Pa. bad faith claim costs $20 million

An insurer has agreed to pay $20 million in what is believed to be the state’s richest settlement of a bad faith claim.

According to the plaintiff’s attorney, Robert Mongeluzzi of Saltz Mongeluzzi Barrett & Bendesk, Princeton Insurance Co. has agreed to the $20 million in mediation of a bad faith claim filed in Philadelphia Court of Common Pleas.

Princeton did not admit liability in the settlement, Mongeluzzi said.

The case involved a road worker who was paralyzed after being struck by a drunk driver who left a tavern that Princeton insured.

The $20 million is in addition to the $1 million Princeton was previously required to pay under the limits on the tavern’s $1 million policy after it lost its appeal on the dram shop case.

A jury awarded the accident victim $75 million, an award that a judge later cut in half. But that large award was never paid because the tavern had only $1 million in insurance. The tavern assigned its rights to the victim, who sued Princeton for bad faith, charging that the insurer failed to negotiate a settlement within the policy’s $1 million limits after the verdict.