BEWARE OF BAD FAITH TACTICS OF INSURANCE COMPANIES
Aug. 30, 2021
You’ve been injured in an auto accident, and you call in a claim to your insurance company. A claims adjuster gets back to you and then puts you through the proverbial wringer.
The adjuster stalls, uses your own words against you, sends you an overly broad medical information release form, and ultimately low-balls your settlement offer. What do you do?
The Colorado Unfair Claims Settlement Practices Act protects consumers against insurance companies by setting standards and conditions on them and requiring them to employ “reasonable” practices. To be covered by this statute, your claim doesn’t have to be just for an automobile accident. It could just as well be for a home, health, or disability policy.
If you’re facing obstacles and obstructions by the insurance company in the claims process, contact our attorneys at Downs, McDonough, Cowan & Foley, LLC. We’ve been dealing with “bad faith” tactics by insurers for years, and we can stand up to their tactics and help you seek the compensation you deserve.
From our offices in Durango, we proudly serve clients in Telluride, Cortez, Pagosa Springs, and the Four Corners region of Colorado.
Bad Faith Tactics Prohibited Under Colorado Law
The Colorado Unfair Claims Settlement Practices Act spells out tactics used by insurers that are considered to be “unreasonable,” including:
Attempting to settle a claim for an amount less than what is due
Failing to affirm or deny coverage of claims within a reasonable time
Failing to investigate claims made on their policies
Failing to respond promptly to communications
Misrepresenting relevant facts or insurance policy provisions
Delaying investigations or payments by requiring unnecessary documents
In worst-case scenarios, legal action against a “bad faith” insurer is possible, but it is best to exhaust more standard administrative remedies first. The claims settlement statute asserts that “the determination of whether the insurer's delay or denial was reasonable shall be based on whether the insurer's delay or denial was negligent.”
Common Claims Process Issues
Remember, an insurance company is a for-profit operation, so they will do everything in their power to protect their bottom line. Insurers hire professionally trained claims adjusters to deal with consumers who file claims. Their job is to limit the parent company’s liability. In so doing, they will use tactics that can delay, low-ball, or even deny claims.
Some of the common issues that arise during the settlement process include:
MISREPRESENTATION: Though they are prohibited by law from misrepresenting policy terms, claims adjusters have been known to mislead claimants by reinterpreting the terms and conditions of their policy, or by ignoring certain policy terms that favor the claimant.
LONG DELAYS: Delay is often the name of the game, and it can take many forms. Not responding to questions or phone calls promptly (though mandated by law) is one. Another is to send out unneeded documents to be filled out and signed, though they’re either redundant or unnecessary. Another tactic is to switch claims adjusters in midstream and start the process all over again. The hope in all of these situations is that you give up in frustration. Colorado law, however, stipulates that valid claims must be approved or denied within 60 days.
FAILING TO CONDUCT A THOROUGH INVESTIGATION: Apart from the obvious “bad faith” tactic of not conducting an investigation, or conducting a less-than-thorough investigation, insurance adjusters will often try to pin the fault on the claimant.
Since Colorado relies on a modified comparative negligence standard, if the adjuster can show you were more than 50% at fault for your accident or injury, they don’t have to pay you. They can also reduce your settlement by claiming, for instance, that your driving was 30% at fault for the damages and injuries you suffered. They can then reduce your settlement from, say, $20,000 to $14,000.
LOW-BALLING THE FIRST OFFER: Insurers will generally try to get you to accept the lowest amount they can get away with. Their first offer is invariably going to be at the low end. Don’t accept the first offer. If you’re injured, you still may not know the full amount of medical expenses you’re going to incur, and if you accept an offer, you can’t go back later and ask for more. Settlements are final.
The adjuster may claim that you’ve already reached the point of maximum medical improvement (MMI in insurance terms), and they don’t owe you any more money. It’s time to take their offer to your attorney and draft what is called a “demand letter,” which informs the insurer of what you consider acceptable in terms of compensation and why.
Your Attorney’s Role in a Settlement
Not all insurers will resort to bad faith tactics, but they all covet the bottom line of maximum profitability. Unless you’re involved in a minor fender bender with no injuries or have a minor property claim that should go smoothly, it’s never a good idea to go it alone against insurance adjusters.
As mentioned above, if the insurer can get you to admit some measure of fault — or even hint at it — they can reduce or deny your settlement. In any case, they will almost invariably present you with a low-ball first offer to settle.
The best approach, especially when injuries are involved, is to involve experienced and knowledgeable attorneys from the beginning. At Downs, McDonough, Cowan & Foley, we have been dealing with insurers for years and we know how to counter their tactics.
Contact us immediately with your claim details and let us go to bat for you. We can listen to your story, investigate, assess liability, and then help you fight for a just and fair settlement.
Our firm is proud to serve clients in Durango, Telluride, Pagosa Springs, Cortez, and the Four Corners region of Colorado.