A delay in payment of benefits is not in itself a basis for a bad faith claim if the insurer had a reasonable basis for the delay.

The defendant filed a motion to dismiss the plaintiffs’ claim for bad faith. The judge granted the motion because the plaintiffs offered no facts to explain why the defendant’s delay in settling their claim for property damage benefits was “arbitrary.” Further, the court pointed out that the plaintiffs failed to indicate that the insurer’s investigation was unwarranted or inadequate. Instead, the plaintiffs simply asserted that payment of benefits a year after a property fire was unreasonable and that the defendant acted in bad faith by “arbitrarily failing and refusing to settle [their] claims in good faith.” Ultimately, the court concluded that, while delay is a relevant factor in determining whether bad faith has occurred, it is not in itself a basis for a bad faith claim if the insurer had a reasonable basis for the delay. The plaintiffs offered no facts to show that the defendant lacked a reasonable basis for delaying their settlement. Moreover, even assuming that the defendant acted unreasonably in delaying payment of benefits, the plaintiffs failed to offer evidence that the defendant knew or disregarded a lack of a reasonable basis in order to support a claim for bad faith.

_{Case Law Alerts, 2^nd Quarter, April 2015}

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