The United States District Court for the Eastern District of Pennsylvania recently granted an insurer’s motion for summary judgment as to both the coverage and bad faith claims, holding that there could be no bad faith where there was no coverage. See Beautyman v. Gen. Ins. Co. of Am., 2019 WL 2435870 (E.D. Pa. June 11, 2019).
In Beautyman, the insured owned a condominium unit and rented the unit to a tenant. The tenant damaged the insured’s personal property within the condo and also damaged common areas within the building. At the time the damage was discovered, the insurance policy did not provide coverage for property “regularly rented” to others. The insured added such coverage after discovering the damage, and subsequently made a claim for damage to the personal property. Additionally, the insured made a claim for the legal fees he incurred to have the tenant evicted. The insurance company denied the claims, because there was no coverage for a rental property at the time the damage incurred and because the liability coverage in the policy did not apply to an eviction proceeding the insured filed against a third party. The insured filed suit, asserting claims for insurance coverage and bad faith.
The insurer moved for summary judgment on both the coverage and bad faith claims. In granting summary judgment on the coverage claim, the Eastern District held that the policy clearly excluded coverage for damage to a tenant-occupied property, and that there was no evidence that any damage occurred after the insured added the appropriate coverage to the policy. Additionally, the Court held that the liability coverage in the policy applied to claims filed against the insured, not an eviction proceeding filed by the insured against a tenant.
With respect to the bad faith claim, the Eastern District held that “not only did [the insurer] have a reasonable basis for denying Plaintiffs’ claims, [the insured’s] pertinent claims are not covered by the Policy. Therefore, Plaintiffs’ bad faith claim is dismissed with prejudice.”