OCTOBER 2006 BAD FAITH CASES COURT HELD PLAINTIFF COULD NOT ESTABLISH PRIMA FACIE BAD FAITH CASE (Third Circuit)
Plaintiff widow’s husband applied for a life insurance policy from Defendant insurer, which was approved and mailed to him on March 3, 2004. The policy provided that the policy year would begin on the date of issue, but that no coverage would be provided until the first premium was paid by the husband while he remained in good health. The husband died unexpectedly on March 10, 2004, the same day he received the policy in the mail; his widow mailed the first premium to Defendant insurer the next day. After a denial of benefits, Plaintiff brought suit alleging breach of contract and bad faith.
The United States Court of Appeals for the Third Circuit found that the payment of the first premium was a condition precedent to liability on the part of Defendant insurer. The Court held that because there was no insurance policy in effect at the time of the husband’s death, Plaintiff could not establish a prima facie case under Pennsylvania’s bad faith statute. The Court affirmed the District Court’s dismissal of Plaintiff’s claim.