Tuesday, April 9, 2019

There Can Be No Bad Faith Where Policy Was Properly Cancelled

In the case of Chad & Ashley, Inc. v. White Pine Ins. Co., No. 1110-CV-2016 (C.P. Lawrence Co. Dec. 19, 2018 Cox, J.), the court granted an insurance company’s Preliminary Objections seeking the dismissal of a Plaintiff’s claims for breach of contract and bad faith in a property damage case. 

According to the Opinion, the Plaintiff brought this action against the carrier for breach of contract and bad faith due to the carrier’s alleged failure to cover a total loss of the Plaintiff’s property.  

The court confirmed that the record before it established that the carrier had sent the Plaintiff a cancellation notice which confirmed an end date of the insurance policy that was approximately two (2) weeks prior to the date of the loss.  

Plaintiff’s counsel attempted to argue that the cancellation notice could be interpreted to instead provide the Plaintiff with a fifteen (15) day notice such that the policy would still be in effect slightly beyond the date of the loss.  

The court disagreed with the Plaintiff’s reading of the cancellation notice.   The court also noted that the insurance contract itself provided only for a ten (10) day period of notice.   As such, the court granted the Defendant’s Preliminary Objections and dismissed the breach of contract claim.

Relative to the bad faith claim, the court noted that, because the insurance contract was not in effect at the time of the loss, the Plaintiff was unable to show the first element of a bad faith claim, i.e., that the insurer did not have a reasonable basis to deny benefits under the policy.   As such, the bad faith claim was dismissed as well. 

Anyone wishing to review a copy of this decision may click this LINK.

Source:  “Digest of Recent Opinions.”  Pennsylvania Law Weekly (March 12, 2019).

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