Most states have laws designed to protect consumers from bad faith insurance. Under the insurance contract, consumers have direct claims against their insurance company for alleged bad faith. However, many courts are finding that insurance personnel, such as agents and adjusters, can also be named individually as defendants in bad faith insurance claims.
Traditionally, bad faith laws against insurance personnel have not been applied under the theory that they are not a party to the contract between the insurer and insured. Additionally, due to their agency relationship, the insurer is considered liable instead of the adjuster because insurance companies are held liable for their agent’s actions during employment. Furthermore, insurance personnel were prevented from being named to avert deterrence from insurance-related jobs for fear of litigation.
Many courts throughout the nation have recently held that individual insurance agents, adjusters, and other personnel can be named as defendants in bad faith insurance litigation. This trend indicates an expansion of exposure to adjusters and other agents of insurance companies. Insurance personnel may be named based on negligence theories of liability because insurance agents share a special relationship with their clients and thus have fiduciary duties to them. Breach of these duties can be a source of their liability.
The courts analyzed whether the insurance agent had a duty to the insured that was independent from the insurer. Judges have opined that adjusters owe a duty of care to an insured to reasonably investigate their claim and refrain from misrepresentations. Also, courts have held individual adjusters liable for violations under the Unfair Trade Practices and Consumer Protection Law and negligent claims handling.
An unintentional consequence of naming individual adjusters to the lawsuit may result in preventing insurance companies from litigating in federal courts due to lack of diversity between parties. Also, for plaintiffs litigating bad faith insurance claims, it may be important to consider additional theories of liability based on independent violations of duties by insurance personnel while claims handling. This trend in the law is a positive development for insured individuals whose benefits have been wrongfully denied.
If you believe your insurance claim was handled in bad faith, the Pittsburgh bad faith insurance lawyers at AlpernSchubert P.C. can analyze your contracts and evaluate all possible legal basis for recovering damages. For questions related to insurance contracts and claims, do not hesitate to contact us online or call us 412-765-1888 for a free consultation. Located in Pittsburgh, we serve clients throughout western Pennsylvania, including Allegheny County, Lawrence County, and Washington County.