If you’re like most people, you probably assume that even the greediest insurance company would rather pay out a small personal injury claim than spend tens of thousands of dollars – literally three times as much as the corporation would have to pay, in some cases – to litigate it. It seems like common sense to us, but in the insurance industry, this sort of logic is sometimes anything but common.
The case began as many motor vehicle accident claims do. Our client, a Bethlehem, Pennsylvania, resident, was involved in an accident at the intersection of Bushkill Drive and Arndt Road in Forks Township. His injuries were severe and permanent, including back strain and sprain as well as herniated, bulging, and protruding discs in multiple regions of his spine.
Since our client was not at fault, he sought compensation for his injuries from the insurance carrier of the driver who caused the collision. Unfortunately, his injuries were so serious that the other driver’s insurance coverage wasn’t enough to compensate him for his damages. The next logical step was to pursue a claim under the underinsured motorist (UIM) portion of our client’s auto insurance policy. After all, he purchased this extra coverage for the purpose of protecting himself. He’d already paid for it, so do not use it in his time of need would have been ridiculous.
As it turned out, our client’s insurance company, Penn National – officially Pennsylvania National Mutual Casualty Insurance Company – didn’t feel the same way. Though the insurer was more than happy to accept our client’s payment for UIM coverage, it wasn’t exactly eager to provide that coverage now that the policyholder needed it. Penn National denied coverage. The insurance company preferred to spend time and money filing nonsensical legal actions to delay or distract from the lawsuit we filed on behalf of our client. The insurer even went so far as to conceal hundreds of pages of documents until a judge ruled that the company had to turn the files over to her to decide whether or not they could be kept hidden. No sooner did the judge make this ruling than Penn National finally agreed to settle the case, aware that the documents would confirm what we had argued all along – that there was no reason for the company to deny coverage to their own policyholder.
This is a perfect, though disturbing, an example of what we call “bad faith.” When you purchase insurance, you enter into a contract – and when an insurer tries to wriggle out of paying a claim with no legal or factual basis for doing so as Penn National did to our client, it is breaching that contract. In reality, paying the claim wouldn’t have even cost the insurer that much, but the company made the mistake of thinking that because the case had a relatively small value, it could get away with denying the claim. Then the insurance company tried to hide any documents that would have explained why coverage was being denied. The insurer dragged this case out for years, unnecessarily harming its own policyholder. Ultimately, we recovered $150,000 from a case that, in all likelihood, would have cost Penn National an amount more along the lines of $50,000 had the insurer only been reasonable enough to pay the claim the first time. You shouldn’t have to fight your own insurance company – but if you do, you want persistent attorneys experienced with bad faith claims on your side.