What Is the Bad Faith Law in Pennsylvania?

Insurance providers have a duty to act in good faith in response to the claims they handle, and when they fail to do so, they can be identified as acting in bad faith and can be penalized for doing so in the form of verdicts that exceed their policy limits. Insurance companies have the fiduciary duty of treating valid claims with the same consideration they afford their own interests, and any discrepancies can be identified as bad faith practices. If you’ve suffered an injury due to someone else’s negligence or have another kind of insurance claim and haven’t been able to obtain the compensation to which you’re entitled from the involved insurance company, a dedicated Allentown bad faith insurance attorney can help.

The Insurance Company’s Duty

When you file a claim with an insurance company – such as with a drunk or speeding motorist’s insurance provider after a car accident – you rely on them to handle the claim fairly. The fact is that the insurance company is in a position of superior power due to its immense financial resources and negotiating abilities, and this considerable power differential calls for fair dealings in support of claimants’ rights.

We purchase insurance to protect ourselves – and those we harm in the case of liability policies – and in exchange for our pay, insurance companies are obligated to uphold each policy’s terms and to fairly pay all valid claims that each policy covers.

Common Forms of Bad Faith on the Part of Insurance Providers

While every bad faith claim is unique to the circumstances involved and while not every failure to cover a claim in a favorable manner amounts to bad faith, common examples of what may constitute bad faith include all the following:

• Failing to properly investigate the claim in the first place
• Denying a claim outright without bothering to investigate
• Denying a claim based on unreasonable grounds
• Failing to explain why a claim has been denied or failing to explain a policy’s limits
• Failing to take action within a reasonable amount of time regarding investigations, confirmation or denial of coverage, or payment or denial of claims
• Implementing business policies that differ from industry standards
• Delaying the payment of a claim for an unreasonable amount of time

Damage Sought

If you bring a successful bad faith case against an insurance company, you can seek compensation for all the following damages:

• The full amount of the original claim
• Interest on the claim amount from the date you filed it
• Your attorney fees and court costs

You can also seek punitive damages that are designed to punish the insurance company rather than compensate you.

Examples of Bad Faith Insurance Practices

Insurance Bad faith claims essentially mean that the insurance company has unreasonably denied or delayed payment of valid claims. Some examples of actions that might constitute bad faith include:

• Unreasonable denials of coverage;
• Failing to fully, fairly and promptly investigate and evaluate claims;
• Failing to offer a fair and reasonable amount in settlement of claims;

What Kind of Damages Could I Receive From a Successful Bad Faith Claim?

Under the Pennsylvania Bad Faith Statute, plaintiffs may seek bad faith damages from an insurance carrier including: punitive damages, attorneys’ fees, interest and court costs. Specifically, the Bad Faith Statute provides:

In an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may 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 an amount equal to the prime rate of interest plus 3%.

(2) Award punitive damages against the insurer.

(3) Assess court costs and attorney’s fees against the insurer.

42 Pa.C.S.A. § 8371. Additionally, plaintiffs may be entitled to consequential damages arising from the bad faith handling of their claims.

Seek the Help You Need from an Experienced Allentown Bad Faith Insurance Attorney Today

Bad faith cases are legally complex, but the formidable Allentown, Pennsylvania, bad faith insurance attorneys at HGSK Injury Lawyers are well prepared to implement the full force of their immense experience and legal skill in pursuit of your case’s optimal outcome. To learn more about what we can do to help you, please contact us online or call 267-350-6600 to schedule a free consultation today