Statutory Text
§ 1716. Payment of benefits.
Benefits are overdue if not paid within 30 days after the insurer receives reasonable proof of the amount of the benefits. If reasonable proof is not supplied as to all benefits, the portion supported by reasonable proof is overdue if not paid within 30 days after the proof is received by the insurer. Overdue benefits shall bear interest at the rate of 12% per annum from the date the benefits become due. In the event the insurer is found to have acted in an unreasonable manner in refusing to pay the benefits when due, the insurer shall pay, in addition to the benefits owed and the interest thereon, a reasonable attorney fee based upon actual time expended.
Key Terms:
Benefits:
These refer to the insurer's obligation, typically monetary, to the insured upon the occurrence of certain incidents covered in the insurance contract, such as an automobile accident.
Reasonable proof:
This represents sufficient documentation or evidence demonstrating that the insured is entitled to the stated benefits.
Overdue benefits:
These are benefits that remain unpaid 30 days after reasonable proof has been received by the insurer.
Interest:
A percentage charge on overdue benefits; according to §1716, the rate is set at 12% per annum.
Reasonable attorney fee:
A fair payment to a lawyer for services rendered, calculated based on the actual time spent on a case.
Importance for Pennsylvania Drivers:
This section is pivotal for Pennsylvanian drivers since it provides them a concrete timeline within which they can expect to receive their insurance benefits post-accident. In the event of delay, it ensures these drivers are entitled to interest on overdue benefits, thus offering financial protection. The potential penalty for insurers who unreasonably withhold payment also offers recourse for drivers.
Importance for Pennsylvania Attorneys:
For attorneys, § 1716 provides guidelines on representing clients dealing with overdue benefits. It offers a legal framework to argue for not only the overdue benefits and interest but also compensation for the time spent on the case, which could make pursuing overdue payments a more feasible option for clients.
Advanced Analysis of Language:
The specific language used in the MVFRL underscores the obligations of insurers and the rights of insured drivers. Phrases such as "overdue benefits shall bear interest" and penalties for insurers who act in an “unreasonable manner” emphasize the law's intent to enforce timely payments. The term 'reasonable proof' may invite interpretation and has been subject of litigation in the past.
The explicit stipulation of the interest rate and the grounding of attorney fees on 'actual time expended' provide definable parameters, leaving less room for ambiguity. The use of 'shall,' a mandatory term in legal parlance, underscores the obligatory nature of the stated provisions.
Overall, § 1716 uses language that clearly establishes deadlines, penalties, and additional compensation to encourage adherence to payment timelines.
