Wednesday, November 21, 2007

insurance - denial - bad faith

Greene v. United Services Automobile Assn. - Superior Court - November 20, 2007

http://www.aopc.org/OpPosting/Superior/out/a20010_07.pdf

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.

>