No Bad Faith Found For Change In Auto Policy Terms Prior to Accident

In the recent Lawrence County Court of Common Pleas case of Oesterling v. Allstate Insurance Company¸ PICS Case No. 12-0348 (C.P. Lawrence Co. Feb. 9, 2012 Motto, P.J.), President Judge Dominick Motto found that a carrier’s notice to the injured party Plaintiff of a change in his policy more than one year before the Plaintiff’s accident occurred was sufficient, proper, and did not amount to bad faith conduct.

The change to the policy was the addition of a “household exclusion” which served to prevent the injured party Claimant’s claim for underinsured motorist benefits. The Court granted the carrier’s Motion for Partial Summary Judgment on the statutory bad faith claim presented.

According to the Opinion, after being injured as a result of a motor vehicle accident, the Plaintiff settled the liability limits against the tortfeasor and also obtained the policy limits from the UIM carrier that covered the vehicle he was operating at the time.

The Plaintiff then made a claim for UIM benefits against Defendant Allstate Insurance Company, who insured two other vehicles owned by the Plaintiff at the time of the accident. Allstate denied coverage due to the household exclusion.

The Plaintiff filed suit and asserted that the original policy purchased from Allstate did not contain a household exclusion. Allstate countered that the Plaintiff had received adequate notice of the change in the policy terms approximately 15 months prior to the subject accident.

The Plaintiff was attempting to pursue a claim that Allstate acted in bad faith by denying UIM benefits based upon a household exclusion that was found in a policy amendment that had been mailed to the Plaintiff more than one year before the accident ever occurred. The Plaintiff essentially contended that, when Allstate went to make such a substantial change in the policy terms, more than a mass mailing was required in terms of proper notice of the change to its insureds.

The Lawrence County Court of Common Pleas noted that Allstate had mailed a letter to the Plaintiff that included an “Important Notice” in large bold print, which document indicated the changes made to the policy. In that document, the Plaintiff was also advised to contact his Allstate Insurance agent with any questions.

Judge Motto ruled that Allstate’s reliance on the household exclusion found in the policy change that was sent to the Plaintiff more than a year before the accident did not constitute bad faith. The Court found that Allstate’s notice to the Plaintiff was “at least arguably sufficient and proper.” The Court also emphasized that, once Allstate determined that the Plaintiff was not entitled to UIM coverage, the carrier promptly sent a letter at that point to inform the Plaintiff of its position.

As such, the court stated, “[w]ithout finally deciding whether the household exclusion will ultimately be found to be valid, the Court here finds that Allstate had a right to assert it.”

I do not have a copy of this case. If someone can send it to me, I can share it here on Tort Talk. In the meantime, if you desire a copy of this case, it can be secured from the Pennsylvania Law Weekly Instant Case Service by calling 1-800-276-7427 and given the above-referenced PICS Case No.

Source: Pennsylvania Law Weekly Case Digest (February 21, 2012).