Insurance Claims for Pennsylvania readers: denial language, document control, and practical next moves

Pennsylvania's insurance bad faith statute (42 Pa.C.S. § 8371) is one of the more powerful in the country: when an insurer acts in bad faith, courts can award interest on the claim from the date of bad faith conduct, punitive damages, and attorney fees. The punitive damages component makes Pennsylvania bad faith claims particularly impactful — unlike many states where bad faith remedies are limited to actual damages plus fees. The choice no-fault (full tort vs. limited tort) system discussed in the car accident section also creates insurance claim complexities around coverage disputes.

Pennsylvania Bad Faith Statute: 42 Pa.C.S. § 8371

Pennsylvania's bad faith insurance statute (42 Pa.C.S. § 8371) allows a court, in an action on an insurance policy, to award: (1) interest on the claim from the date the claim was made at a rate equal to the prime rate plus 3%; (2) punitive damages; and (3) court costs and attorney fees. The standard for bad faith is: the insurer did not have a reasonable basis for denying the claim, and the insurer knew of or recklessly disregarded its lack of a reasonable basis. Pennsylvania courts have held that § 8371 applies to first-party bad faith (your own insurer denying your claim) and covers both property and auto insurance. The availability of punitive damages — not available in all state bad faith regimes — makes § 8371 claims particularly impactful and gives insurers strong incentive to fairly evaluate and settle claims.

Pennsylvania First-Party Benefits Disputes

Pennsylvania auto insurance first-party benefits (FPB) disputes — disputes over medical bill payments under your own no-fault coverage — are subject to a separate arbitration process under 75 Pa.C.S. § 1796. An insurer who unreasonably delays or denies FPB payment can face penalties including 12% per year interest on overdue amounts, attorney fees, and costs. The arbitration is conducted by a three-arbitrator panel (one chosen by each party, one neutral). Many disputes about which medical treatment is covered under FPB — such as disputes about whether treatment is "reasonable and necessary" — go through this arbitration process rather than court. For significant FPB disputes, the arbitration can be contested vigorously with full discovery and expert testimony.

Pennsylvania Homeowners Claims: Act 66 of 2017

Pennsylvania Act 66 of 2017 made significant changes to homeowners insurance litigation. The Act created a new framework for post-loss assignments of insurance claims (similar to Florida's now-eliminated AOB) and imposed new requirements on public adjusters. Pennsylvania homeowners dealing with property claims should know: they can hire a licensed public adjuster to assist with large claims; the insurer must give written notice of the loss payment amount within 15 working days of completing its investigation; and disputes about covered damages can potentially go to appraisal if the policy provides for it. For disputed commercial property claims, Pennsylvania's bad faith statute (§ 8371) is available and has been used in property claim contexts.