Filing a bad faith insurance claim in Colorado is fairly straightforward. There are three types of claims that the insured must make against the insurance company in order to do this: breach of contract, statutory bad faith, and common law bad faith. There are claims like these because of the insurance policy and Colorado laws that say insurance companies have to be honest with their policyholders. (Learn more about Colorado insurance basics at the Colorado Division of Insurance’s website).
Dealing with insurance claims can be frustrating even in the best of circumstances. But when an insurance company denies your legitimate claim or drags its feet in paying you what you’re owed, it goes beyond frustrating into being downright wrong. This type of behavior is known as “bad faith” and it’s illegal in Colorado.
As a Colorado resident, you have legal rights when it comes to bad faith practices by insurance companies. And you have the power to fight back. This guide will provide an in-depth look at bad faith insurance claims in Colorado, including:
- What constitutes bad faith
- Your rights under Colorado law
- How to identify bad faith tactics
- Steps for fighting an unfair claim denial
- Recovering damages from a bad faith lawsuit
What is Bad Faith Exactly?
Bad faith refers to unreasonable behavior by an insurance company when it comes to paying out valid claims. This includes tactics like:
- Denying claims without proper investigation
- Delaying claim payments beyond a reasonable timeframe
- Misrepresenting policy terms to avoid paying out benefits
- Lowballing claim settlements to get the policyholder to accept less
- Intimidating or threatening policyholders who pursue claims
Essentially bad faith is when an insurance company puts its own financial interests ahead of its duty to honor the insurance contract. This duty of “good faith and fair dealing” is implied in all insurance policies in Colorado.
Your Rights Under Colorado Bad Faith Laws
Colorado has strong legal protections that prohibit insurance companies from engaging in bad faith practices. Key laws include:
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CRS. § 10-3-1113 – Prevents unreasonably delaying or denying payments of claims. Allows policyholders to recover double damages plus legal fees.
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C.R.S. § 10-3-1104 – Prohibits a range of unfair claim settlement practices like misrepresenting policy terms and failing to investigate claims properly.
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Common law bad faith – Policyholders can sue for economic and non-economic damages stemming from an insurer’s bad faith actions
These laws hold insurers accountable for unfair claims conduct. If your insurance company violates them, you have the right to fight back through legal action.
Spotting Bad Faith Red Flags
The first step is recognizing potential bad faith behavior by your insurance company. Here are some common red flags to look out for:
- Repeatedly asking for more documentation after you’ve provided enough proof of claim
- Delaying communications and responses to your inquiries
- Misquoting your policy terms when denying your claim
- Refusing to pay for repairs recommended by an independent adjuster
- Denying liability when facts clearly show the loss is covered
- Making unreasonably low settlement offers
Any of these actions can signal unreasonable claim conduct. Document all interactions and be wary of tactics to deny, delay, or frustrate your rightful claim.
Steps to Challenge Bad Faith Treatment
If you believe you’ve suffered bad faith treatment by your insurer, here are key steps to challenge it:
1. Review your policy terms – Make sure the loss is specifically covered and you complied with duties like timely reporting.
2. Gather documentation – Compile a timeline of events, records of calls/letters, claim documents, emails, and denial letters.
3. Send written complaint to insurer – Outline your complaint and request proper payment. Give them reasonable time (30 days) to respond.
4. Consult a bad faith attorney – If claim issues persist, contact an attorney to review your case. They can help you pursue legal action if grounds exist.
5. File official complaint – Your attorney may recommend filing a complaint with the Colorado Division of Insurance.
6. Consider lawsuit – You may have grounds for a bad faith lawsuit to recover damages. An attorney can advise you on the merits of a case.
With the right legal help, you can get an uncooperative insurer to pay what you are rightfully owed.
Recovering Damages in Bad Faith Cases
By law, you can recover extensive damages if you win a Colorado bad faith lawsuit against your insurer:
- The wrongfully denied policy benefit amount
- Double damages under C.R.S. § 10-3-1116
- Compensation for economic losses like medical bills or lost wages
- Non-economic damages for emotional distress, pain and suffering
- Attorney’s fees and court costs
- Potential punitive damages to punish the insurer’s willful misconduct
Damages can far exceed the original policy benefit amount. In 2019, one Colorado couple won a $1 million bad faith judgment against their home insurer who wrongfully refused to fully pay a fire claim.
Partnering With the Right Bad Faith Attorney
To successfully fight back against bad faith, partnering with an experienced Colorado attorney is crucial. They will handle the complex legal process while you focus on recovery. Look for these key traits:
- Extensive bad faith litigation experience
- Dedicated focus on policyholder rights
- Strong record of favorable verdicts and settlements
- Willingness to take bad faith cases to trial if needed
- Resources to handle claims involving extensive damages
- Compassionate commitment to guiding clients through the legal process
The right lawyer can make all the difference in getting justice when you’ve been wronged.
Don’t Accept Bad Faith Treatment – Fight Back
If you believe an insurance company has treated you unfairly, don’t accept it. You have legal rights in Colorado. With strong documentation and the help of a skilled bad faith attorney, you can hold your insurer accountable and recover the compensation you deserve. It’s your money – fight to get it back.
What Duties Does an Insurance Carrier Owe?
If you have insurance in Colorado, your insurance company has to be honest with you and settle your claims fairly. If the insurance company doesn’t do that and their actions aren’t fair, they could be sued for “bad faith.” ” Generally, insurance companies are required to do the following things during the claims-adjusting process:
- Promptly investigate the insurance claim;
- Quickly settle claims when it’s clear that someone is owed a benefit;
- Communicate with the insured;
- Explain the terms of the policy;
- Claim coverage must be agreed upon or denied within a reasonable amount of time after the loss has been reported; and
- Numerous other duties.
When it comes to claims, insurance companies have to follow a lot of strict rules. However, most people can tell when someone is acting in bad faith. Some actions that most people would find unacceptable are (1) denying coverage without any investigation, (2) making ridiculously low offers to settle insurance claims, and (3) not responding to the insured at all.
Guide To Bad Faith Insurance Claim Practices
What is a Colorado bad faith insurance lawsuit?
A Colorado bad faith insurance lawsuit is a civil claim with two parts. First, the insured party demands fair payment for the amount that they should have received under their policy. Second, they make an additional claim for the insurance company’s bad faith actions in unreasonably denying or underpaying the claim.
What is Colorado bad faith law?
Colorado bad faith law allows policyholders to recover not only the amount of benefits wrongly withheld or denied but also double their damages and get reimbursed for attorney fees and other costs. What is Insurance Bad Faith? What is Insurance Bad Faith? When an insurance company attempts to renege on its obligations, it acts in bad faith.
Can you file a bad faith insurance claim in Colorado?
Willful wrongdoing by the insurer can lead to punitive damages equal to actual damages. Colorado Revised Statutes 10-3-1116 (1) allows insured car owners or homeowners to file a statutory bad faith claim. An insurer’s unreasonable delay or denial of payment without a valid reason qualifies under this statute.
What if a bad faith insurance company refuses to pay you?
If you make an insurance claim and the company refuses to pay you, our Colorado bad faith insurance lawyers are prepared to help you fight for your rights. We can assist you with taking action to receive compensation for your claim, as well as justice for bad faith insurance practices.