Is My Insurance Company Acting in Bad Faith? Insights from Pennsylvania Accident Attorney Chad Rankin of RG Injury Law

Pennsylvania law requires insurance companies to act in good faith when handling car accident cases. See 42 Pa.C.S.A. 8371. If the insurance company does not, then they are acting in bad faith. Bad Faith is not specifically defined by the law, but judges ruling on cases under that law have provided guidance. One of the key cases defined bad faith as any frivolous or unfounded refusal to pay proceeds of a policy; it is not necessary that such refusal be fraudulent. For purposes of an action against an insurance company for failure to pay a claim, such conduct imports a dishonest purpose and means a breach of a known duty (i.e. good faith and fair dealing), through some motive of self-interest or ill will; mere negligence is not bad faith. See Terletsky v. Prudential Property, 649 A.2d 680 (Pa. Super. 1994). The Court went on to explain that the car accident victims must show:

1. The insurance company did not have a reasonable basis for denying benefits; and
2. The insurance company knew of or recklessly disregarded its lack of a reasonable basis in denying the claim.

This explanation has grown to be used and accepted by both the Pennsylvania and Federal Courts when looking at bad faith in car accidents. In 2017, the Pennsylvania Supreme Court officially adopted this test but added that car accident victims must prove the above by clear and convincing evidence. See Rancosky v. Washington National Insurance, 28 WAP 2016 (Pa. 9/28/17). The Supreme Court case also clarified that the car accident victim did not have to prove that the insurance company had an evil motive or ill will, but that it could be used to show bad faith.

Common Bad Faith Actions or Inactions   

1. Denial of Benefits / Refusal to Pay – common examples of bad faith under this category include an insurance company misrepresenting the amount of coverage or benefits under the policy, refusal to accept evidence relevant to the claim, “lowball” offers which have no relation to the value of the case.
2. Unreasonable Delay – this can occur when the insurance company unnecessarily delays the investigation or evaluation of the claim or does not pay quickly enough once they have determined the value of the claim. It can also occur when the insurance company attorney engages in legal steps that have little or no merit in law or fact for the case.
3. Poor Management / Supervision – this occurs when the insurance company does not efficiently, effectively, and professionally manage the case.
4. Failure to Follow Internal Guidelines – Most insurance companies create guidelines to handle cases. If the insurance company adjusters do not follow the guidelines, they may be acting in bad faith.
5. Failure to Reconsider Initial Position – Insurance companies often make initial determinations about the value of a case upon receipt of preliminary information. As cases develop, they will often receive additional information which should change the initial evaluation. If the insurance company refuses to include this new information in the overall evaluation of the claim, they would be acting in bad faith.
6. Failure to Properly Investigate the Claim – Insurance companies may try to cut corners in order to avoid the time and cost associated with properly investigating a claim. Failure to do so can result in a successful bad faith claim.

The statute of Limitations for a Bad Faith Case

A car accident victim has two (2) years from the time they knew or should have known about the insurance company’s bad faith to bring a lawsuit against them.

Damages

In addition to the value of the claim, the car accident victim may also be entitled to the following damages as a result of an insurance company’s bad faith:

1. Interest – A judge may award interest equal to the prime rate plus 3% for the time the claim was made. The additional damage of interest is not automatic. The judge has the discretion to make this award on a case by case basis.

1. Attorney’s Fees and Costs – In almost all cases within the United States, people pay for their own attorney’s fees and court costs. However, the Pennsylvania bad faith law permits a judge to make the insurance company for the car accident victim’s attorneys fees and court costs in addition to the value of the claim.

1. Punitive Damages – If the evidence shows that the insurance company acted in an outrageous, malicious, wanton, or reckless manner, they could be liable for punitive damages. Punitive damages are designed to punish and are above and beyond the value of the claim.

Chad Rankin and the other attorneys Rankin & Gregory, LLC (RG Injury Law) have handled numerous bad faith cases against insurance companies.

Call us for a no-pressure, car accident injury case consultation at 717.656.5000.

You may think you need car accident lawyers in Philadelphia to win your auto accident injury case. However, our winning record is the result of personalized attention and communication with clients, thorough knowledge of vehicle law in Pennsylvania, and experience with car insurance companies. While we call Lancaster County, Pennsylvania, our home, our PA personal injury law firm fights for clients with injuries and disabilities in need of personal injury lawyers, Social Security SSDI and SSI, Workers’ Compensation lawyers, and/or veterans seeking VA Disability Compensation lawyers throughout the mid-Atlantic region from offices in Lancaster County that include service in Harrisburg, Hershey, Middletown, Annville, Mt. Gretna, Elizabethtown, Columbia PA, Lancaster City, Neffsville, Hempfield Township, Manheim Borough, Manor Township, Manheim Township, Gap, Ephrata, Lititz, Leola, Mt. Joy, Marietta, Akron, Denver, Millersville, Willow Street, Strasburg, New Holland, Paradise, Refton, Quarryville, Rheemstown, West Chester, Coatesville, Exton, King of Prussia, and Malvern. RG Injury Law also fights for people with disabilities in the counties of Lebanon, Philadelphia, Chester, York, Dauphin, Berks, and Montgomery.