In case you missed this Labor Day Weekend Post: WHERE POLICY EXCLUSION WAS CLEAR, AND INSUREDS OFFERED NO ACTUAL FACTS TO MEET THEIR HIGH BURDEN TO PROVE THAT INSURER’S POSITION LACKED A REASONABLE BASIS, SUMMARY JUDGMENT WAS GRANTED TO THE INSURER ON BAD FAITH CLAIM (Philadelphia Federal)
In Leitner v. Allstate Insurance Company, the insureds alleged bad faith on the basis of improper denial of their claim and/or unreasonable delay in the investigation process. The court cited the bad faith statute and the standards imposed by case law, emphasizing the “high bar” an insurance bad faith plaintiff had to leap to make out a case.
At issue was whether a loss was sudden and accidental, which would be covered; or was the result of action occurring over time. The case involved flooding from a burst pipe.
The carrier had the loss inspected and followed up requesting further documentation. It denied the claim on the basis that there was “seepage or leakage over a period of weeks, months, or years, of water, steam or fuel….” The insured’s own plumber found the source of the problem two-fold: the pipe became disconnected due to bad workmanship, and allowed waste to pour into the floor beneath the kitchen; and/or (2) another pipe made of terra cotta running underground just outside the property broke due to age and caused water to accumulate on the basement floor of the property.
The plumber could not tell from the condition of the piping how long the problems had existed but he did state that, based mainly on the amount of accumulated waste and other debris, the piping underneath the kitchen had been leaking for “approximately more than a month” and that the outside piping had been leaking for “more than two weeks, definitely” and probably more than a month. Even altering the number of dwellers using water, his estimate remained that the problems existed for a number of weeks.
The insureds did not offer evidence refuting this testimony or call it into question, which supported the carrier’s position that both the disconnected plastic pipe and the broken terra cotta pipe had been leaking for at least a number of weeks, and therefore the insured’s claim fell within the exclusion.
Thus, by the policy’s clear terms, the insurer’s determination did not lack a reasonable basis, and the bad faith claim was dismissed on summary judgment.