February 25, 2015 Practice Points

Pennsylvania Holds that Policyholders Can Assign Insurance Bad Faith Claims to Third Parties

The Pennsylvania Supreme Court has decided that policyholders can assign their statutory bad faith claims to third parties

by Andrew J. Kennedy

The Pennsylvania Supreme Court has decided that policyholders can assign their statutory bad faith claims to third parties. Allstate Prop. & Cas. Co. v. Wolfe, 2014 PA. LEXIS 3309 (Pa. December 15, 2014). The Third Circuit Court of Appeals had certified that question to the Pennsylvania high court. The decision settles conflicts that had arisen between the state’s intermediate appellate courts, which had held that allowed assignments of bad faith claims, and some recent decisions from federal courts, that had barred such assignments.

The decision clears the way for injured plaintiffs to settle claims from insured defendants by taking assignment of bad faith claims. Now they can settle cases by assigning both claims that arise under common law and those that arise under Pennsylvania’s bad faith statute, 42 Pa.C.S. Section 8371.

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