When processing claims, insurance companies have an obligation to act in good faith towards their insureds. Insurance companies are not allowed to put their own financial interests ahead of the financial interests of their insureds while processing claims. If you believe that an insurance company has failed to act in good faith toward you, we can help.

Bad faith issues arise in the handling of claims brought against you (third party claims) and in claims that you make for benefits under your own policy (first party claims).

In Pennsylvania, “Bad Faith” is the “frivolous and unfounded” refusal to pay policy benefits, with “conduct which imports a dishonest purpose” and violation of breach of the insurer’s well established duty of good faith and fair dealing through “some motive of self-interest or ill will.”    In these cases, the Plaintiff has the burden of proof by “clear and convincing evidence” that the insurer (1) lacked a reasonable basis for its denial of coverage or benefits, and (2) that the insurer either knew, or recklessly disregarded its lack of a reasonable basis in denying the claim. Terletsky v. Prudential Prop. and Cas. Ins. Co., 649 A.2d 680 (Pa.Super. 1994).

Bad faith is not limited to an insurer’s denial of coverage or refusal to pay policy benefits. Bad Faith “encompasses a wide variety of objectionable conduct” like failing to conduct a good faith investigation of claims, failing to communicate with the insured, misrepresenting policy terms or limits, arbitrarily refusing to accept evidence, and making unreasonable “lowball” settlement offers to an insured.

In New Jersey, a cause of action for first party bad faith is not yet recognized. However, in situations where claims have been brought against you, your insurance company has an affirmative duty of good faith to get the claim settled within your policy limits in order to protect your personal assets from a judgment.