In Jones v. Nationwide Property and Casualty Insurance Company, the insured was involved in an automobile accident. She held collision insurance with the insurer with a $500.00 deductible. The insurer paid the insured the amount of her loss minus the $500.00 deductible. The insurer then pursued a subrogation action against the other driver, and it received an amount greater than $500.00 but less than the amount it had already paid to the insured.
Pursuant to an Insurance Department regulation, 31 Pa. Code § 146.8(c)
, the insurer did not reimburse the insured for the full amount of her deductible, but rather a pro rata share. The insured filed a class action complaint, alleging that the insurer’s policy of reimbursing only a pro rata share of the deductible constituted a breach of contract, bad faith, conversion, and unjust enrichment.
The court used a case from the Eastern District of Pennsylvania to determine that Insurance Department Regulation 31 Pa. Code § 146.8(c)
, which allows the insurer to pay a pro rata share, was indeed legal. Harnick v. State Farm Mut. Ins. Co.
, (E.D. Pa. Mar. 6, 2009). In that case, which also was tried under Pennsylvania substantive law, the court ruled that 31 Pa. Code § 146.8(c)
fit directly within the scope of authority delegated to the department by the General Assembly. Because the court in this case adopted reasoning in Harnick
there was no possible bad faith because the insureds had failed to allege that the insurer committed any impermissible behavior under Pennsylvania law.
Date of Decision: May 24, 2010