Insurance companies in Colorado must adhere to laws which ensure they are treating their customers fairly. These laws weren’t always in place, and proving an insurance company was NOT acting in their customers’ best interest used to be more difficult. However, Colorado has enacted laws to regulate the business of insurance by defining, or providing for the determination of, all such practices which constitute unfair methods of competition, or unfair or deceptive acts or practices to help protect Colorado consumers. These laws for the regulation of insurance may be found at C.R.S. §§ 10-3-1101 et al. To give you a better idea of what we are talking about, let’s take a look at part of one of these statutes:

Your insurance company owes you the duty of good faith and fair dealing, which duty is breached if the insurer delays or denies payment without a reasonable basis for its delay or denial. 

Whether the insurer’s delay or denial was reasonable shall be based on whether the insurer knew that its delay or denial was unreasonable or whether the insurer recklessly disregarded the fact that its delay or denial was unreasonable.

OK, so what does this mean? Let’s start with the basics – when you begin an insurance policy, you are entering into a contract. In exchange for the payment of your insurance premium, the insurance company promises to pay a benefit in the event of a mishap, collision, or loss. The issue arises when your insurance company does not keep its promise by paying all or part of the benefit you paid premiums for without a reasonable basis. This is otherwise known as Insurance Bad Faith.

Colorado law has also specifically identified some types of prohibited conduct by insurance companies as deceptive or unfair. The following are examples of the types of conduct that Colorado specifically prohibits insurance companies from doing:

Refusing to pay claims without conducting a reasonable investigation based up all available information;

Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear;

Compelling insured to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in action brought by such insureds; or

Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.   

 

Insurance Bad Faith claims can be very complicated, requiring attorneys to obtain and review the insurance claims file to help determine if what the insurance did or did not do was unreasonable, hire experts in the field of insurance claims handling, and often file a lawsuit to get the insurance company to pay what they otherwise owed. However, it’s certainly not as difficult as it was before Colorado enacted several new laws that statutorily define bad faith insurance practices and if proven hit the insurance company with more significant damage and attorney fees.

At D’Angelo Law, we’re well-versed in dealing with insurance companies. If you’re dealing with a claim stemming from an auto collision – we can help. Reach out today and let’s chat. We’ll help you make sure your insurance company keeps its promise.