JANUARY 2010 BAD FAITH CASES TESTIMONY OF INSURED’S PUBLIC INSURANCE ADJUSTER EXCLUDED ON BAD FAITH CLAIM BUT ALLOWED ON INSURER’S ALLEGED VIOLATION OF THE UIPA (Middle District)
In Hered, LLC v. Seneca Insurance Company, the insurer denied the insured’s claim for a fire loss and damage to its business premises on the basis that the insured fraudulently misrepresented the functioning of the sprinklers in the insured building. The insured sued the insurer for breach of contract and bad faith. The insurer filed a motion to exclude expert testimony of the public insurance adjuster who had been hired by the insured to adjust its fire loss. The insurer argued that a public adjuster should not be allowed to testify that the insurer acted in bad faith in handling the insured’s claim and failing to pay the claim.
At oral argument, the insured’s counsel conceded that the expert was not qualified and competent to testify that the insurer acted in bad faith. The court held that while expert testimony may be appropriate to establish that an insurer lacked a reasonable basis for denying an insured’s claim, in the present case, the insured could not present expert testimony regarding the bad faith claim. Accordingly, the court granted the insurer’s motion to exclude expert testimony with respect to the bad faith claim.
The court denied the insurer’s motion to exclude expert testimony with respect to the expert’s opinion that the insurer had violated the Unfair Insurance Practices Act (UIPA). The court found that the probative value of the expert testimony substantially outweighed any danger of unfair prejudice to the insurer and that any possible prejudice could be cured by an appropriate jury instruction.
Date of Decision: February 21, 2008
Hered, LLC v. Seneca Ins. Co., Civil Action No. 3:CV-06-0255, United States District Court for the Middle District of Pennsylvania, 2008 U.S. Dist. LEXIS 111943 (M.D. Pa February 21, 2008) (Blewitt, U.S.M.J.).