In Ski Shawnee, Inc., v. Commonwealth Insurance Company, a bridge collapsed on a road leading to the insured’s ski resort, and the road was closed to the public for two days. Approximately 70% of the insured’s patrons typically use the road to access the resort, and they could not access the resort using that road on those days because of the collapsed bridge. The insurer provided the insured with a policy that included business income loss coverage for loss of income the insured sustains and extra expenses it incurs when “caused by action of civil authority that prohibits access to the covered premises.”
The insured filed a claim with the insurer for lost income, and the insurer hired a claim adjuster to determine the appropriate amount of loss. After an evaluation and weeks of correspondence between the parties, the adjuster eventually notified the insured that there would be no coverage under the insurance policy for the loss of income resulting from the closure of the bridge. The insured filed a complaint, bringing causes of action for breach of contract, breach of the Pennsylvania Unfair Insurance Practices Act, and bad faith.
The court determined that while the insured may have lost some income over the two days the bridge was closed, there was no genuine issue of material fact that at least some of Ski Shawnee’s customers were able to access the ski resort via alternate routes on those days. Therefore, no single customer was actually prohibited from accessing the resort, so the income loss coverage provisions of the insurance policy did not apply.
Because the court had decided that the policy did not include coverage for the loss of profits, it also held that the insurer had a reasonable basis for denying benefits under the policy. The court accordingly granted summary judgment on both the breach of contract and bad faith claims.
A private party cannot bring claims under Pennsylvania Unfair Insurance Practices Act and Unfair Claim Settlement Practices Act. As the Court stated, “the UIPA and the UCSP are designed to be implemented and enforced by the Insurance Commissioner of Pennsylvania. As such, Plaintiff, as a private citizen, cannot maintain a claim against Defendant on these statutory and regulatory sections, and Defendant’s motion will be granted on this count as well.”
Date of Decision: July 6, 2010
Ski Shawnee, Inc. v. Commonwealth Ins. Co., No. 3:09-CV-02391, United States District Court for the Middle District of Pennsylvania, 2010 U.S. Dist. LEXIS 67092, (M.D. Pa. July 6, 2010) (Caputo, J.).