There is no legal requirement that insurance companies conduct perfect investigations.

The defendant claimed that a reasonable jury could not conclude that the defendant acted in bad faith, thereby violating its duties under the contract of insurance or Pennsylvania’s bad faith statute, 42 Pa.C.S. §8371. This case arises out of a car accident when a third-party driver caused injuries to the plaintiff. The plaintiff argued that the defendant acted in bad faith in failing to review the first-party medical file, not requesting permission to speak with the plaintiff, and not reviewing any of the pre-accident medical records. The court found that those alleged shortcomings did not amount to bad faith, even when looking at all three together. Specifically, the court held that there is no legal requirement that insurance companies conduct perfect investigations. Rather, an insurance company simply must show it had a reasonable foundation for its action after review or investigation.

Case Law Alerts, 2nd Quarter, April 2014