Insurance companies have a contractual duty to deal honestly and fairly with their clients. While many insurers take great pains to address the concerns of policyholders and abide by the terms of their contracts, others are not so scrupulous. In these cases, the insured may be able to file a bad faith claim against the company.
An insurer’s failure to pay a claim fairly or promptly can have devastating consequences for injured victims, so if you were recently injured in a car crash or another type of incident and you were denied compensation, it is critical to speak with an experienced bad faith insurance attorney who can explain the claims filing process.
What Constitutes Bad Faith?
Determining what types of behavior qualifies as bad faith can be difficult and while there is no clear cut definition, there are certain indicators that are typical of bad faith, including:
- Failing to evaluate a claim in a timely manner;
- Unreasonably denying a claim;
- Using intimidation to coerce a settlement;
- Making an unreasonably low settlement offer;
- Demanding over-burdensome or unnecessary paperwork;
- Advising the claimant not to hire an attorney;
- Changing the claimant’s policy without notice;
- Significantly increasing premiums for accidents that were not the policyholder’s fault;
- Failing to complete an investigation promptly and thoroughly; and
- Failing to communicate with a client regarding the status of a claim.
Insurers who exhibit these types of behaviors can be held accountable for bad faith insurance practices in court as long as:
- The claimant has exhausted his or her administrative remedies; and
- The insurer’s actions were unreasonable.
Filing a claim of bad faith insurance practices can be time-consuming and stressful, so it is in a claimant’s best interests to ensure that the delay, denial, or improper investigation was not merely the result of a simple clerical error or other oversight.
To this end, a claimant who has been denied or offered an unfair settlement should first attempt to speak with the claim adjuster’s supervisor and bring the matter to his or her attention. At this stage, it is important to document all communications with the company, including:
- The date and time of each communication;
- The name of the person handling the call; and
- A brief summary of each conversation.
It is also critical to keep copies of all written communications with the insurer.
Contacting the Division of Insurance
However, if after explaining the situation, as well as the adjuster’s behavior, the company refuses to change its position, the claimant can file a claim with the Colorado Division of Insurance (DOI), via:
- Fax; or
- An online complaint form.
Generally, formal complaints must be in writing or filed electronically through the DOI’s website. The DOI then requests certain information from the claimant, including:
- The company’s name;
- The type of coverage offered under the policy in question;
- The claimant’s policy number;
- The claim number;
- A description of the issues; and
- A statement of the required resolution.
Once this information is obtained, the DOI gives the insurance company 20 days to research and respond to the complaint. Once the company’s response is received, the analyst assigned to the complaint reviews the insurer’s explanation and determines whether a law, regulation, or contract provision has been violated. In the event that the DOI discovers that a company has violated a law or regulation or has disregarded policy provisions, it can:
- Require payment to the claimant for wrongfully denied or withheld benefits or a refund of premiums paid;
- Pursue enforcement of policy provisions;
- Require the company to perform a self-audit; or
- Issue a fine against the company.
Once a claimant has attempted to resolve an issue through administrative procedures, he or she can file a claim against the insurer in court. If able to demonstrate that an insurer acted in bad faith, a plaintiff can recover twice the value of the initial claim.
Contact us Today to Speak With an Experienced Bad Faith Insurance Attorney
An insurance company’s failure to fulfill the terms of a policyholder’s contract can have serious consequences for injured victims who are already struggling to make ends meet. Insurers have a legal duty to comply with the terms of a claimant’s policy and can be held accountable if they do not.
If you believe that your insurance company is acting in bad faith, please contact the legal team at McCormick & Murphy, P.C., by calling 719-249-0541 today or by sending us a brief message. One of our dedicated bad faith insurance attorneys can also be reached via live chat.