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The 5 Types of Bad Faith
Denver Bad Faith Attorneys

InsuranceWith every insurance contract, there is an implication of good faith and fair dealings. There is the idea that an insurance company will treat each claim with objectivity and fairness. However, this is not always the reality. When a claim is handled unjustly by the insurance provider, it is considered bad faith. If this happens to you, contact one of our Denver bad faith attorneys for help immediately. 

Insurance companies have much to gain by acting in bad faith. Out of the thousands of claim decisions made every day, very few are ever contested by insured parties. This allows insurance companies to save large amounts of money on denied claims that should have been approved.

Insurance companies have an obligation under Colorado state law to act in good faith. Among other things, these good faith practices include:

  • A prompt investigation of the claim,
  • Open and ongoing communication concerning the claim,
  • Prompt payment of your claim, or
  • A prompt denial of the claim with a reasonable explanation –in writing

When an insurance provider fails in these duties, they are guilty of acting in bad faith.

The following are the five bad faith insurance practices most commonly reported:

  1. Deliberately acting in bad faith. Insurance companies only make money when they don’t have to pay out claims. For this reason, the top-grossing firms routinely deny legitimate claims or settle for far less than the actual value of the claim. In fact, by denying and underpaying claims, insurance companies collectively enjoy profits that average over $30 billion a year.
  2. Underpaying on claims. Providers commonly underpay insurance losses by failing to inspect or survey all of the damage. They also classify functional damage as cosmetic, calculate repair costs inaccurately, and interpret the policy in their favor.
  3. Grossly delaying payment for a claim. Some insurance claims are complex and require extensive analysis of the cause of the damage. Others do not because the damage can be easily calculated. Extensive delays in the latter scenario may reach the threshold of breaching the contract and be considered bad faith.
  4. Denying legitimate claims. Insurance companies have a duty to settle legitimate claims for the policy limits or face potential legal exposure.
  5. Canceling an insurance policy completely for an unsubstantiated reason. Insurance companies can only cancel your policy for a legitimate reason, for instance, lack of payment. They are required by law to notify you in writing, however, before doing so.

Speak To A Denver Bad Faith Attorney

Denver Bad Faith Attorneys Fuicelli & Lee, PCIf your insurance company has acted in bad faith, you could be eligible for as much as three times the amount of insurance benefits owed to you. You could also be entitled to interest on those benefits, punitive damages, and other damages. Contact the law firm of Fuicelli & Lee, PC, for a free case evaluation. You pay nothing unless you receive a financial settlement or award. Call our office at 303-355-7202 or fill out our confidential contact form.

 

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