While auto insurance is an important resource for accident victims in terms of recovery, things don’t always go smoothly in filing a claim and receiving benefits under one’s policy. This is why, in addition to exploring potential personal injury issues following an accident, crash victims may also need to explore the possibility of litigation against their insurance carrier.

Insurance bad faith is an area that has been heavily litigated here in Pennsylvania. Part of the reason for this is that the state statute recognizing the right to sue for bad faith is rather meager in guidance. One of the important issues the statute does not address, for instance, is the definition of bad faith. 

Case law in Pennsylvania has established bad faith as an insurance company’s denial of a claim with no reasonable basis. In order to demonstrate bad faith, a plaintiff must be able to prove by clear and convincing evidence that the insurance company either knew of the lack of reasonable basis for denying the claim or acted with reckless disregard to the lack of reasonable basis.

It should be pointed out that providing bad faith is not an easy matter. This is true not only because what qualifies as a reasonable basis can be rather broad, but also because of the requirement of proving an insurance carrier’s intention or mental state in denying a claim and the fact that a heightened burden of proof is applied.

In our next post, we’ll continue this discussion and look at a couple relatively recent cases in bad faith insurance and how they have impacted this area of litigation.