Insurance law

Ill-will Not Necessary to Prove Bad Faith

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Justice-Scale-ImageThe Pennsylvania Supreme Court recently held that “ill-will” or “self-interest” is not necessary for a policyholder to successfully sue an insurer for bad faith.

Justice Max Baer writes in Rancosky v. Washington Natural, “Additionally, we hold that proof of an insurance company’s motive of self-interest or ill-will is not a prerequisite to prevailing in a bad faith claim under Section 8371, as argued by Appellant. While such evidence is probative of the second Terletsky prong, we hold that evidence of the insurer’s knowledge or recklessness as to its lack of a reasonable basis in denying policy benefits is sufficient.”

The two prong test developed in the 1994 Superior Court opinion of Terletsky v. Prudential remains. A party suing an insurer must prove “(1) that the insurer did not have a reasonable basis for denying benefits under the policy and (2) that the insurer knew of or recklessly disregarded its lack of a reasonable basis.”

For now, the precise effect of Rancosky is yet to be seen; however, what we know is that more plaintiff’s claims will survive motions for summary judgment. A significant win for the plaintiff’s bar, not so much for the defense.

See, Penn. Supreme Court: ‘Ill-will,’ ‘self-interest’ not necessary to win insurance bad-faith claim. 

 

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Pennsylvania PIP Trivia

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A motor vehicle accident occurs in Pennsylvania. The injured party has a NC driver’s license and a NC registered vehicle with a NC insurance policy, but he or she now live in PA. Are they entitled to first party benefits under Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”)? The answer is no. Here’s why…

First Party Benefits, at a minimum, provide up to $5,000.00 of medical coverage for an injured insured. At the insured’s option they may also provide, wage loss and funeral benefits. First party benefits under Pennsylvania Motor Vehicle Financial Responsibility

Pursuant to Pugh, “there are two requirements for determining an insured’s entitlement to recover first party benefits: (1) the insured vehicle must be a vehicle of the type required to be registered, such as an automobile, and (2) the insured vehicle must actually be registered in the Commonwealth.” Since the insured vehicle in the instant case is not registered in Pennsylvania, the insurer is not obligated to pay first party benefits under MVFRL. Pugh v. Government Employees Ins. Co., 380 Pa. Super. 606, 610 (Pa. Super. Ct. 1989).

As an aside, PA law also requires one to register their vehicle within 20 days of moving to the state.