Bad Faith Insurance Claims

Insurance is meant to be a safety net to protect individuals when the unexpected happens. When people purchase insurance policies, they trust that their insurance company will act in good faith and fulfill its obligations in the event of a claim. Unfortunately, some insurance companies engage in bad faith practices, denying or undervaluing legitimate claims, barring people from getting the proper compensation they need to move forward after an accident. In Colorado, people who are facing such situations can turn to the expertise of a bad faith insurance lawyer to help protect their rights and seek fair compensation.

Bad faith insurance claims arise when an insurance company doesn’t honor its obligations to its policyholder. This can manifest in a variety of ways, such as delaying a claim, offering an unreasonably low settlement, or outright denying coverage without proper justification. The key issue is that these actions go against the fiduciary duty the insurance company has to act in the best interest of the policyholder.

At the Law Offices of Rodemer | Kane, we have the knowledge and experience to go up against insurance companies that would attempt to use bad faith practices to lessen or deny your claim after you’ve been involved in an accident. If you have been in an accident and are now battling with your insurance company, contact our Colorado Springs law office online of call 719-635-7886 to book a free case consultation with a bad faith insurance lawyer near you.

What Does Bad Faith Insurance Mean?

Bad faith insurance refers to the unethical practice of insurance companies handling claims incorrectly to reduce the amount of payout they are expected to provide. When you make a claim with your insurance company, it is expected that the insurance company pays you the proper amount within a reasonable period of time. Insurance companies are legally obligated to act in good faith, this means that they must reasonably and promptly investigate, evaluate, and settle insurance claims that are submitted to their organization. When an insurer unjustly denies a valid claim, undervalues a claim without proper investigation, or engages in other deceptive practices, it may be considered bad faith.

Types of Bad Faith Insurance Practices

Bad faith claims can refer to more than just claims that have been denied without merit. There are a number of items that could be considered bad faith insurance practices, some of the most common include:

• Unjustified Denial of Claims – The most common bad faith practice is a flat out denial of a legitimate insurance claim. Insurance companies may deny a claim without a valid reason or proper investigation, which violates the policyholder’s rights, and for which they should be taken to task.
• Delaying Claim Processing – When you’ve been in an accident, you want help as quickly as possible. Deliberate delays from your insurance company or other parties’ insurance companies when processing a claim, such as refusing to answer the phone or respond to emails, can cause financial strain, especially in situations where immediate action is required, like paying for medical bills or vehicle replacement.
• Undervaluing Claims – Insurance companies are expected to assess all insurance claims fairly and accurately. Undervaluing a claim without justification is considered a bad faith practice that an experienced lawyer will fight against.
• Failure to Investigate – When an insurance company insufficiently investigates a claim made to their organization, it can lead to a wrongful denial of a claim or a settlement that does not provide adequate compensation to address the policyholder’s losses.
• Misrepresentation or Deception – Providing false information to clients, misrepresenting policy terms, or engaging in other deceptive practices are considered bad faith insurance practices as well.

When insurance companies engage in deceptive or unfair practices that result in improper delays, reductions, or denials of your claim, Colorado law protects you. 

Examples of Bad Faith Insurance Claims

A common example of bad faith is when an insurance company delays the processing of a claim, knowing that it will hurt the claimant financially. Another example is when an insurer refuses to settle a claim or offers a settlement much lower than what is fair. This is where legal action comes into play, as we can hold the insurer accountable for not living up to their contract.

In Colorado Springs, CO, we often see bad faith claims related to roofing and insurance. Some examples of these would include:

1. Bad Faith in Roof Damage from Hail Storm:

• A common bad faith insurance example happens when a house is damaged by a hailstorm. The insurance company might initially offer a low settlement for roof replacement, such as $10,000, but the homeowner’s own adjusters determine the repair should actually cost $75,000. This is a classic case of bad faith, where the insurer attempts to settle quickly and undervalues the true cost of repairs.
• In these situations, the homeowner may need to prove bad faith by showing that the insurance company was acting in its own financial interests rather than the homeowner’s, essentially refusing to meet the true value of the claim. A situation like this may lead to additional damages, possibly tripling the value of the claim if bad faith is proven.

2. Undue Delay in Roof Claims:

• Another aspect of bad faith involves undue delays. In cases where the insurance company takes too long to settle a claim, even when experts have confirmed the true cost of repairs (e.g., a $75,000 roof replacement), an attorney might step in to handle the situation. The delay itself, especially when caused by the insurer’s reluctance to settle at the appropriate amount, can lead to a bad faith claim.
• These situations are common when the insurer is trying to undercut the claim by offering a settlement much lower than what the repair or replacement truly costs.

3. Insurance Practices in Hail Damage Cases:

• A specific example involved a bad faith claim regarding hail damage. The insurance adjusters might classify damage as “wear and tear” instead of hail damage, thus offering significantly less for the repairs. To counter this, an attorney might bring in specialized, independent adjusters to demonstrate that the damage was indeed from hail and not from normal wear.

These examples highlight situations where the insurance company’s actions (whether it’s undervaluing the claim or delaying settlement) can be challenged as bad faith, especially when they refuse to act in the best interest of the insured.

Continuing with the example of roofing claims, bad faith can especially come into play when there are large scale claims in neighborhoods after a hailstorm. For example, a neighborhood has a hailstorm which causes roof damage to many homes. One neighbor (House A) gets an insurance payout for the roof replacement, but their insurer (e.g., Farmers) offers far less than another adjuster (e.g., Progressive) might pay to a neighbor across the street (House B).

This scenario highlights bad faith when insurance companies undervalue claims or try to rush settlements without proper assessments, motivated by financial savings rather than fair compensation for their clients’ losses. Neighbors might share their experiences, and one might realize they are being underpaid compared to others. This collective realization can lead to a lawsuit against the insurer for bad faith practices.

These cases can be quite common when there is widespread damage, neighbors or multiple claims in the same area can highlight patterns of bad faith when insurance companies are found to be underpaying or rushing settlements. If proven, these cases can lead to legal actions against the insurer for failing to act in the insured’s best interest.

Statute of Limitations for Bad Faith Claims in Colorado

In bad faith cases, the statute of limitations is often shorter than in personal injury cases, sometimes as little as two years. This means it’s crucial to act fast if you believe your insurance company is acting in bad faith. If we can prove that the insurer was not acting in good faith, you could be entitled to not just the original amount owed, but potentially punitive damages as well.

Why You Need A Bad Faith Insurance Lawyers in Colorado

If you are dealing with an insurance company that has wrongfully denied your insurance claim or grossly undervalued the settlement offer it is highly advised that you reach out to a bad faith insurance lawyer near you. Bad faith insurance lawyers have expertise in insurance law and understand the complexities of insurance policies. They are used to dealing with insurance companies and are aware of the tactics insurance companies will use to try to lessen a claim.

Personal injury lawyers who deal with accident settlements also have the knowledge of different types of accidents to more accurately evaluate the details of an insurance claim and determine whether the insured party is being offered an unfair settlement. They can help to ensure that the claim is being handled appropriately and that the policyholder’s rights are upheld.

Another reason to retain the services of a bad faith insurance lawyer is to help with negotiations on behalf of the policyholder. They can communicate effectively with the insurance company to address concerns and push for a fair and just resolution. And in cases where negotiations fail, a bad faith insurance lawyer can file a lawsuit against the insurance company and represent the policyholder in court if necessary. Ultimately, a Colorado personal injury lawyer will strive to maximize the compensation a policyholder receives by whatever means necessary.

Colorado Law 10-3-1115 Provides You with Protection

Your Colorado bad faith insurance lawsuit is a civil claim broken into two parts. The first element is when you as the insured party demands fair payment for the amount that you should have received under your policy. The second element of making a claim is adding an additional claim for the insurance company’s bad faith actions in their unreasonable denial or underpayment of your claim. 

When it comes time to file a claim for a bad faith insurance loss, reaching out to an experienced Colorado bad faith insurance attorney can be especially helpful. The experienced bad faith insurance claim lawyers from Rodemer | Kane has years of experience accurately calculating clients’ proper claims, then holding the insurance company accountable for the full amount owed. 

Contact A Bad Faith Insurance Lawyer Near You in Colorado

Bad faith insurance lawyers in Colorado play an important role in holding insurance companies accountable for their actions. Policyholders facing unjust denials or undervalued claims should seek legal representation to ensure their rights are protected and to pursue the compensation they rightfully deserve. If you have been injured in an accident and are dealing with troublesome insurance companies or have any more questions about bad faith insurance in Colorado, please contact the Law Offices of Rodemer | Kane to book a no obligation free case consultation. We are happy to work with you and answer any questions you might have.

To learn how we can help through a brief risk-free, cost-free initial consultation, give us a call at 719-437-7286, or visit our site to schedule a consultation. If you or a loved one has been injured in an accident, our Colorado Springs personal injury attorneys are here for you.

Seeking compensation for serious injuries caused by others? Contact one of our catastrophic injury lawyers near you.