What Kinds of Conduct Constitute Bad Faith by an Insurance Carrier?

When you are injured in an accident, you may be forced to turn to your own insurance carrier for benefits. When you do so, it is important to remember that you have legal rights when your insurance carrier treats you unfairly. Insurance companies have an obligation to handle your claims promptly and fairly. When an insurance company fails to properly handle your claim, you may be able to hold them accountable by bringing an action for bad faith. If you believe your insurance company may be acting in bad faith, it’s time to consult with an experienced Allentown bad faith insurance attorney.

Is It Bad Faith?

Insurance companies must, at all times, treat their insureds fairly. When an insurance company fails to do so, the Pennsylvania Legislature has created a statutory remedy for bad faith conduct by an insurance company. See 42 Pa.C.S.A. § 8371. Specifically, the Pennsylvania Bad Faith Statute states:

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. While the Statute does not define “bad faith”, or specifically explain how to prove “bad faith”, the Pennsylvania Supreme Court recently set forth a two-part test for determining whether the actions of an insurance company rise to the level of “bad faith”. Specifically, in Rancosky v. Wash Nat’l Ins. Co., 170 A.3d 364, 376 (Pa. 2017), the Pennsylvania Supreme Court stated that:

[I]n order to recover in a bad faith action, the plaintiff must present clear and convincing evidence (1) that the insurer did not have a reasonable basis for denying benefits under the policy and (2) that the insurer knew of or recklessly disregarded its lack of a reasonable basis.

Id. at 376. It is important to remember that “bad faith” conduct is not limited to just an insurance company’s bad faith in denying a claim. On the contrary, the Insurance Bad Faith Statute was designed to address and remedy all instances of bad faith conduct of insurers, including investigative practices, regardless of whether the conduct was committed before, during or after litigation. Accordingly, bad faith conduct can include a wide variety of actions including the lack of a good faith investigation into facts as well as the failures of the insurer to communicate with the claimant. A bad faith cause of action is also not dependent upon a finding of coverage.

Further, although proof of an insurer’s motive of self-interest or ill-will is not required to win a bad faith claim, evidence of self-interest or ill-will is considered to be probative of bad faith. Id. In this regard, Justice Wecht, in his Concurring Opinion in Rancosky, set forth various examples of bad faith conduct by an insurer. Specifically, Justice Wecht stated as follows:

Many species of bad faith may flourish notwithstanding the absence of either “self-interest” or “ill will”. Shoddy claims-handling, lack of diligence, non-responsiveness, haphazard investigation, unreasonable denials, and the like, all may come within the statutory definition of bad faith while nonetheless falling short of the “self-interest”/”ill will” threshold.

Common Forms that Bad Faith Practices Take

Although bad faith claims are very fact specific, some of the most common forms of bad faith insurance practices include the following:

• Unreasonable denials of coverage;
• Misinterpreting the language of their policies or records;
• Ignoring evidence favorable to their insureds;
• Delaying claim resolutions unreasonably;
• Implementing arbitrary demands regarding proof of loss;
• Failing to conduct proper investigations – or any investigation – in the claims submitted.

Some insurance companies go so far as engaging in abusive practices toward claimants.

Addressing Your Damages

If the court determines that an insurance company acted in bad faith, it can award damages in any of the following categories:

• Interest on the amount of the claim from the date the claim was made;
• Your court costs and attorney fees; and
• Punitive damages against the insurance company.

Additionally, you may be entitled to other consequential damages that arise from the bad faith handling of the claim by the insurance company.

Personal injury claims are challenging legal matters to begin with, and when the insurance company handling your claim acts in bad faith, it makes the matter that much more difficult. Fortunately, a bad-faith insurance attorney is standing by to help.

You Need an Experienced Allentown Bad Faith Insurance Attorney in Your Corner

The accomplished Allentown, PA, bad faith insurance attorneys at HGSK Injury Lawyers appreciate exactly how difficult bad faith on the part of insurance providers can be for claimants like you, and we will spare no effort in our focused quest to right the wrong you’ve suffered. Your claim is important to your future, so please don’t delay contacting us online or calling us at 267-350-6600 to schedule a free consultation and learn more about what we can do to help you today.