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Insured Party Can Sue Insurance Company for Negligence

The Pennsylvania Supreme Court recently decided an interesting case involving an insured couple suing their insurance company over negligent handling of a claim under their homeowner's policy.  Typically, when a contract exists between two parties, one of the parties cannot sue the other party for negligently carrying out duties covered by the contract.  The theory is that the claim is one of breach of contract and not negligence (or tort). The Pennsylvania Supreme Court ruled, in Bruno v. Erie Insurance, however that one party to a contract will not be prevented from suing the other for negligence merely because a contract between the two parties existed.  

The Court stressed in its opinion that the facts of the case are very important to this decision and for decisions which will follow.  This case involved a home that contained toxic mold.  The homeowners had an insurance policy covering the home.  When mold was discovered they filed a claim with the insurance company for removal of the mold.  The insurance company allegedly sent an adjuster and contractor out on two occasions to inspect the mold.  The inspector and a contractor hired by the insurance company essentially told the homeowners that there was nothing to worry about.  The mold later turned out to be toxic and the homeowners suffered severe health problems.  The mold problem was so severe that the home was torn down. 

The homeowners filed suit against the insurance company and a contractor hired by the insurance company to inspect the mold.  The case included a negligence claim for the insurance company "misleading" the homeowners on the severity of the mold.  

At the Common Pleas level the case was dismissed when the defendants filed preliminary objections to the complaint.  The matter was appealed to the Superior Court.  The Superior Court agreed with the lower court that the negligence claim could not go forward.  The plaintiffs pressed their case up to the Pennsylvania Supreme Court, which decided it is a valid case.  The case will now proceed at the Common Pleas level.  This is certainly a case to watch.

"Insured Can Sue for Negligence Despite Contract", Lizzy McLellan, The Legal Intelligencer, December 30, 2014

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