SEPTEMBER 2017 BAD FAITH CASES: NO BAD FAITH WHERE (2) LOW BUT REASONABLE SETTLEMENT OFFER, OR (2) FOR FAILING TO INCREASE OFFER WHERE INSURED WOULD ACCEPT NOTHING LESS THAN POLICY LIMITS (Philadelphia Common Pleas)

The insured filed a UIM claim. The insurer ultimately offered $25,000 to settle the claim, but the insured indicated that he would not accept any amount less than the maximum policy limit of $50,000. Upon reviewing more claim information, the insurer increased its valuation to $28,000, but did not communicate this to the insured due to his earlier refusal to settle for less than $50,000. Pursuant to the terms of the policy, the insured requested arbitration of the dispute.

The arbitration panel awarded the insured $45,000. The insured filed suit against the insurer for bad faith, arguing that insurer’s final settlement offer of $25,000 was approximately half of the value of the ultimate arbitration award. The insured also cited insurer’s failure to notify him of its claim valuation increase.

The insurer moved for summary judgment, arguing that its offer had a reasonable basis and that it did not act with an improper purpose in evaluating the insured’s claim. The Court agreed with the insurer, and held “an insurer that makes a low but reasonable estimate of [an insured’s] loss does not act in bad faith in making a settlement offer based upon its estimation.”

The Court further reasoned that insurer did not act in bad faith because it evaluated relevant information concerning the insured’s claim, and the settlement offers were not arbitrary. Lastly, the insurer did not act in bad faith by failing to communicate its increased valuation to the insured because the insured unambiguously indicated that he would not settle for less than $50,000.

Date of Decision: August 17, 2017

Boleslavksy v. Travco Insurance Co., No. 151000886, 2017 Phila. Ct. Com. Pl. LEXIS 257 (Phila. C.C.P. Aug. 17, 2017) (Anders, J.)