Bad Faith Insurance Claims

Occasionally, personal injury firms have to deal not with other parties, such as those that may have caused a horrific accident to happen, but someone that should by all rights, be on our client’s team.

What we are talking about here, is when one of our client’s own insurance companies, deals in bad faith with a client.

Tremendous power and a resultant duty to act in good faith

Insurance companies are huge conglomerates with millions of dollars worth of resources. In fact, have you ever seen an insurance company operating from even a moderately sized building?

No! Insurance companies have multi-million dollar glass and steel edifices because they want all their potential insurees to be assured that they are in fact, as one popular insurance company claims, “In good hands.”

Never feel sorry for insurance companies, especially auto insurer companies. First, they have a captured clientele, in that there is not a state in the union that does not mandate that you have auto insurance in order to drive. And banks and other car lenders usually require full auto insurance, not merely liability insurance, as a condition of the car loan.

Recognizing that auto insurance companies are dealing with a full-house 99 percent of the time, virtually every state has an insurance commission in order to keep insurer’s from raising rates too high, as well as to demand fair treatment from an insurance company.

However, it happens more often than you would believe, that a regional claims manager or associate vice president, get’s super tight about handling legitimate claims, with the result that our clients suffer.

Bad Faith factors

Factors that may be associated with bad faith include:

  • Misrepresentation of relevant facts or of insurance company policies

  • Deliberate failure to recognize a claim or to act in a timely manner on it

  • Failure to establish reasonable policies to handle claims

  • Failure to approve or deny claims in a reasonable timeframe.

  • Failure to supply reasonable explanations as to why claims are denied.

Bad faith insurance claims are regulated in Colorado by the Unfair Claims Settlement Practices Act.

Generally, a potential bad faith claim exists with an insurance company having an attorney call the insurance adjuster’s supervisor is sufficient to get prompt action.

First, when an attorney calls, this puts the insurance company on notice that you not only mean business but are willing to fight, if necessary to protect your rights.

Many times, it happens that the supervisor may not even be aware of a problem, and things got slowed down because an adjuster got overwhelmed with cases.

Other times, the supervisor himself may be part of the problem, however, when notified that a client is considering filing a formal complaint with the State Insurance Commission, everything gets involved rather quickly.

If a phone call to the adjuster’s supervisor doesn’t do the trick, your attorney may quickly follow with a bad faith letter, formally informing the insurance company of the issues.

In this case, normally attorney will send multiple copies of the letter to the insurance company’s legal department, plus address it to every level of management necessary.

After all of that, and still no action, your attorney may advise not only making a formal complaint with the State’s Insurance Commission but also to sue in state court.

Low-ball offers

By far the most frequent problem is deliberate, low-ball offers from your insurance company, or if you were injured by someone else, their insurance agency.

The Unfair Claims Settlement Practices Act is supposed to eliminate companies from attempting to settle from far less than they know the true value of a claim to be, but some companies have a “might as well try attitude, what’s the worse that could happen?” attitude.

Such companies know too, that both bad faith claims with the State Insurance Board as well as law-suits take both time and money, so they may hope a client, anxious for some kind of pay-out, will accept prematurely.

Personal injury attorneys, among their many skills, must be great negotiators, which the average person on the street is not.

What may seem to be a fair deal to you maybe not fair at all when important considerations such as long-term care, lost wages, the need to hire a housekeeper or medical aid, and future health consequences are involved.

People with serious injuries are not trained to deal with such numbers, whereas, an attorney is.

If you have serious questions about dealing with your insurance company or other company’s agents, consider contacting us for a complete assessment of your case.

Zaner Harden is a personal injury law firm in Colorado Springs with years of personal injury cases behind them. They are tough, disciplined, and can help you secure satisfaction concerning your claims.

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