"> July 2016 Bad Faith Cases | Low But Reasonable Loss Estimate

July 2016 Bad Faith Cases: A Low But Reasonable Loss Estimate Cannot Be Bad Faith (Western District)

In Gowton v. State Farm Fire & Casualty Company the insured’s sole allegation of bad faith was a conclusory averment that a refusal to pay in the amounts alleged due was bad faith. The complaint also averred at one point that the insurer relied on loss calculations that were unsupportable, without any explanation of why they were inadequate. Under Pennsylvania case law, a low but reasonable estimate of a loss is not bad faith. Thus, an unsupported claim that an insurer estimated low, by itself, cannot be bad faith. The court dismissed with leave to file an amended complaint.

Date of Decision: June 29, 2016

Gowton v. State Farm Fire & Cas. Co., No. 15-1164, 2016 U.S. Dist. LEXIS 84454 (W.D. Pa. June 29, 2016) (Bissoon, J.)

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