In Zimmerman v. State Farm Mutual Automobile Insurance Company, the court was faced with a carrier’s motion to dismiss an insured’s bad faith allegations. The case stems from a May 2010 car accident that caused the insured to suffer serious personal injuries, including a fractured fibula. At the time of the accident, the insured held a policy with the carrier that included underinsured motorist coverage. This coverage required the carrier to pay all sums that the insured is entitled to recover as compensatory damages from the owner of an underinsured vehicle.
The carrier tendered to the insured $100,000, which was the limit of the policy. The carrier subsequently opened a underinsured motorist claim and obtained the insured’s medical records. In June 2011, the carrier made an initial offer on the remainder of the insured’s claim. The insured argued that this offer was inadequate and filed suit against the carrier in the Court of Common Pleas of Schuylkill County, alleging bad faith and breach of contract. The carrier removed to federal court and filed a motion to dismiss.
The insured claimed that it was entitled to discovery on the bad faith claim because a year after the accident, the carrier “made an inadequate offer that did not adequately consider the severity of her injuries.” The insured further alleged that the carrier did not properly investigate her claim or reasonably underwrite the underinsured policy limit. Lastly, the insured argued that the carrier failed to negotiate with her in good faith.
The court reasoned that, although the insured’s allegations were largely conclusory, bad faith claims require a fact-intensive inquiry and the development of a factual record. As such, the court ruled that the insured stated a viable claim and that discovery was appropriate.
Date of Decision: October 12, 2011