When the insurance company doesn’t pay what it’s supposed to, it may be liable under Colorado law.
Bad faith insurance claims arise when an insurance company delays or denies payment of a underinsured or uninsured motorist claim.
In plain English, this means that if someone has purchased an insurance policy that protects them in the event of an unforeseen catastrophe, e.g. a car accident, then that insurance company has to pay for reasonable claims. If the insurance company does not pay reasonable benefits on behalf of its insured then the person who is supposed to be protected by the policy can bring a “bad faith insurance claim.”
For instance, if you are at fault in a car accident and you have insurance, your insurance company has to pay for any and all reasonable expenses related to the other person’s medical bills, future medical costs, etc. The insurance company’s obligation to its insured is done when the insurance company has paid out all expenses reasonably related to the claim, up to your policy limits.
What’s great about Colorado law is that it defines “unreasonable,” in terms of an insurance company’s refusal to pay, pretty broadly. Under Colorado law, an insurance company acts unreasonably if it delays or denies payment of a covered benefit without a reasonable basis for that action.
Why is this important? This is important because if you have been paying premiums to your insurance company on a monthly basis with an expectation that your insurance company is going to cover you when things go south in a personal injury suit or a car accident, etc., then you expect them to pay. When they refuse to pay, then it’s you that’s being personally targeted in a lawsuit. Even if the insurance company eventually pays after their hand has been forced, you, in the meantime, are suffering from all of the stress, time, and attorney fees that a lawsuit involves.
So what happens if you’re the at-fault party in a car accident and your insurance company delays or denies payment of a covered benefit without a reasonable basis for that action? Of course, you sue and file a bad faith insurance claim.
Insurance companies have to be reasonable or pay up.
Any insured person whose own insurance company refuses to pay reasonable benefits can sue in district court. If that person is successful with his or her bad faith insurance claim, he or she can to recover reasonable attorney fees and court costs and two times the covered benefit in addition to the value of the claim.
Yes, you read that correctly. If your insurance company does not pay reasonable benefits and you succeed with your bad faith insurance claim, you get two times the covered benefit plus reasonable attorney fees and court costs.
Insurance companies are in the business of collecting as many premiums as possible and paying out as little benefits as possible. Do not let your insurance company deny paying benefits on your behalf and leaving you personally on the hook and liable to the person suing you when they know good and well that your claim is reasonable.
If your insurance company has unreasonably withheld payment of its obligations on your behalf under the terms of your Colorado insurance policy, contact Marathon Law today. 303-704-1222