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In PA, Delay Damage Is a Compensatory Damage to Be Paid by the Insurer.

October 6, 2011

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In the case of <a href="">[i]Heebner v. Nationwide Insurance[/i]</a>, the EDPA (Goldberg, J.) was faced with the question of whether an insurer’s obligation for compensatory damages includes an obligation to pay for delay damages. For those unfamiliar with Pennsylvania’s peculiarities (it is, after all, a Commonwealth), delay damages are a statutory addition (prime rate plus 1%) that is added to a plaintiff’s damages award if the award occurs more than one year after the lawsuit was commenced. Plaintiff argued that delay damages are a form of compensatory damages in that PA’s Supreme Court has defined their purpose as a form of indemnity to the plaintiff “for the money he would have earned on his award if he had promptly received it.” In contrast, Nationwide argued that because PA’s delay damages statute indicates that delay damages are “added to the amount of compensatory damages”, they cannot, by definition, be compensatory damages. The trial court sided with the plaintiff. It held that the Nationwide policy was ambiguous in that it did not specifically state that compensatory damages did not include delay damages, and that delay damages are, in fact, a form of compensation to the plaintiff.
So, the moral of the story is that – in Pennsylvania, if you don’t want to be liable for delay damages, you need to specifically exclude them from coverage.
If you have any questions about this post, please contact Bob Cosgrove at <a href=""></a>.

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