Understanding Bad Faith Insurance Claims
Policyholders pay insurance premiums under the impression that they will be reasonably assisted in the event they need to file a claim. They expect adequate coverage to pay for damages, and they assume they will be protected from any claims made against them by other individuals.
In most cases, this is true. Insurance companies act in good faith, making reasonable pay-outs and negotiating in their policyholders best interests. Unfortunately, the opposite also happens. An insurance company may deny a claim without just cause, fail to communicate important matters, or offer a settlement that is far too low.
What is a Bad Faith Claim Against an Insurance Company?
The law stipulates that all insurance companies, from auto insurance to homeowners insurance, must fulfill certain duties to their policyholders when a claim is made. Failure to meet any of these obligations amounts to what is called bad faith. The duties expected of any insurance company include:
Assistance
Fundamentally, insurance companies are supposed to help you. You pay your monthly premiums so that you have someone in your corner if and when you need them. Your insurance company should not behave as if you have done anything wrong. They are expected to treat you with the benefit of the doubt and find reasons to get your claim approved, not ways to deny it.
Communication
Your insurance adjuster should explain your policy to you and send you a copy to read on your own. You should fully understand your coverage and benefits and what to expect in the claims process. Your adjuster should communicate effectively about all aspects of your claim and answer any questions you have in a timely manner. You should also be kept informed of the progress being made on your claim.
Timely Investigation
The insurance company must conduct a fair and thorough investigation and provide the findings of their investigation within a reasonable time frame. For example, an insurance adjuster who has failed to obtain documentation or conduct negotiations within the claim filing deadline, or who appears to have otherwise deliberately delayed the process, may be acting in bad faith.
Reasonable Explanation
In the event a claim is denied or settled for less money, the insurance company is required to issue a reason. They cannot deny a claim or negotiate a lower settlement without telling you why.
Reasonable Settlement
In some cases, a bad-faith insurer may refuse to settle in order to get the case to go to trial. A trial may reveal damages that are beyond the limits of the policy, which means the insurer’s overall liability may be reduced. Refusal to pay based on the desire to go to trial and settle for less may be a violation of your insurance contract.
Prompt Payment
When a claim is settled, payment should be made promptly. This time frame varies according to jurisdiction. The Colorado Code of Regulations stipulates that the insurer must “make a decision on claims and/or pay benefits within sixty (60) days after receipt of a valid and complete claim unless there is a reasonable dispute between the parties.”
What Does a Bad Faith Insurance Lawyer Do?
If you believe your insurance company has mishandled your claim or denied it unfairly, you have the right to file a lawsuit against them. You will need to hire a qualified bad faith insurance attorney to help you do this. The course of action your lawyer takes will depend on the specific jurisdiction; typically, however, the case will fall under one or both of the following claims:
Breach of Contract
Your insurance policy is a contract. You pay premiums with the expectation that certain obligations will be met when a claim is filed. If these obligations are not meant, your insurer is in breach of contract.
Tort
A tort is a civil case that implies some harm has been done to the claimant through negligence or other wrongful actions.
Roth Group Law Handles Bad Faith Insurance Claims in Colorado
The attorneys at Roth Group have assisted hundreds of clients in resolving their insurance claims. Colorado Law requires that your insurance company investigate and pay valid claims. If your insurer has failed to do so, we are here to help you hold them accountable. Contact our office today to schedule a consultation.