Pennsylvania Insurance Coverage & Bad Faith

Beyond construction litigation, we handle insurance coverage analysis, bad faith defense, and first-party property disputes in Pennsylvania — the other side of the insurance defense practice, where the fight is between the carrier and its own insured rather than between the insured and a third-party claimant.

These files are different from liability defense. The legal framework is different, the ethical dynamics are different, and the stakes for the carrier are different — because a coverage denial that goes wrong doesn't just cost the claim value. It costs the claim value plus statutory bad faith damages, interest, attorney's fees, and potentially punitive damages. The exposure multiplies fast.

Coverage Analysis — Getting the Denial Right

Every coverage dispute starts with the same question: does the policy cover this loss? That sounds simple. It isn't. Pennsylvania insurance coverage law is contract interpretation — but with a thick overlay of regulatory principles, statutory mandates, and decades of case law that consistently favor the insured when policy language is ambiguous.

We provide coverage analysis at the pre-denial stage and the litigation stage:

• Pre-denial opinions: Before the carrier issues a denial or reservation of rights, we review the policy language, the loss facts, and the applicable law — and tell you whether the denial will hold up in court. This is where money is saved. A well-supported denial that correctly applies the policy language and cites controlling authority survives litigation. A denial letter that misidentifies the exclusion, misstates the facts, or fails to investigate adequately becomes Exhibit A in the insured's bad faith complaint.
• Reservation of rights letters: When the carrier needs to defend under a reservation while investigating coverage, the ROR letter must identify every coverage issue with specificity. Under Pennsylvania law, a carrier that defends without reservation may waive its right to deny coverage later. A carrier that issues an inadequate ROR may face the same result. We draft ROR letters that preserve every viable coverage defense without creating unnecessary conflict with the insured.
• Declaratory judgment actions: When coverage needs judicial resolution — either because the insured has sued or because the carrier needs certainty before trial — we file and defend declaratory judgment actions under 42 Pa.C.S. § 7531 et seq.

Policy Interpretation — The Pennsylvania Rules

Pennsylvania courts apply a well-established framework to policy interpretation disputes, and the rules consistently favor the insured at the margins:

• Ambiguity is construed against the insurer. If a policy provision is susceptible to more than one reasonable interpretation, the court adopts the interpretation that favors coverage. Madison Const. Co. v. Harleysville Mut. Ins. Co., 557 Pa. 595 (1999). This means the carrier's denial must rely on language that is clear and unambiguous — not just arguably applicable.
• Exclusions are strictly construed. The carrier bears the burden of proving that an exclusion applies, and exclusionary language is interpreted narrowly. If the exclusion could reasonably be read not to apply, it doesn't apply.
• The insured's reasonable expectations control. Even when policy language appears clear, courts may look to the insured's reasonable expectations of coverage — particularly for unsophisticated policyholders. This doctrine has teeth in Pennsylvania.
• The duty to defend is broader than the duty to indemnify. If the complaint potentially alleges a covered claim — even one that is factually dubious or legally weak — the carrier must defend. The "four corners" test compares the complaint allegations to the policy language, and any doubt is resolved in favor of the insured. Kvaerner Metals Div. of Kvaerner U.S., Inc. v. Commercial Union Ins. Co., 589 Pa. 317 (2006).