The short answer is Yes! This is call a “Bad Faith” claim. When you purchase an insurance policy, whether for Home, Auto, Life, etc., the insurance company agrees to cover certain issues that arise. These issues are called “claims” in the insurance industry. For example, you would make a claim with your insurance company if you are in an auto accident.
The insurance policy you purchase will come with a large document explaining what is covered and what isn’t covered. This document is supposed to make it very clear what claims you can make. However, a quick review who prove to anyone that these policies are not clear. And that is exactly what the insurance industry intended when drafting these policies. Because the policies are not clear, your insurance company may refuse to cover a claim when you think it should.
Under Pennsylvania Law, 42 PA.C.S. 8371, you may sue your insurance company under an allegation of “Bad Faith” if you believe you were denied a claim unfairly. The Law defines “Bad Faith” as: 1. a frivolous or unfounded refusal to pay, 2. a failure to investigate into the facts of a claim, or 3. a failure to communicate with the insured. If you think the insurance company’s actions fall within one of these definitions, then you must prove: 1. the insurance company did not have a reasonable basis for denying coverage; and 2. the insurance company knew or recklessly disregarded its lack of a reasonable basis when it denied coverage of your claim.
Examples of bad faith include failure to provide a defense to an insured individual, a refusal to pay a claim, delay in paying a claim, or misconduct by the insurance company during the pendency of a claim. If you prevail, you may receive the fair value of your claim in damages, interest in your claim from the date the claim was made in the amount equal to prime rate of interest plus 3%, and award of punitive damages, and an award of attorney’s fees and court costs.
If you think you have been treated unfairly by an insurance company, give us a call so that we may review your policy and see if you have a bad faith claim.