Uninsured, Underinsured Motorists Benefits and Insurance Bad Faith in Pennsylvania What are uninsured/underinsured motorists (UM/UIM) benefits? UM/UIM benefits are optional first-party insurance benefits that are available to Pennsylvania motorists, who desire an extra layer of financial protection in the event that they and/or their passengers are injured in a motor vehicle accident. While motor vehicle liability coverage in Pennsylvania is mandatory, there are times when motorists do not carry any liability insurance – they are referred to as “uninsured” motorists. More frequently, there are motorists who do not carry sufficient liability insurance to cover the damages caused by their careless conduct. For example, if you're involved in a wreck caused by another and you determine that the other driver only has the state's minimum required limit of liability coverage, which in Pennsylvania is $15,000.00, and it's insufficient to cover your medical expenses, the other driver would be considered “underinsured” —meaning that they have liability insurance, but it's just not enough to cover the damage. Under these circumstances, if you had UIM coverage, your motor vehicle liability insurance company may be obligated to pay the remainder of your medical bills and, in some cases, reasonable compensation for your injuries and damages up to the limits of your UM/UIM coverage limits. So what is bad faith insurance practice? In the context of UM/UIM insurance, bad faith insurance practice is essentially your motor vehicle liability insurance company’s unreasonable refusal to pay the UM/UIM benefits you are entitled to under the policy and the laws of Pennsylvania. For example, let’s say that the at-fault driver referenced above only has $15,000.00 in liability insurance coverage and you sustained $25,000.00 in medical expenses. The at-fault driver paid the extent of his/her liability limits, but you still had $10,000.00 remaining in medical bills. If you purchased UIM coverage, you would have standing to file a claim for UIM benefits with your motor vehicle liability insurance company. If your motor vehicle liability insurance company refused to provide you with UIM coverage and did not have a reasonable basis to support its coverage decision, then you may be able to sue your motor vehicle liability insurance carrier for breach of contract (failure to abide by terms of insurance policy) and bad faith. The breach of contract claim would typically involve your request to be paid the benefits you are arguably owed, whereas, the bad faith claim would include your claim for attorney’s fees and “punitive” damages, which are damages essentially designed to punish the insurance carrier for its bad faith refusal to pay benefits, and to deter them from doing this again to other policyholders. There is a wrinkle in these claims however, as the policyholder has a right to a jury trial in breach of contract case, but this is not so for bad faith claims filed in state court – the bad faith claim is decided by the court. See, Nebel v. Encompass Home and Auto Insurance Company, No. GD-15-015891 (C.P. Allegh. Co. Oct. 6, 2016 Folino, J.), where the court granted the insurance company’s motion to sever and stay the bad faith portion of a UIM/bad faith claim.