In a previous post, Insurance Company Acting in Bad Faith? Pennsylvania Protects Policyholders if Facts Are Plead, I discussed the importance of Pennsylvania’s insurance bad faith statute1 and how insurers routinely attempt to avoid litigating the substance of those bad faith claims by filing motions to dismiss alleging pleading deficiencies. Recently, the District Court for the Middle District of Pennsylvania rejected an insurance company’s argument that an insured could not make a bad faith claim because, although low, its damages estimate was reasonable because it was based on inspections of the property…its own self-serving inspections.

In that case,2 a dump truck crashed into an insured’s house. After the homeowner’s insurance company investigated the damage to the insured’s house, a payment of $558.91 was issued to the insured. Unsatisfied with the meager payment, the insured then hired a public adjuster, who determined the value of the loss to be approximately $39,000. Another company thereafter prepared an estimate on behalf of the insured totaling approximately $40,000. The insurance company of the driver of the vehicle that cut-off the dump truck causing it to crash later determined that the insured’s house sustained “significant structural damage” and estimated damages to be about $60,000.

Nevertheless, the homeowner’s insurance company refused to pay the insured for the actual damage to her house in line with those damages estimates. When the insured filed a lawsuit for breach of insurance contract and bad faith, the insurance company sought to dismiss the bad faith claim maintaining that while its damages estimate was lower than the insured’s estimates, it was reasonable on its face because it was based on its inspections and argued that does not amount to bad faith.

Ultimately, the court allowed the insured’s bad faith claim to proceed because it found that, given the extreme disparity between the insured’s and insurance company’s estimates, the insurance company’s estimate was not a low but unreasonable estimate of the damages. In its findings, the court noted that the insured had provided evidence showing the true extent of her claimed damages.
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1 42 Pa.Cons. Stat. § 8371.
2 Meiser v. State Farm Fire & Cas. Co., No. CV 3:17-2366, 2018 WL 4680055 (M.D. Pa. Sept. 28, 2018).

  • Jim Johnson

    It appears that SF’s goose was cooked when the tortfeasor’s
    estimate came in even substantially higher than the PA’s and contractor’s
    estimates. I would loved to have inspected the damage and reviewed the estimates.

  • shirley heflin

    Dear Mr. LaSalle:

    What a happy ending to a matter that didn’t require litigation, but since the Insured was forced into it, I’m glad they won on both the breach of contract and bad faith cause of actions!

    Respectfully,
    SHIRLEY HEFLIN
    Tampa, FL