Superior Court: No Bad Faith in UIM Value Dispute

January 5, 2010
John A. Livingood, Jr.

On December 28, 2009, the Superior Court affirmed summary judgment in favor of the insurer in Johnson v. Progressive, 2009 Pa. Super. 255, a bad faith claim.

Plaintiff alleged bad faith in Johnson after demanding the $100,000 policy limits, being offered $30,000, and winning $75,000 at the arbitration. The Superior Court, relying heavily on the factors established in Condio v. Erie, 899 A.2d 1136 (Pa. Super. 2006) and Hollock v. Erie, 842 A.2d 409 (Pa. Super. 2004), found that the insurer had not, as a matter of law, committed bad faith by placing a reasonable value on the claim, even when the arbitration award ended up being higher. The court noted, “The underlying facts involve nothing more than a normal dispute between an insured and insurer over the value of an UIM claim. The scenario under consideration occurs routinely in the processing of an insurance claim. To permit this action to proceed under these facts would invite a floodgate of litigation every time an arbitration award is more than an insurer’s offer to settle, even though the award is substantially below the insured’s demand.”

The Johnson opinion reiterates the holding of Condio, it is acceptable for an insurer to arbitrate (or litigate) a UM/UIM case when there is a reasonable basis for doing so.

For more information on this opinion, or any other aspect of the PaMVFRL, do not hesitate to contact me.

John A. Livingood, Jr.