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A bad faith claim arose from the insurer’s alleged mishandling of the insured’s claim following a fire that destroyed the insured’s home.  The insured had a policy with the insurer which covered his dwelling, personal property, and additional living expenses.

After the fire, the insured’s daughter reported the fire to the insurer.  The insurer’s representative spoke to the insured and his daughter to gather information about the fire and conducted an inspection.  The insurer’s representative had meetings with the insured and his daughter to review the policy coverage, limits, terms, and conditions.

The insurer’s representative determined estimates for the dwelling, however, the insured did not agree with these estimates.  The insured demanded appraisal, but the insurer objected to the appraiser chosen by the insured because they felt he was not a disinterested independent appraiser.

The insured did not appoint another appraiser and just continued to send letters requesting the policy limit.  The insured did not hire a contractor or builder to commence rebuilding his home.

With regard to the personal property, the day after the fire the insurer’s representative met with the insured and his daughter and provided them with personal property inventory forms.  The insured did not provide a complete inventory list to the insurer within 60 days as the policy required.  The insured did provide a partial inventory list and the insurer did give the insured an advance amount of money while awaiting a complete inventory list from the insured.

With regard to the additional living expenses, the insured told the insurer that he wanted to stay with his daughter in her home.  The insured requested that the insurer provide a certain amount to his daughter each month since he was residing there,  yet the insurer felt this amount was unreasonable and refused to pay that amount.

The insured filed a multiple count complaint against the insurer including bad faith.  The insurer submitted a motion for partial summary judgment on the insured’s bad faith claim. The insurer argued that the insured failed to prove by clear and convincing evidence that the insurer acted in bad faith in the handling of the insured’s claims.

The insured argued that sufficient facts do exist to raise a genuine issue of material fact regarding whether the insurer acted by clear and convincing evidence in bad faith.  The insured pointed to various conduct of the insurer to support his claim including alleged failure to communicate, refusal to answer inquiries, and  denial of amounts requested and payments on personal property.

The court found that most of the alleged conduct attributed to the insurer by the insured either did not occur or blatantly contradicts the record.  The remaining conduct does not suggest bad faith.

The insured failed to establish that the insurer lacked a reasonable basis for denying benefits under the insured’s dwelling, personal property, or additional living expenses.

It is clear from the plain language of the policies, and supported further by the insurer’s investigation of  the claim, tender of payment, and extension of deadlines for payment under the policies even where the insured failed to satisfy those deadlines.  The insurer took immediate steps to resolve the claim. The insurer’s estimates and actions were reasonable and did not amount to bad faith.

The court held that the insured did not establish a bad faith claim against the insurer and granted the insurer’s partial summary judgment motion with regard to the bad faith claim.

Date of Decision: September 22, 2008

Littleton v. State Farm Fire & Cas. Co., U. S. District Court for the Middle District of Pennsyvlania, No. 07-1515, 2008 U.S. Dist. LEXIS 73278 (M.D. Pa. Sept. 22, 2008)(Rambo, J.)