notes, denial letters, and communications with adjusters or claims representatives.
• Document defense costs: Track attorney’s fees, litigation expenses, and other costs incurred because of the denial.
• Evaluate potential bad-faith claims: In some cases, policyholders may have separate claims for bad-faith damages under Pennsylvania law in addition to breach-of-contract claims. It’s important to find an attorney experienced in litigating bad-faith claims. Legal representation is essential because of the complex nature of these lawsuits.

Get Help From A Pennsylvania Insurance Bad Faith Attorney

Insurance companies have a legal responsibility to handle claims fairly and in good faith. When they fail to honor this duty, policyholders could suffer both financial and emotional consequences.

If your insurer denied coverage, refused to defend you, delayed payment, or acted unfairly during the claims process, you may have legal options under Pennsylvania law. The attorneys at Ross Feller Casey represent individuals, professionals, and businesses in complicated cases throughout Pennsylvania. They know how to handle insurance companies and have a proven track record of success in bad-faith cases.

Contact Ross Feller Casey today to set up your free consultation to discuss your potential insurance bad-faith claim. You won’t be charged anything until we make a financial recovery in your case.