What to do when your insurance won’t pay up
It’s hard to imagine your insurance company leaving you out in the cold. Especially in Colorado, where it can be really cold.
Sometimes there are very legitimate reasons for an insurance company to deny you, but sometimes – alas – there are not. There are times when an insurer will unreasonably deny your request for coverage, and it will be up to you to unearth that legitimate claim.
Duties to the insured
In Colorado, like everywhere else in the United States, an insurance company has a duty to its insured. There is a binding contract between the two parties, and just like you have the obligation to pay premiums every month by a certain date, the insurance company has a duty to spring into action in the event you call upon them.
The Colorado Revised Statutes make it very clear that insurers’ denials must be reasonable. That is the key word here: reasonable. Additionally, they must not act with reckless disregard in their investigation of an insured’s claim.
Listed below are just a few types of unreasonable actions an insurer can take:
- Failing to promptly communicate with an insured;
- Not investigating a claim quickly enough after being informed of it;
- Refusing to pay a claim without a reasonable investigation;
- Forcing insureds to start litigation by offering an amount far below the policy limits;
- Failing to settle claims in which fault is reasonably clear; or
- Not offering reasonable explanations as to denial.
Any of these reasons would be enough for an insured to seek out an attorney, but the first stop should be to speak with the insurance adjuster’s supervisor in an effort to keep everyone’s costs down. If appealing to reason doesn’t work, notify the Division of Insurance. The insurance company needs to remember that it has a duty under the revised statutes not only to investigate a client’s claim, but also to weigh the client’s interests as equal to its own. If all of that doesn’t work, then hire an attorney.
According to both Colorado case law and statutory law, an insurer cannot deny a claim without substantial justification; they shouldn’t “low-ball” their clients with insulting numbers that don’t coincide with their coverage; and they need to provide actual reasons for any denial of a claim.
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