Claims against insurers under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL) occupy a unique place in its jurisprudence. Insurance is highly regulated, and many other recovery avenues exist in Pennsylvania for aggrieved insureds, such as breach of contract and bad faith. Usually, insurance claims are tethered to contract law, since the insured-insurer relationship and duties are governed by the insurance policy. Courts should be reluctant to ignore contractual principles when a UTPCPL claim arises out of a policy.
Generally, deceptive insurance solicitations are actionable under the UTPCPL, while post-inception policy-related claims are not. Toy v. Metropolitan Life Insurance Co. exemplifies this point. Toy involved an insurance salesman’s pre-issuance misrepresentations about the investment qualities of a life insurance policy. The insured asserted both bad faith and UTPCPL claims. The Pennsylvania Supreme Court affirmed dismissal of the statutory bad faith claim, concluding that bad faith did not cover an “insurer engaged in unfair or deceptive practices in soliciting the purchase of a policy.” By contrast, the court allowed the UTPCPL deceptive sales practices claim to proceed. Under Toy, claims that arise out of solicitation-related deception can give rise to a UTPCPL claim, such as misrepresentations during the sale of the policy, while bad faith and breach of contract theories apply following policy inception.