FOLLOW US

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. The complaint alleged several instances of the insurer’s bad-faith conduct, including the following: 1. Allstate “failed to fairly and adequately evaluate Plaintiff’s claim or make a reasonable effort to negotiate a timely settlement of the claim.” 2. Allstate “assigned multiple claim representatives who were unaware of the history of Plaintiff’s claim, refused to acknowledge receipt of engineering reports submitted by Plaintiff and Ridley Township and failed to acknowledge or respond to proofs of loss that Plaintiff submitted.” 3. Allstate denied the “claim without engaging its own engineering expert.” Plaintiff alleged that she was forced to hire (out-of-pocket) the services of a public insurance adjuster and obtain an Appraisal, which showed that Allstate had drastically undervalued her claim. 4. Allstate “[e]ventually … reversed its coverage determination and provided coverage, admitting that its denials of the claim had been unsubstantiated, but this was not until 5 months after Plaintiff submitted her claim.” 5. “In the meantime, [Allstate] refused to give the plaintiff any substantial advance payment to allow Plaintiff to obtain alternative housing, and ‘Ridley Township compelled the demolition of the [P]roperty.’” “In addition, Plaintiff lost her job as a medical insurance biller because her alternative living arrangements lacked a dedicated, HIPAA-compliant workspace, and she had to sell personal property and use personal funds from her deceased husband’s insurance policy for her living expenses.”