Beware! In Pennsylvania, the actions of a rogue independent adjuster can subject the insurer to bad faith — http://www.law.com/jsp/pa/PubArticlePA.jsp?id=1202476595563&slreturn=1&hbxlogin=1. In the case of Grigos v. Lloyd’s, Grigos, the owner of Aramingo Diner, had a first party policy with Lloyd’s. In December 2006, he suffered a fire loss at the diner and submitted a claim. Lloyd’s, through its American agent, assigned the fire investigation and all claims handling to an independent adjuster. That adjuster’s handling of the claim was deemed by the court to be “malicious, incompetent or just ignorant” as the IA (apparently) consistently misrepresented the nature of the policy and its coverages to the assured. Once Lloyd’s realized that its agent had run amuck, however, it paid the full value of the claim. Consequently, while the Philadelphia court ruled that Lloyd’s was bound by the bad faith actions of its agents (i.e. Lloyd’s was deemed to have acted in bad faith), because the “all claims under the policy have been paid”, the “law does not allow any recovery for bad faith.” A cautionary tale for this world in which claims handling responsibility is often delegated to outside agencies and vendors.

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