Pa. Bad Faith Claim On Lapsed Policy Dismissed

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PHILADELPHIA, May 11 – The Pa. Superior Court has dismissed a bad faith claim filed against Progressive insurance, finding that the policy in question had lapsed, and that it was not bad faith for theinsurer to originally remove the case to federal court, despite a later remand.

The trial court entered summary judgment in favor of appellee Progressive Insurance Company and against appellant Anne Racioppi on her claims of breach of contract and bad faith.  Racioppi had allowed her policy to lapse for non payment of premium, and she did not purchase a new policy until the day following the accident from which she made her UIM claim.

In affirming the trial court, the Pa. Superior Court rejected Racioppi’s claim that Progressive failed to provide statutory  notice of cancellation/non-renewal of her policy.  The court ruled that Act 68 did not apply where an insurer offered to renew the policy and the insured refused to pay the premium — such an act was sufficient evidence of the insured’s intent to cancel the policy, the court ruled. Progressive sent the insured multiple renewal notices instructing her to pay the renewal premium by a certain date, the court observed. Racioppi did not deny receiving the notice.

Judge Kate Ford-Elliot further found that Progressive did  not act in bad faith in removing the case to federal court.  She ruled that Racioppi initially sued an entity of Progressive Insurance domiciled in Ohio. As a result, appellee removed to federal court based on diversity jurisdiction as a legitimate  litigation tactic. Once the proper division of Progressive was substituted, however, the case was properly remanded.  The court held that Progressives engagement in a legitimate litigation strategy did not constitute  bad faith.

Racioppi v. Progressive Insurance Company, (Pa. Super. May 11, 2016)(Ford Elliot, J.)

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Author: CJ Haddick

C.J. Haddick is a Director with the law firm of Dickie, McCamey, & Chilcote, PC, based in Pittsburgh, Pa. He has advised and represented insurers in insurance coverage and bad faith litigation for more than a quarter of a century, and written and spoken throughout the United States on insurance coverage and bad faith prevention and litigation. He is Managing Director of the firm's Harrisburg, Pa. office. Reach him at chaddick@dmclaw.com or 717-731-4800.

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