February 25, 2011

Recently, a Philadelphia Court of Common Pleas Judge rejected an insurer’s argument that it should not be held responsible for the actions of an independent adjuster.  In Grigos v. Certain Underwriters at Lloyd’s, London, December Term, 2008, No. 1907, the insurer, through its managing general agent, hired an independent adjuster to handle this first party fire claim.

It was alleged, throughout the adjustment of the claim, that the independent adjuster misrepresented the policy limits and exclusions when negotiating with the insured’s public adjuster.  Furthermore, it was alleged that the independent adjuster delayed payment on covered losses which exacerbated the insured’s losses.  Finally, the independent adjuster allegedly denied the insured’s request for appraisal.  When the insured retained counsel and sued requesting that the Court compel appraisal, the independent adjuster agreed to the request.

Ultimately, the insurer paid all of the insured’s claims, which extinguished the claim for bad faith for breach of contract.  However, the Judge granted the motion for summary judgment on the statutory bad faith claim, finding that the independent adjuster’s actions were malicious, incompetent and ignorant and that he acted with bad faith, all of which were attributable to the insurer.  Ultimately, the case settled before the trial of the statutory bad faith claim.