What Is The Time for Responding to a Defense Tender?
The insurer has 10 days to acknowledge the receipt of a claim. 31 Pa. Code §§ 146.5 – 146.7.
An insurer must accept or deny a claim within 15 days of receipt of proof of loss, unless more time is needed, in which case the insurer must notify the insured of that and continue to do so every 45 days until a coverage determination is made. 31 Pa. Code §§ 146.5 – 146.7.
Does Reserving Rights Create a Conflict of Interest?
A reservation of rights does not automatically constitute a conflict of interest between the insurer and insured. Yaron v. Darwin Nat’l Ins. Co., 2011 Phila. Ct. Com. Pl. Lexis 167 (2011).
A conflict of interest arises between an insured and insurer when the company’s pursuit of its own best interests in the litigation is incompatible with the best interests of the insured. Kvaerner U.S. Inc. v. One Beacon Insurance Company, 2005 Phila. Ct. Com. Pl. Lexis 377 (2005).
Does a Reservation of Rights Create Additional Duties?
None found.
What Must Be Done If A Conflict of Interest Exists?
Where the conflict of interest between the insurer and the insured raises a question as to the loyalty of the insurer’s chosen counsel in representing the insured, the insured is entitled to choose its counsel, whose reasonable fee must be paid by the insurer. Kvaerner U.S. Inc. v. One Beacon Insurance Company, 2005 Phila. Ct. Com. Pl. Lexis 377 (2005).
Who Is Responsible for Fees of Independent Counsel?
Insurer. Kvaerner U.S. Inc. v. One Beacon Insurance Company, 2005 Phila. Ct. Com. Pl. Lexis 377 (2005).
What Are Independent Counsel’s Obligations?
No cases found.
What Settlement Duties Exist?
No cases found.
What Actions May Result in a Claim for Bad Faith?
Statute: Pennsylvania’s bad faith statute, 42 Pa. Cons. Stat. § 8371 provides that in “an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions: (1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%; (2) Award punitive damages against the insurer; and (3) Assess court costs and attorney fees against the insurer. 42 Pa. Cons. Stat. § 8371
Breach of implied covenant of good faith and fair dealing: An insurer who refuses to settle a claim that could have been resolved within policy limits without “a bona fide belief… that it has a good possibility of winning,” it breaches its contractual duty to act in good faith and its fiduciary duty to its insured. Birth Center v. St. Paul Cos., 787 A.2d 376 (Pa. 2001).
Bad faith claim handling: An insurer who does not have a reasonable basis for denying a claim and who knows or recklessly disregarded its lack of reasonable basis in denying the claim may be found to have acted in bad faith. Terletsky v. Prudential Prop. & Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super. Ct. 1994).
Are Attorney’s Fees Recoverable in Insurer-Insured Dispute?
Pennsylvania’s bad faith statute for insurance actions provides that, “[i]n an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions: (1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%. (2) Award punitive damages against the insurer. (3) Assess court costs and attorney fees against the insurer. 42 Pa. Cons. Stat. Ann. § 8371.
Are Punitive Damages Recoverable in Insurer-Insured Dispute?
Pennsylvania’s bad faith statute for insurance actions provides that, “[i]n an action arising under an insurance policy, if the court finds that the insurer has acted in bad faith toward the insured, the court may take all of the following actions: (1) Award interest on the amount of the claim from the date the claim was made by the insured in an amount equal to the prime rate of interest plus 3%. (2) Award punitive damages against the insurer. (3) Assess court costs and attorney fees against the insurer. 42 Pa. Cons. Stat. Ann. § 8371.
Alternative Coverage Options
Whether a particular loss is within the coverage of an insurance policy is such a question of law and may be decided on a motion for summary judgment in a declaratory judgment action.” State Farm Mut. Auto. Ins. Co. v. Universal Underwriters Ins. Co., 657 A.2d 1252, 1255 (Pa. Super. 1995), rev’d on other grounds, 701 A.2d 1075 (Pa. 1997).
Relevant Statutes
Declaratory Judgment – Pa. Cons. Stat. § 7532
“Courts of record within their respective jurisdictions have the power to declare rights, status, and other legal relations, whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for. The declaration may be either affirmative or negative in form and effect, and such declarations shall have the force and effect of a final judgment or decree.”
Bad Faith Statute – 42 Pa. Cons. Stat. § 8371 (see above).
Pennsylvania’s Unfair Insurance Practices Act – 40 Pa. Cons. Stat. §§ 1171.1, does not provide a private cause of action. D’Ambrosio v. Pennsylvania Nat’l Mut. Cas. Ins. Co., 431 A.2d 966 (Pa. 1981);