Policy-Holder Insurance Coverage Issues
Insurance is intended to spread risk throughout society so that the catastrophic consequences of concentrated risk do not act disproportionately on certain individuals, businesses, or industries. While insurance can insulate an insured from certain risks, the coverage provided by insurance is contractual in nature and subject to the terms and conditions of the policy, state, and federal law. In some cases, insurance companies may attempt to contort state or federal law to disclaim its duty to provide coverage in a matter. In other cases, the insurance company may delay, stall, and fail to act in good-faith regarding a coverage issue.
Insurance companies are frequent players in the litigation game. The experienced attorneys employed by these companies litigate aggressively and understand effective strategies to put pressure on the insured individual. At Meredith & Narine our dedicated insurance coverage lawyers believe that contractual obligations and the expectations of an insured individual or entity should be upheld absent good reason showing otherwise.
Insureds in Pennsylvania Can Protect Their Rights under a “Reasonable Settlement” Standard
In insurance coverage cases insurance companies may decide that it is in the company’s best interest to defend under reservation of rights. A reservation of rights is a statement where the insurer sets forth its interpretations of the rights and obligations under an insurance policy. The reservation of rights notice puts an insured on notice that the insurance company intends defend, but it retains the ability to later disclaim coverage at a later time. Such an approach provides the insurer with a strategic advantage while fulfilling its duties because the company is still able to defend even while investigation potential indemnification issues.
In a July 2015 decision, the Pennsylvania Supreme Court addressed an issue faced by policy holders who have allegedly committed a tort or some other act of wrong-doing. On one hand, the insured has an interest in settling the matter so that the individual or company can move forward. The insurance company, when acting under a reservation of rights or a non-waiver agreement, may determine that it is in the company’s best interest to reject a settlement offer – even a reasonable one – to allow any potential indemnification issues to play out.
In Babcock & Wilcox Co. v. American Nuclear Insurers the court limited an insurer’s ability to deny reasonable settlement offers when in the context of a defense under reservation of right. The court recognized that insurers should not have carte blanche to refuse to consent to an objectively reasonable settlement that is free from collusive conduct. This approach balances the interests of the insurer while accounting for the potentially perilous position a policy-holder can be placed in if the policyholder is verboten from agreeing to a reasonable settlement while under the threat of having to pay the full amount of any potential judgment if the claim, in the end, is not covered by the insurer.
Insured Individuals Can Assign a Bad Faith Insurance Claim in Pennsylvania
When an insurer acts in alleged bad faith and refuses to defend or settle, the insured is left in a difficult situation where they are unable to satisfy the potential judgment. In situations like these, policyholders wonder how they will be able to afford to defend and, ultimately, how they will be able to cover any damages awarded by a jury. For the defendant, the incentive to settle is high, but the settlement strategy may not immediately be obvious due to the apparent lack of resources.
In Pennsylvania, a policy holder who is sued, but whose insurer fails to defend in bad faith is permitted to assign any statutory bad faith claims against the insurer in settlement. The party that is assigned the claim is granted the right to pursue the company for not only the statutory bad faith claim, but also the resulting judgment, interest, and attorney’s fees.
Rely on An Insurance Lawyer with Experienced Handling of Insurance Coverage Issues in Pennsylvania
The experienced insurance litigation attorneys of Meredith & Narine are dedicated to protecting the rights of policy holders and those who have been assigned a claim against an insurer who acted in bad faith. To schedule a confidential legal consultation with an experienced lawyer, call 215-995-2769 or contact us online.