Bad Weather and Bad-Faith Lead to Bad News for Allstate Insurance

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In the case of Smith v. Allstate Insurance Company, in the U.S. District Court Eastern District of Pennsylvania, the court found that Allstate’s actions supported the plaintiff’s bad faith claim.

This case involves property damage sustained during a hurricane and reported to Allstate under a homeowners policy.

In a twist of fate, Allstate did not deny that the homeowner’s losses were covered under its existing policy. Still, there were unreasonable delays and partial denials during the processing of the claim. In the homeowner’s complaint, she alleges that Allstate failed to mitigate damages and instead created other consequential damages as a result of its failure to timely process her claim or make full payments.

The plaintiff sued Allstate for breach of contract and bad faith. The insurer quickly filed a motion to dismiss the bad faith claim only. However, their motion was denied.

Before making his decision, Judge Padova of the Eastern District of Pennsylvania reviewed the complaint and the plaintiff’s subsequent pleadings, and after drawing all reasonable inferences in favor of the plaintiff, he concluded that the complaint adequately alleged facts that support that the insurer’s unresponsive, untimely and dilatory conduct, along with its failure to conduct a proper investigation of the claim, and its unsubstantiated coverage denials, all supported the court’s ruling.