Is Your Auto Insurance Carrier Acting in Bad Faith?
If you’re involved in a motor vehicle accident caused by another driver, you can file a third-party claim against the driver’s auto insurance carrier to cover accident-related expenses. This claim is also known as a bodily injury (BI) claim. Now, what happens when the at-fault-driver is uninsured or has minimal liability insurance? Certainly, an unpleasant scenario, especially when the medical care required to address your injuries resulted in a pile of bills that continue to increase rapidly. It’s here where a “first party claim” kicks in to save the day. This claim can be filed with your auto insurance carrier when your policy of insurance has Underinsured Motorist Insurance Coverage (UIM) available. With this in mind, let’s discuss the extent of this coverage.
What is Underinsured Motorist Insurance Coverage?
Underinsured motorist coverage is designed to protect drivers when they are involved in an accident with another driver whose insurance coverage is insufficient to cover the damages or when they have no coverage at all. For instance, if you’re hit by a driver with minimal liability insurance and your damages exceed their policy limits, your UIM coverage can help bridge the gap, ensuring you receive compensation up to your own policy limits for the full value of your claim.
Understanding Bad Faith Claims in Underinsured Motorist Insurance Coverage
In the realm of auto insurance, dealing with the aftermath of an accident can be complex, especially when it involves Underinsured Motorist (UIM) Coverage. In an ideal world, your insurance carrier completes an evaluation of your claim and submits payment for the benefits owed to you in a reasonable time frame. Unfortunately, insurance carriers often unreasonably delay or deny payment of a first party claimant, adding a troubling aspect to an already intricate process. This improper denial is prohibited by C.R.S § 10-3-1115 and engages the insurer in a conduct that constitutes “Bad Faith”. Understanding what these types of claims entail and how they impact policyholders can be crucial for ensuring fair treatment.
What Constitutes Bad Faith Under C.R.S § 10-3-1115?
“Bad faith” in insurance terms refers to a situation where an insurer fails to deal with claims fairly and honestly. This can occur in various ways, including:
- Unjust Denial of Claims: The insurer denies a valid claim without proper reason.
- Undue Delay: The insurer unnecessarily prolongs the claims process.
- Inadequate Offers: The insurer offers to pay an amount that is significantly lower than the value of the claim.
- Misrepresentation: The insurer provides misleading information regarding the coverage or the claims process.
How Can an Insurance Carrier Act in Bad Faith When Investigating a UIM Claim?
When a policyholder files a claim under their UIM coverage, they expect the insurer to act in good faith. However, there are times when insurance companies might act in bad faith. Here’s how:
- Denying Coverage Improperly: An insurer might wrongfully deny a UIM claim by arguing that the policyholder is not entitled to coverage. This could be due to an incorrect interpretation of the policy terms or a misunderstanding of the facts.
- Lowball Offers: If an insurer offers an amount that is significantly lower than what the policyholder is entitled to under their UIM coverage, this could be considered bad faith. For example, if your damages amount to $50,000 but the insurer offers only $10,000, it may indicate bad faith.
- Delaying Payments: Excessive delays in processing or paying out a UIM claim can also be a sign of bad faith. Insurers are expected to handle claims in a timely manner and provide fair compensation without unnecessary holdups.
- Failure to Investigate: An insurer is obligated to thoroughly investigate a claim. If they fail to do so, or if their investigation is flawed, they may be acting in bad faith. This can include not evaluating all the evidence or not consulting with necessary experts.
What Legal Recourses Are Available to You When Your Insurance Carrier Acts in Bad Faith?
If you believe that your insurance company is acting in bad faith regarding your UIM claim, you have several potential courses of action:
- Internal Appeals: Start by appealing the insurer’s decision. Provide additional evidence or arguments to support your claim.
- State Insurance Commissioner: File a complaint with your state’s insurance commissioner. They can investigate your complaint and may help resolve disputes with the insurer.
- Legal Action: In cases where internal appeals and state complaints do not resolve the issue, you might consider pursuing legal action. Consulting with an attorney who specializes in insurance law can provide guidance and help you navigate the legal process.
How Can You Prevent Bad Faith Issues?
To minimize the risk of bad faith handling, consider the following steps:
- Read Your Policy: Understand the terms and limits of your UIM coverage. Knowledge is power when dealing with insurance companies.
- Document Everything: Keep thorough records of all communications, documents, and evidence related to your claim.
- Seek Professional Help: If you’re unsure about any aspect of your claim, consult with an attorney who specializes in insurance claims.
Conclusion
Navigating a UIM claim can be challenging, especially if you encounter bad faith practices from your insurer. Understanding your rights and knowing how to address potential bad faith issues can make a significant difference in securing the compensation you deserve. Always remain vigilant and proactive in managing your claim, and don’t hesitate to seek professional assistance. If you believe your insurer is not fulfilling its obligations fairly, and its unreasonably delaying or denying payment of the benefits owed, Malnar Injury Law can provide you with the legal guidance necessary to assert a Bad Faith claim successfully.
If you are interested in scheduling a free consultation to discuss your potential claim, please contact us at our main line (719) 888-9529 or write us a message to attorney@coautoinjury.com. One of our staff members will assist you promptly.
Yarleen Santiago Colón
Paralegal
Malnar Injury Law
