insurance - denial - bad faith
Greene v. United Services Automobile Assn. - Superior Court - November 20, 2007
The court denied the plaintiffs' claim that their insurer denied their homeowner's insurance claim in bad faith. The court held that in order for a party to succeed on a statutory claim of bad faith under 42 Pa. C.S. sec. 8371 (actions on insurance policies) that party must fulfill a two-prong test. A plaintiff must show, by clear and convincing evidence, that
- the insurer did not have a reasonable basis for denying benefits under the policy and
- knew or recklessly disregarded its lack of a reasonable basis in denying the claim.
The court elaborated that the "motive of self-interest or ill will" level of culpability is not a third element required for a finding of bad faith, but it is probative of the second element, i.e.., the insurer knew or recklessly disregarded its lack of reasonable basis in denying the claim.