{"id":31931,"date":"2016-03-31T19:26:51","date_gmt":"2016-04-01T00:26:51","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/uncategorized\/insurance-company-liability-for-bad-faith-in-pennsylvania.html"},"modified":"2017-07-06T16:18:17","modified_gmt":"2017-07-06T21:18:17","slug":"insurance-company-liability-for-bad-faith-in-pennsylvania","status":"publish","type":"corporate","link":"https:\/\/corporate.findlaw.com\/corporate-governance\/insurance-company-liability-for-bad-faith-in-pennsylvania.html","title":{"rendered":"Insurance Company Liability for Bad Faith in Pennsylvania: Plaintiff’s Perspective"},"content":{"rendered":"
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Cause of Action for Bad Faith<\/b><\/p>\n

The idea that a person could sue his insurance company<\/a> for its misdeeds in handling claims under a policy of insurance is a relatively recent concept in Pennsylvania. For years the legislature invested the power of enforcement in the Insurance Department through the Unfair Insurance Practices Act, 40 P.S. Section 1171.1 et seq<\/a>. This law specifically prohibited private lawsuits against insurance companies by the public. In addition, the Department was given a broad range of enforcement tools to punish wrongdoing. Justice was in the hands of a bureaucracy, which was oftentimes slow and unwilling to institute legal action against carriers doing business in the Commonwealth.<\/p>\n

Plaintiff’s attorneys were able to find ways around the statute through the use of the common law remedies of breach of contract as well as fraud and deceit. The courts, however, refused to acknowledge a cause of action in trespass for "bad faith". See D’Ambrosio v. Pennsylvania National Mutual Casualty Insurance Company<\/i>, 494 Pa. 501, 431 A.2d 966(1981). Private lawsuits against insurance companies were permitted under the Pennsylvania Unfair Trade Practices Act and Consumer Protection Law, 73 P.S. 201<\/a> , (hereinafter referred to as the Consumer Protection Law). See Pekular v. Eich<\/i>, 355 Pa. Super. 276, 513 A.2d 427(1986).<\/p>\n

Private Cause of Action for Bad Faith<\/b><\/p>\n

In 1990, the Pennsylvania Legislature enacted the legislation, which permits a private cause of action against insurance companies. 42 Pa.C.S. Section 8371<\/a> states that if a court finds that an insurer acted in bad faith:<\/p>\n