MAY 2015 BAD FAITH CASES: COURT GRANTS SUMMARY JUDGMENT ON BAD FAITH CLAIM BASED ON REASONABLENESS OF INSURER’S VALUATION OF INSURED’S UIM CLAIM BY A SEASONED ADJUSTER (Philadelphia Federal)

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In Insetta v. First Liberty Insurance Cop., the insurer made a verbal offer of $34,000 to the insured plaintiff, to settle his UIM claim. The insurer’s adjuster placed a monetary value on the claim based upon a review of plaintiff’s medical records and economic data showing wage losses due to the accident; and also took into account the $15,000 already paid to plaintiff by the tortfeasor’s insurance. The insurer’s valuation further included an acceptance of the full disability time/wage loss sought by plaintiff. Nevertheless, the insured rejected the insurer’s settlement offer.

The insured and his wife brought claims for breach of contract, bad faith, and loss of consortium. Plaintiffs based their bad faith claim on the allegedly low figure offered, and also contended that the insurer’s “reliance on the findings of [a specific doctor] as to Plaintiff’s injuries exhibits that Defendant acted only in a self-interested fashion.” Further, the insureds alleged that the insurer’s adjuster did not engage in a good faith review of plaintiff’s injury. In support of this argument, they pointed to the adjuster’s alleged “failure to review the Plaintiff’s file before her deposition,” “the fact that [the adjuster] did not have the authority to settle claims for more than $40,000 without further authorization,” “[the adjuster’s] failure to consult a physician as to Plaintiff’s injuries or to have a records review done by a physician,” and her “inability to answer certain questions relating to the computation of Plaintiff’s injury claim.”

The insurer moved for summary judgment on the bad faith claim.

The Court set forth the familiar two-part test that any bad faith plaintiff must satisfy by clear and convincing evidence to support a claim of bad faith under 42 Pa. C.S. § 8371: “(1) that Defendant lacked a reasonable basis for denying benefits; and (2) that Defendant knew or recklessly disregarded its lack of reasonable basis.”

In granting summary judgment to the carrier on the bad faith claim, the Court reasoned that plaintiffs did not show by clear and convincing evidence that the valuation the insurer placed on plaintiff’s injuries was unreasonable. The Court also observed that the insurer’s adjuster had forty-two years of experience as a claims adjuster, and undertook a “substantial and thorough investigation” into plaintiffs’ UIM claim, which provided a reasonable basis for the insurer’s decision. Because Plaintiffs failed to show the insurer lacked a reasonable basis, the Court dismissed the bad faith claim and granted the insurer’s motion for partial summary judgment.

Date of Decision: March 20, 2015

Insetta v. First Liberty Ins. Corp., Civil No. 14-1890, 2015 U.S. Dist. LEXIS 34798, (E.D. Pa. March 20, 2015) (Kelly, J.)

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