Colorado Law requires insurance companies to act fairly and in good faith. As part of the insurance company’s duty to act fairly and in good faith, they are also prohibited from unreasonably denying or delaying the payment of your claims. Colorado law includes an Unfair Claims Settlement Practices Act that prevents insurance companies from committing or performing the following:
- Failing to use reasonable standards in investigating your claim;
- Failing to affirm or deny coverage within a reasonable time;
- Refusing to pay your claim without conducting a reasonable investigation;
- Attempting to settle your claim for less than a reasonable amount;
- Failing to promptly settle your claim where liability has become reasonably clear;
In addition to these requirements, insurance companies are also required to:
- Investigate your claim for benefits;
- Not deny your claim based on surmise, speculation, or conjecture;
- Not deny your claim without substantial justification;
- Refuse to pay insurance benefits when due;
- Promptly communicate with you about the status of your claim;
- Be honest with its insured and third-party claimants;
- Provide you with factual reasons for why the insurer is denying or delaying any payment of benefits;
- Not “low ball” it’s insured for unreasonably low amounts.
In addition to an insurance company’s obligation to act in good faith, Colorado has recently passed unique law prohibiting insurance companies from unreasonably denying or delaying the payment of benefits to its insured. C.R.S. 10-3-1115, 1116. This statute not only provides that an insurance company is liable to its insured for damages when it unreasonably delays or denies payment of benefits, but also specifies the damages as twice the benefits that were unreasonably delayed or denied.
The attorneys at Larson & Larimer recently litigated one of the first cases to apply this new statute. After successfully proving at trial that American Family Mutual Insurance Company unreasonably delayed paying benefits to its insured, the case was appealed by American Family. The Colorado Court of Appeals upheld the finding of the trial court and ordered American Family to pay twice the benefits that were unreasonably delayed and the attorney fees incurred by its insured.
The requirement of your insurance company to act in good faith and to not unreasonably delay or deny the payment of your covered benefits applies to all types of insurance coverage, including auto insurance, home owners insurance, property insurance, health insurance, etc. If your insurance company is not complying with the above requirements or you believe that they are unreasonably delaying or denying the payment of your benefits, please contact an attorney at Larson & Larimer. Our attorneys are experienced in insurance law, insurance coverage, and laws relating to bad faith. We can review and analyze the conduct of your insurance company, advise you as to whether their conduct violates Colorado law, and advise you of your potential remedies.