Denver Bad Faith Insurance Attorney

What is Insurance Bad Faith?

Insurance bad faith refers to any unfair conduct by an insurance provider to deny a legitimate claim or make an unfair settlement. Typically, insurance companies have the upper hand when dealing with insurance claims. This is because they possess more expertise and financial muscle. Some will use the two elements to try and breach the covenant of fair dealing and to act in good faith.

On your part, paying premiums may not be enough, especially if you are dealing with an unscrupulous insurer who will try to use their expertise and finances to try and intimidate you. To protect yourself and give yourself some bargaining power, it’s best to involve a skilled attorney for some much-needed legal advice.

How to Identify Bad Faith Tactics

There are two types of bad faith insurance claims: first-party bad faith and third-party bad faith.

First-party bad faith occurs when an insurance provider fails to treat you fairly. For instance, if you were in a car accident resulting in any form of injury, your insurance provider should compensate you for the same as long as the loss is covered under the policy.

As a policyholder, the Colorado bad faith statute allows you to bring a first-party bad faith insurance action against your insurer if their conduct is deemed unreasonable or if your insurer knew their conduct was unreasonable and blatantly ignored facts that indicated that their conduct was unreasonable. Some specific examples of when first-party bad faith could occur include when your insurer:

• Denies your claim before conducting a full investigation
• Denies a claim without giving sufficient reason
• Delays your claim unnecessarily
• Attempts to underestimate your payout
• Resorts to poor communication or total lack of communication to frustrate you

On the other hand, third-party bad faith occurs when you, as the insured, are sued by a third party and your insurer is defending the action on your behalf. In such a case, your insurer is supposed to take all measures to protect your interests so that the claim is settled within policy limits, and your personal assets are not used to settle any excess damages to the injured party. Some acts that may constitute third-party bad faith include:

• Inadequate handling of the lawsuit
• Failure to settle the suit within the policy limits, thus exposing you to excess liability
• Wrongfully failing to defend you in a third party lawsuit