When your insurance company tries to renege on their obligations on your policy agreement, this is called bad faith insurance practice. It often happens after people get injured and expect a payout from their insurance company, only to find their claim has been illegitimately denied or grossly undervalued. Here’s what you need to know if that happens to you and why you should consider hiring a Colorado bad faith insurance attorney.
What Should I Do if My Insurance Claim Was Denied
If your insurance claim was denied, you may be entitled to take legal action. Bad faith is an insurance practice that usually deals with personal injury claims and is the result of fraudulent insurance practices.
By paying for your insurance policy with your insurer, that means you have a legally binding contractual agreement. When they fail to pay a valid claim, they are breaching the contract.
An attorney can advise you on whether you have valid grounds for a bad faith claim and represent you in court if so. Then, the court will make a ruling on two things:
- Whether or not the insurance company needs to pay the claim
- The value of the claim
What Is the Definition of Bad Faith Insurance Practices?
Insurance bad faith is the legal liability of an insurance company after they unreasonably deny a claim. When an insurance company fails to uphold their obligations, they may face additional financial liability on top of the original damages (i.e., penalties and attorney fees)
Are There Laws That Govern Bad Faith Insurance Practices in Colorado?
Colorado law recognizes that individual policyholders who need coverage often find themselves in unfair predicaments with insurance companies. Therefore, Colorado laws give individuals legal recourse when insurance companies drag their feet or decide not to play fair.
Such “Insurance bad faith laws” exist in Colorado to ensure insurance companies do not engage in unduly practices. The laws are meant to prompt insurance companies to pay claims fairly or provide an alternative form of relief if they unfairly deny claims.
The laws that govern bad faith insurance in Colorado can be found in Colorado Revised Statutes 10-3-1115¹ and 10-3-1116². Colorado statutes essentially state that insurance companies cannot deny or delay claims without reasonable justification if there is an enforceable policy. Furthermore, victims of bad faith insurance are entitled to claim double the recovered benefit in addition to attorney fees.
Two Types of Bad Faith in Colorado: Insurance Statutes and Common Law
Before the bad faith insurance statute, there was only coin law to pre-empt insurance policyholders. Common law provided legal recourse for insured parties whose insurance company failed or refused to pay. Under common law, the victim must prove that the insurance company intentionally or recklessly de regards the rights of the insured.
However, with new statutory laws, the victims must simply prove that the insurer refused to provide “reasonable payment”(Schultz v GEICO Cas. Co., 429 P.3d 844).
What Are Some Reasons That an Insurance Claim Would Get Denied?
The first and most important step to determining whether or not you have a claim is to understand why the insurance company denied your claim.
Here are some of the most common reasons for insurance claim denials:
- The claimant failed to provide sufficient supporting information. If you want the insurance company to pay your claim, they need evidence that supports your claim. Having evidence will also help them to determine an accurate value for your claim. If you’ve filed a claim without enough information to show the specific extent of your damages, they may deny your claim.
- Disputes over liability – since insurance claims are primarily decided based on fault, you need to have clear and convincing evidence to show the responsible party’s fault.
- Causation is unclear – insurance companies don’t want to pay for damages that have questionable causation. For example, if you have preexisting conditions could create a question of how much the accident actually contributed to a person’s injury. If there’s any question about how the claimant’s injuries really occurred, the insurance company will have some more questions before they agree to pay for damages.
- You didn’t file the claim correctly or at all – when filing a claim, you must follow all the steps carefully, failure to do so could mean a claim denial. Always double check to ensure you’ve met all the requirements for filing a claim to avoid a denial based on a
- a different company or policy should pay first. If you have multiple policies it can be confusing to determine who is actually supposed to provide coverage first. An attorney can help you identify all possible liable parties and their respective policies to ensure you don’t miss out on coverage you’re entitled to.
- There is insufficient coverage on the policy – insurance companies will only pay up to the policy limit.s if the policyholder doesn’t have sufficient coverage that gap could mean a claim denial. For the most part, insurance companies will not pay the entire amount of a claim if it exceeds the policy limit.
- An invalid or expired policy – if a policy is canceled or not in force during the time of the accident, the company will likely deny the claim.
- Failure to report the incident in a timely manner – if you did not report the accident right away to the police or insurance company, they might question your damages and the assertion of fault. Colorado law also requires all persons involved in an accident to report the incident; in failing to do so, it may seem questionable to the insurance company regarding the seriousness of your injuries and the validity of your claim.
- Bad faith or insurance malpractice – sometimes, insurance companies just outright act in bad faith. They may knowingly lowball a claimant or outright deny a valid claim just to keep their profits in their pockets. Sadly, they work to protect their bottom lines, even if that means shortchanging innocent injury victims.
How to Appeal Your Car Insurance Claim Denial
You may have the right to appeal an insurer’s decision if you feel they made an error or acted in bad faith. Insurance companies have a specific process for which they provide directions to follow if you need to contest or appeal a claim denial.
Here are some steps you may need to take in the process of appealing an insurance claim denial:
- Gather evidence that will be helpful to your appeal. You may have already done this for your claim, but if it was denied due to insufficient evidence, you’ll need more substantial evidence. Examples of evidence your attorney might help you obtain include police reports, eyewitness testimony, medical records, and more. It’s always a good idea to make copies of all the evidence you submit.
- Draft a letter of appeal. The purpose of an appeal letter is to spell out why you disagree with the insurance company’s decision. This letter should be as detailed as possible and include all the details of your policy, the claim in questions, and the denial letter.
- Hire a Colorado bad faith insurance attorney. Filing an appeal can be an overwhelming process. By hiring a legal professional who is familiar with the process and knows how to devise a tailored strategy for your case, you can rest easy and gain some peace of mind.
How Long Do I Have to Appeal Unreasonable Insurance Claim Denials in Colorado?
Colorado law allows two years for insurance bad faith claims. So that means you have two years from the time you realize you’ve been unreasonably denied or delayed to bring a claim. Determining when the statute of limitations actually started can be a tricky determination, so it’s best to act as soon as possible. Often time claimants don’t even realize what’s happening until some time later, which further complicates defining a clear statute of limitations.
Determining Whether Bad Faith Has Occurred May Require the Help of a Legal Professional
Making a determination of bad faith requires a review of the original claim as well as the insurance company’s denial or response at the time the claim was made. if the insurer cannot retroactively submit evidence to support a claim they’ve already denied or delayed in the past.
Likewise, a claimant may not bring evidence to light after the claim has been denied. That is, the courts won’t accept new evidence to support an old claim. This is why it’s crucial to seek legal help as soon as possible. An attorney can assist you with all the technical and legal requirements for successfully disputing a claim denial and will better your chance at getting a fair payout.
Contact a Colorado Bad Faith Insurance Attorney if You Claim Was Unfairly Denied
If your insurance claim was unreasonably delayed or denied by your insurance provider, you may want to speak with our Colorado bad faith insurance attorneys about your case. We may be able to help you get the compensation you deserve.
Call us today for a free initial consultation.