You pay good money every month for the insurance coverage that you’ve come to rely on. The insurance company that you’ve entrusted to protect your car, home, or other property should be responsive, helpful, and expedient when the time comes for a claim to be filed and for you to be compensated for your losses.
Under Colorado law, insurance companies have an obligation to deal fairly with you in good faith, which means conducting all of the due diligence necessary to make an informed and prompt decision regarding your claim. If you believe you have been treated unfairly by your insurance company after your claim has been denied, you may have a legal case against them.
Why Are Reasonable, Covered Claims Sometimes Denied?
Any time an insurance company makes the decision to deny your claim, they must have a reason for doing so. Unfortunately, a creative insurance adjuster doesn’t have to look far to find what could be considered a valid reason (to them) for why they don’t owe you compensation for your covered losses.
Another common tactic used by insurance companies is intentionally underpaying a claim.
Whether the insurance company denies your claim outright or simply offers to pay you much less than your claim is worth, both instances could be grounds for legal action against them. While the insurance company might be trying to keep their money to themselves, they may not be acting in good faith and, therefore, you could be a victim as a result.
The good news is that you can take action when this happens. And, the legal team at Matthew R. Osborne, PC can help.
The Two Types of Bad Faith Claims
The term ‘bad faith’ loosely describes any action that an insurance company takes that runs in willful contradiction to the contract that is in place between the insurer and the insured. This action could be a claim denial. Intentionally prolonging your claim process is another example of acting out of bad faith. Yet another example of a bad faith insurance practice is underpaying your claim.
Other examples of bad faith insurance practices include:
- Ignoring your requests for updates, information, or claim status
- Delaying investigations or appraisals
- Misrepresenting the provisions contained within the active insurance policy
- Refusing to compensate you for a claim without performing an adequate investigation
- Failing to make a claim decision at all
When these actions happen between an insurance company and the insured and no other third party is involved, it’s considered a first-party bad faith claim. When an insured individual has a policy that protects them from claims made by a third party, and when the insurance company fails to adequately do their job with said protection, this is considered a third-party bad faith claim.
Whether you’re dealing with a first-party or third-party bad faith claim, there are actions you can take to obtain justice in your case.
What to Do If This Happens to You
There are many actions you can take after your insurance claim is wrongfully denied.
Step one is not to panic. You might have suffered significant losses or personal injury, and upon hearing the news that your insurance company won’t be paying you (or will be paying you much less than what you’re owed), it’s easy to overreact.
Do the best you can to stay calm, and come up with a strategy for what to do next.
Step two is to ‘run it up the flagpole’, or escalate your claim beyond the purview of the adjuster assigned to it. Typically, insurance adjusters report to supervisors whose job it is to make sure they do their job. You might find that you’ll be treated differently when you request to deal with the adjusters supervisor, instead.
During this process, be sure to diligently keep track of all documentation, including the dates of all relevant actions taken by both you and the adjuster you’ve been working with. It might also help to write out a timeline of events so that you can refer back to it when needed.
A last resort before hiring an attorney would be to file a claim with the state insurance board. This measure can add yet more evidence bolstering your case if and when the time comes to file a lawsuit against your insurance company.
If the above-listed actions are ineffective and the insurance company still won’t budge, it’s time to call us. We will work with you to collect all of the facts surrounding your claim and deal directly with the insurance company on your behalf.