Insurance companies have a legal duty to handle claims fairly, honestly, and in good faith. When they fail to meet that obligation, it’s known as “bad faith” insurance. Unfortunately, this type of misconduct happens more often than many people realize, and it can leave injured individuals facing financial hardship, delays, and unnecessary stress after an accident or loss.
If you suspect an insurance company is acting in bad faith during your Castle Rock car accident claim, it’s important to recognize the warning signs. Below are some common examples of bad faith insurance tactics.
What is Bad Faith Insurance?
Bad faith occurs when an insurance company wrongfully delays, denies, or underpays a valid claim. Insurers have a contractual and legal obligation to act reasonably and in good faith when processing claims, whether you’re filing with your own insurance (first-party claim) or against another driver’s policy (third-party claim).
Colorado law allows policyholders to pursue legal action against insurance companies that engage in bad faith practices, which may result in additional compensation beyond the value of the original claim.
Common Examples of Bad Faith Insurance Practices
Bad faith can take many forms, but some of the most common examples include:
Unreasonable Denial of a Valid Claim
One of the clearest signs of bad faith is when an insurance company denies a legitimate claim without proper justification. For example, they might reject your claim by misinterpreting policy language or inventing unreasonable excuses to avoid payment.
Delaying Payment Without Cause
Insurance companies must process claims in a timely manner. When they intentionally delay payment, request excessive documentation, or stall investigations, it may constitute bad faith.
Failure to Conduct a Proper Investigation
Insurers must thoroughly investigate accidents, property damage, and other covered losses. If they refuse to investigate or rely on incomplete information to deny your claim, they may be acting in bad faith.
Offering Unreasonably Low Settlements
Another tactic involves offering a settlement far below the reasonable value of your damages, hoping you’ll accept less out of desperation or frustration. While initial offers often start lower as part of negotiations, grossly undervaluing a claim without valid reason could cross the line into bad faith.
Misrepresenting Policy Terms or Coverage
Some insurance adjusters misrepresent the language or scope of your policy to confuse you or deny coverage. They may incorrectly claim your loss isn’t covered or twist the policy terms to limit what they owe.
Remedies for Bad Faith Insurance
Colorado law provides remedies for bad faith conduct. Victims may be entitled to compensation beyond their original claim for damages, including:
- The full value of your valid claim
- Additional damages for financial harm caused by the delay or denial
- Punitive damages in severe cases of intentional misconduct
- Legal fees and costs
If you believe an insurance company is mishandling your claim, you should document every interaction with adjusters and other representatives, including emails, letters, and phone calls. Keep copies of your policy, medical records, repair estimates, and correspondence related to your claim.
You should also consult an experienced car accident attorney in Castle Rock who understands Colorado’s insurance bad faith laws. Our skilled lawyer, Dale G. Casares, can review your case, negotiate with the insurance company on your behalf, and take legal action if necessary.
Contact Casares Injury Law to schedule a free consultation with a Castle Rock car accident lawyer to learn more about how we can help you if you are facing bad faith from an insurer.