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7 Frequently Asked Questions Regarding Insurance Claim Disputes

Insurance companies spend billions of dollars per year on marketing campaigns. Take State Farm's "Like a good neighbor" slogan, for example; or the catchy "Nationwide is on your side" jingle. However, sometimes insurance claims aren't as straightforward as they might have you believe, and will use a situation where liability is uncertain to their advantage.

In some cases, a policyholder's claim is unreasonably denied or delayed, despite having coverage. Or, some companies may mislead a claimant. Both of these instances constitute "bad faith" conduct on the part of your insurance carrier.

Keep reading below to get straight answers from experienced Colorado insurance dispute attorneys about the most common questions regarding "bad faith" insurance.

What does the term "bad faith" mean?
An insurance policy is essentially a contract between the Insured (you) and the Insurer (your insurance carrier). "Bad faith" is a breach of this contract, and occurs when an insurer wrongly denies or delays an insurance claim and withholds policy benefits without just cause.

What are some examples of "bad faith" insurance?
Some of the most common "bad faith" insurance practices we see are insurers who:

  • Fail to promptly and adequately investigate a claim
  • Have unreasonable interpretations of language in a policy
  • Delay payment on an undisputed claim
  • Fail to defend a policyholder who has been sued under a policy with a liability clause

While these are the most common examples of "bad faith" conduct, insurance disputes can take many other forms. Contact a knowledgeable attorney if you have questions about whether or not your insurer is acting in "bad faith".

Can my insurance provider legally deny my claim?
What you insurer will and will not cover can be found on your policy's Declarations Page. This section is usually the first or second page of your insurance policy, and states the dollar limits that apply to each category of coverage, as well as any extras you have added onto your basic policy, such as endorsements and riders. Review your Declarations Page carefully to see what your insurance provider is contractually obligated to cover.

Can I resolve a claim dispute without taking legal action?
If you believe your insurance provider has denied your claim without just cause, and you wish to try fighting for payment without going to court first, then there are a few options available to you. Here are some suggestions:

  • Read your policy thoroughly. In the event of a dispute, it is imperative that you read the entire policy—fine print and all—to find out if you have legal precedent to dispute a claim.

  • Collect and organize paperwork. Before talking to an insurance agent, make sure you have all the necessary documents in front of you, including: your insurance policy, doctors' bills, medical receipts, and any other pertinent information.

  • Contact your agent. When speaking with the agent, remember to be persistent, and document the name of each representative you speak to, their ID number, and what date and time you called. If you are given the run-around, ask to speak to a supervisor.

  • File an appeal. If you have received no reasonable response on why your claim is being denied, then consider filing an appeal with your state's department of insurance.

If, after all this, your insurance provider still refuses to recognize your claim, then you will likely need to consult an attorney. Insurance companies will sometimes settle to avoid the negative publicity that comes with bad faith lawsuits, or they may settle to avoid large verdicts for wrongful conduct.

How do I know when it is time to consult an attorney?
If you have jumped through all the necessary procedural loops to get compensation for your claim, only to have it denied by your insurance carrier without a reasonable explanation as to why, then it's time to take the next step by talking to a bad faith attorney.

Keep in mind that it is important to consult an attorney who has prior experience in litigating insurance dispute cases. Insurance companies hire the very best lawyers to represent their side, so to have a chance at getting the compensation you deserve from your claim, you need an experienced legal representative who knows how to speak the lingo of insurance companies in order to negotiate a settlement.

What damages can I recover if I sue my insurance provider for "bad faith"?
If the court finds that your insurer wrongfully denied your claim, you will be eligible to receive the full benefits of your claim as specified by your policy, in addition to any subsequent losses and damages suffered by the initial denial, such as emotional distress, lost income, attorney fees, etc.

Punitive damages may also be awarded where the insurer has shown intentional and/or gross misconduct, but this is relatively rare.

Where can I learn more about insurance claim disputes?
To find out more about "bad faith" insurance claims and taking legal action to resolve claim disputes, browse through our Knowledge Center and check out the Babcock blog.

Have questions about your specific case? Discuss the details of your claim with a Colorado insurance dispute lawyer at The Babcock Law Firm at no charge. Contact us today!

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