JANUARY 2016 BAD FAITH CASES: NO BAD FAITH WHERE INSURER AND INSURED HAVE REASONABLE BACK AND FORTH NEGOTIATIONS OVER VALUE (Middle District)

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In Williams v. Progressive Northern Insurance Coverage, the insured made a UIM claim.  The insurer increased its offer to the insured over time, after various stages of investigation; but the insured demanded policy limits and would not settle. Rather, the insured brought a bad faith claim, which the court ultimately rejected.

The court observed that some examples of bad faith could include “a frivolous or unfounded refusal to pay, failure to investigate the facts, failure to communicate with the insured, failure to engage in settlement negotiations, and unreasonable delay.”  Further: “While the insurer’s duty of good faith and fair dealing does not allow it to protect its own interests at the expense of its insured’s, an insurer also need not ‘submerge its own interests in favor of those of its insured, and investigating and litigating a claim does not constitute bad faith.’”

In this case, the court observed that the insurer did investigate the claims and did makes its offers based on its investigation at the time of that offer.  The court concluded “it appears that the [the insurer] was reasonably attempting to gather all of the information necessary to properly evaluate the claim.” Moreover, the insured could not put on clear and convincing evidence, that the insurer “was motivated by self-interest or ill will in handling” the claim.

While there is considerable case law that proving self-interest or ill will are not elements of a bad faith claim, the court’s opinion is clear that the insured could not meet the first element of any bad faith claim: an unreasonable denial of coverage where coverage is due.

Date of Decision:  December 4, 2015

Williams v. Progressive Northern Ins. Co., CIVIL ACTION NO. 3:14-1876, 2015 U.S. Dist. LEXIS 162572 (M.D. Pa. December 4, 2015) (Mannion, J.)

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