The insured's bad faith claim based upon the insurer's alleged use of an independent contractor to assess the amount of loss in order to lower the amount paid survived a motion to dismiss. Williamson v. Chubb Indem. Ins. Co., 2013 U.S. Dist. LEXIS 178022 (E.D. Pa. Dec. 19, 2013).
The insureds' home was damaged. Chubb, their insurer, retained an independent contractor, Eastern Diversified Services (EDS) to assess the amount of loss. EDS estimated the loss to be $193,270.43, and Chubb paid this amount.
Chubb's standard practice was to conduct damage estimates itself using an estimating program called Symbility. EDS used a different program with a data base creating lower payments for loss. When this was brought to Chubb's attention, Chubb refused to recalculate the plaintiff's estimate.
Plaintiffs sued for breach of contract and bad faith. Chubb moved to dismiss. The court ordered an appraisal and deferred consideration of the bad faith claim. The appraisal award valued plaintifffs' claim at $6,094.73 higher than EDS's original valuation.
Plaintiffs amended their complaint, asserting a single claim for bad faith. Plaintiffs contended that by using EDS and departing from its own estimating standards, Chubb intended to and succeeded in obtaining an estimate that would justify underpaying Plaintiffs' claim. Chubb argued the proper analysis was whether the valuation of EDS was reasonably on the whole.
Under Pennsylvania law, evaluating claims of similarly-situated insureds differently could constitute an unfair insurance practice and thus be the basis for a bad-faith action. Therefore, the allegations in Plaintiffs' amended complaint stated a claim for bad faith.
