In Johnson v. Progressive Insurance Company, the insured’s car was rear-ended by another vehicle, resulting in a knee injury. The insured’s automobile insurance included $100,000 in underinsured motorist (“UIM”) benefits. Over one year after the accident, the insured advised the insurer that he intended to pursue his UIM coverage. Within days, the insurer acknowledged the claim and promptly consented to the insured’s request to settle the underlying tort action against the driver of the other car.
One month after the insured settled his tort claim, the insurer requested documentation to support the nature and extent of the insured’s injuries, as well as information regarding the insured’s five prior automobile accidents. Instead of providing the requested documentation, the insured made a demand for arbitration and suggested that the insurer’s request relating to the prior accidents was made in bad faith. The insured did not provide the insurer with permission to review his medical records for another month, and the insurer did not receive all of the medical records for an additional four months.
The insured demanded the full amount of UIM coverage of $100,000, and the insurer offered $30,000. At arbitration, the insured was awarded $75,000. The insured subsequently sued the insurer for bad faith. The trial court granted the insurer’s motion for summary judgment, and the insured appealed.
The Superior Court affirmed the trial court, stating that there was “no question that the claim was handled promptly and professionally by the insurer.” The court found that the facts involved nothing more than a normal dispute between an insured and insurer over the value of an UIM claim.
The court noted that the insurer’s offer was slightly less than fifty percent of the insured’s award, and emphasized that bad faith is not present merely because an insurer makes a low but reasonable estimate of an insured’s damages. The court stated that allowing an action to proceed under these facts “would invite a floodgate of litigation any time an arbitration award is more than an insurer’s offer to settle, even though the award is substantially below the insured’s demand.”
Date of Decision: December 28, 2009
Johnson v. Progressive Ins. Co., No. 3173 EDA 2008, Superior Court of Pennsylvania, 2009 Pa. Super. LEXIS 4988, 987 A.2d 781 (Pa Super. Ct. December 28, 2009) (Bowes, J.)