What are the Elements of a Bad Faith Insurance Claim?
Insurance companies, due to their greater bargaining power, are held to a standard of care when upholding their insurance agreements with their insurers. A bad faith insurance claim can be made whenever an insurance company fails to process an insurance claim in a reasonable manner. Bad faith can be found in the following instances:
- Communication. Insurer is under a duty to communicate regularly with the client. When the insurer fails to communicate in a timely fashion regarding their investigation of the claim or acknowledgment of status, they are acting unreasonably and may be held liable for bad faith.
- Investigation. Insurer is obligated to investigate the claim. Insurer needs to have a good basis for the denial of a claim; if an insurer denies a claim without proper basis for it, it may be liable for bad faith.
- Processing the claim. Insurer should promptly acknowledge the claims made, investigate the claim, and properly process the claim so that a prompt coverage decision can be made. Insurer cannot employ delay tactics or request unnecessary and burdensome documents to delay processing the claims.
- Cancellation of the insurance policy. Insurer is not allowed to change the policy terms or cancel the policy without prior notification. An insurer might issue a change in the policy so that the claim is not covered under the new policy, which is a bad faith tactic and may make the insurer liable.
- Unfair settlement. Insurer should not pressure the insured to accept an unfair settlement. Insurer must fully evaluate the claim and honestly present all options available for settlement and recovery.
Elements of Bad Faith Insurance Claim in Pennsylvania
The Pennsylvania Supreme Court stated that bad faith is found in any frivolous or unfounded refusal to pay proceeds of a policy. Pennsylvania courts follow a two-part test when finding bad faith insurance.
The insured must show that:
- Insurer did not have a reasonable basis for denying benefits under the policy
- Insurer knew and disregarded its reasonable basis for denying the benefits
No Malicious Intent Required
The Pennsylvania courts do not require malicious intent in bringing a bad faith claim against an insurer. Pennsylvania courts do not impose a high burden on plaintiffs to prove bad faith claims encouraging pursuit of insurance coverage disputes.
If a court finds that the insurance company acted in bad faith, the plaintiff may recover damages. Plaintiff may be eligible to recover interest on the amount of a claim from the date the claim was made. Plaintiff may also be eligible for punitive damages, as well as costs and attorneys’ fees.
Pittsburgh Bad Faith Insurance Lawyers at AlpernSchubert P.C. Hold Insurance Companies Accountable
If you have reason to believe your insurance company acted in bad faith, a Pittsburgh bad faith insurance lawyer at AlpernSchubert P.C. can help. If you faced a denial of coverage or have otherwise been treated unfairly by your insurance company, you may have a claim of bad faith against them. Contact us online or call us at 412-765-1888 for a free consultation today. Located in Pittsburgh, we serve clients throughout western Pennsylvania, including Allegheny County, Lawrence County, and Washington County.