Grand Junction Bad Faith Insurance Lawyers
When you purchase an insurance policy, you enter a contract with the insurer. In exchange for your premiums, the company is supposed to provide the coverage you paid for when you need it. Unfortunately, it does not always work that way. Insurance providers are in business for profit, and they may look for a reason to delay, minimize, or deny your claim. Insurance companies have a responsibility to consumers to handle claims in an honest, ethical, and timely manner. When they fail to do so, they may be held liable for insurance bad faith in a civil lawsuit.
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There are two basic types of insurance bad faith claims – first-party and third-party. First-party bad faith claims can arise when an insurance company unreasonably refuses to pay or fails to properly investigate a policyholder’s claim. Third-party bad faith claims arise in cases of liability insurance designed to protect the insured against claims made by a third party. It is bad faith when the insurance company fails to defend, indemnify, or settle the claim within the policy limits, or improperly fails to investigate a claim.
No insurance company may unreasonably deny or delay payment of a claim of benefits to a first-party claimant, as stated in CRS 10-3-1115 (1) (a). Delay or denial is unreasonable if the insurer delays or denies authorizing payment of a covered benefit without a reasonable basis for that action. Case law has also contributed to state insurance regulations. For example, in Goodson v. American Standard Insurance Co. of Wisconsin, the Colorado Supreme Court states:
“In addition to proving that the insurer acted unreasonably under the circumstances, a first-party claimant must prove that the insurer either knowingly or recklessly disregarded the validity of the insured's claim.”
Plaintiffs pursuing bad faith insurance claims are allowed to seek punitive damages, designed to punish insurance companies for unreasonable delay or denial of coverage. Punitive damages are typically awarded in cases involving fraud, malice, or willful and wanton conduct.
Insurance companies may demonstrate bad faith in any number of ways. The following are some of the most common examples:
- Delaying investigation of a claim
- Denying a claim without first conducting an investigation
- Failing to communicate with the claimant about the status of the claim
- Misrepresenting policy provisions or relevant facts
- Failing to pay the claim promptly
- Offering a lowball settlement, significantly less than what the claimant is entitled to receive
- Failure to settle a claim ethically and fairly
- Delaying payment or investigation by requiring unnecessary documents
When insurers deny or delay claims unreasonably and in bad faith, it is generally for economic reasons. Their revenues are based on the difference between what they collect in premiums and what they pay out in claims. The less money an insurance company pays out for policyholder claims, the greater the insurance company’s profits. To reduce the overall amount paid out, some insurance companies may act in bad faith, knowing that most policyholders will not bring a lawsuit against them.
The statute of limitations (time limit imposed by law) for bad faith insurance lawsuits in Colorado is two years from the date of the bad faith conduct. However, in this type of claim, it can be tricky to determine when the statute begins to run (or when the clock starts ticking). If you believe your insurance company has acted in bad faith, it is in your best interests to contact an experienced lawyer right away.
Our Grand Junction personal injury attorneys at Peters & Nolan, LLC are seasoned trial lawyers with a long history of success. We have more than 20 years of personal injury experience and have recovered millions of dollars in settlements and verdicts for our clients. Contact us today at (970) 243-4357 for dedicated legal assistance with your bad faith insurance claim.
Peters & Nolan, LLC is your ideal source for high quality legal representation throughout the state of Colorado. Known for being personable and responsive, attorneys Andrew J. Peters and Andrew Nolan are aggressive trial lawyers with an excellent record of trying and settling cases in criminal defense, DUI/DWAI and personal injury.