Denver Personal Injury Lawyers

The recognized leaders in personal injury law

Bad Faith Claim

Bad Faith Claim

You probably maintain several insurance policies–auto insurance, homeowners insurance, and health insurance, for example. You pay your monthly premiums and in exchange, you expect the insurance company to treat you fairly when you have a claim. That doesn’t always happen, however, and when it doesn’t, you may have an insurance bad faith claim against the insurance company. You might even have a claim against someone else’s liability insurance company.

The Incentive Problem

The Incentive Problem

Insurance companies have an inherent incentive problem. They make money when you pay them premiums and lose money when you pay your claim. Consequently, the best way to maximize their profit is to charge as much as they can in premiums and pay as little as they can in compensation. This is exactly what they do, to the extent that the law and the market let them. Insurance bad faith claims are the law’s way of restraining insurance companies.  

Two Claims in One

Suppose you have a personal injury claim against a defendant. Even if you win your claim, the defendant probably cannot afford to pay out of their own resources. Instead, you must rely on the defendant’s insurance. To receive compensation, you need to deal with their insurance company. Alternatively, you might file a claim against your own insurance company.

If the insurance company mistreats you, you have a bad faith insurance claim against them and perhaps a personal injury claim against the at-fault defendant. To win your bad faith insurance claim, you must win your personal injury claim. In other words, you must win two claims in one—your original personal injury claim against the at-fault party and your insurance bad faith claim against the insurance company.

Winning First-Party Claims vs. Winning Third-Party Insurance Claims

In a first-party claim, you file a claim against your own insurance policy–your own health insurance policy, for example. In a third-party claim, you file against the at-fault party’s liability insurance policy–their auto insurance policy, for example. It’s generally easier to win a bad faith insurance claim against your own insurance company than it is to win a bad faith claim against another party’s liability insurance company. Both types of claims are winnable, however.

The Insurance Company’s Bag of Tricks: Examples of Insurance Company Bad Faith Tactics

Below are but a few of dozens of ways that an insurance company might deal with you in bad faith:

  • Refusal to negotiate your claim
  • Refusal to acknowledge non-economic damages
  • Unreasonable refusal to acknowledge liability
  • Refusal to pay a settlement that the insurance company has already agreed upon
  • Delaying the investigation or processing of your claim without a valid reason
  • Repeatedly issuing only unreasonably low settlement offers
  • Concealing important information regarding your claim
  • Ignoring your attempts to contact them
  • Attempting to intimidate you
  • Misrepresenting policy language or facts
  • Canceling your policy without valid grounds after you file a claim
  • Refusing to conduct an adequate investigation of your claim
  • Demanding unnecessary or excessive documentation
  • Failing to disclose policy limitations or exclusions that could affect your coverage
  • Using biased experts to assess your damages
  • Refusing to provide a clear explanation for denying your claim
  • Unreasonably delaying payment after settling your claim

Even if the insurance company uses some of these tactics, it’s ‘no harm, no foul’ unless the insurance company denies your claim, offers an unreasonably low settlement, or unreasonably delays the resolution of your claim. Ultimately, a court will decide on your claim based on ‘the totality of the circumstances,’ meaning that there are very few things that an insurance company can do that count as automatic bad faith.

How to Fight Back Against an Insurance Bad Faith Claim

Your best defense against bad faith insurance tactics is to hire an experienced personal injury lawyer before you even contact the insurance company and let your lawyer handle all correspondence for you. If you do this, the insurance company will probably not even dare to try any bad-faith tactics on you. 

Some insurance companies are bullies, and bullies respect only strength. Hiring a good lawyer makes you strong. Here are some other actions you can take if you brought in a lawyer only after the insurance company started treating you badly:

  • Talk to your lawyer about whether you have a valid bad faith claim
  • Ask your lawyer to mention bad faith to the insurance company during negotiations
  • Ask your lawyer to send the insurance company a warning letter
  • File a bad faith insurance lawsuit. You can always withdraw it later in exchange for an acceptable settlement

Remember that you can negotiate your personal injury claim and your insurance bad faith claim at the same time.

Damages

Damages for an insurance bad faith claim can include not only the original personal injury claim amount but also additional compensation for emotional distress, punitive damages, and attorney’s fees.

The Statute of Limitations Deadline

You typically have two years from the bad faith conduct to file an insurance bad faith claim. This is comparable to the two-year statute of limitations deadline that applies to Colorado personal injury claims. 

Talk to a Personal Injury Attorney

Denver bad faith insurance claims can be difficult to win without legal assistance. Winning requires proving the insurer’s actions were unreasonable and caused you harm, which can be difficult without legal expertise. If you do manage to win, however, the amount of your compensation could be significant. Under the contingency fee system, you don’t even have to pay legal fees unless you win your claim.

Contact Zaner Harden Personal Injury Lawyers at (720) 613-9706 today for a free consultation and to learn more about contributory fault.  

Where We Are

We are located across the street from Union Station in downtown Denver and offer validated parking for all our clients. We also have offices in Boulder and Colorado Springs.