MARCH 2017 BAD FAITH CASES: BAD FAITH CLAIMS ARE PREDICATED ON A DENIAL OF BENEFITS (Western District)
This dispute arose after an insurer denied underinsured motorist coverage to its insured. The Insured later sued for breach of contract and for violations of Pennsylvania’s Bad Faith Statute, 42 Pa. C.S. § 8371. The Court dismissed the breach of contract claim and held that because there was no coverage under the policy, the insured could not sustain a bad faith claim. The Court explained that because bad faith claims are predicated on a denial of benefits, an insurer cannot act in bad faith where there was no coverage, and the insurer was never obligated to pay.