May 2010 BAD FAITH CASES BAD FAITH CLAIM SURVIVES MOTION TO DISMISS SETTLEMENT OFFER BY THE INSURER ALLEGED TO BE SIGNIFICANTLY LOWER THAN ACCEPTABLE (Philadelphia Federal)

In Taylor v. Government Employees Insurance Company, the insured was driving when a man in another vehicle struck her vehicle, causing her multiple injuries (some of which may be permanent).  The driver of the vehicle who hit the insured carried an insurance policy that limited bodily injury liability protection to $50,000, which was far less than the amount for the injuries suffered by the insured.  The insured demanded $100,000 from the defendant, her insurer, under her own insurance policy that provided $100,000 in underinsured motorist coverage.  The insurer had not paid the insured, as it had only offered $15,000 as a settlement.  The insured sued for breach of the insurance policy and bad faith, and the insurer filed a Motion to Dismiss both claims.

With respect to the bad faith claim, the court determined that the complaint alleged that the insured’s injuries were numerous and severe and that the insurer failed to act or acted unreasonably.  Therefore, a jury could reasonably infer that the insurer did not have a reasonable basis for offering only $15,000 out of the $100,000 of insurance coverage, and therefore the court denied the insurer’s Motion to Dismiss the bad faith claim.

Date of Decision: April 29, 2010

Taylor v. Gov’t Employees Ins. Co., Civil Action No. 10-914, United States District Court for the Eastern District of Pennsylvania, 2010 U.S. Dist. LEXIS 39708, (E.D. Pa. Apr. 29, 2010) (Padova, J.).