4 Examples of Bad Faith Insurance Practices

When you think about insurance, it’s supposed to be that safety net, right? Something that gives you peace of mind knowing you’re covered if things go sideways.

But what happens when the very thing that’s supposed to protect you decides not to? That’s when the idea of “bad faith” comes into play. It’s when your insurance company doesn’t hold up its end of the bargain, leaving you stranded at the worst possible time.

Colorado has its own set of laws and regulations, but even with these safeguards in place, bad faith insurance practices can still need to be fixed.

No doubt, you’ll be needing the help of Colorado bad faith claim lawyers to beat these guys at their own game.

Here are some practices to identify whether an insurance company is engaging in bad faith practice.

Deliberate Delays in Processing Claims

In Colorado, there’s something called the Colorado Unfair Claims Settlement Practices Act. This piece of legislation is meant to ensure that insurance companies handle claims promptly and fairly.

Now, you might think, “Well, as long as I get paid eventually, what’s the big deal?” But those delays can be devastating when your bills are piling up and your bank account is running low.

In 2019, a family in Durango faced this exact situation after their home was damaged by a wildfire. The insurance company took nearly a year to pay out their claim, citing “ongoing investigations” that never seemed to go anywhere. The family eventually sued, and the court ruled in their favor, slamming the insurer for its unreasonable delays.

If you’re dealing with this kind of delay, don’t let the insurance company string you along. You have rights under Colorado law, and there are steps you can take to get the money you’re owed.

Unreasonable Denial of Claims

You pay your premiums on time and follow the rules, yet your claim is denied when the time comes. Not just denied, but denied without a good reason. It’s one of the most gut-wrenching experiences you can face, being told “no” when you’ve done everything right.

Here in Colorado, insurers are expected to provide clear reasons for any claim denial. If they don’t? That’s another red flag. A refusal without a solid, valid reason isn’t just a denial; it’s a breach of trust, a direct violation of what insurance is supposed to stand for.

Lowball Offers

This is where your insurance company offers you far less than your claim is actually worth, hoping you’ll take the money and go away.

You’ve gone through the claims process and finally get an offer. But when you look at the numbers, something doesn’t add up. The amount they’re offering doesn’t come close to covering your costs.

When insurance companies use tactics like this, it’s not just unfair; it’s bad faith, plain and simple.

Misrepresentation of Coverage

This one hits hard because it’s about trust. You buy insurance based on what the company tells you it will cover. But when the time comes, they backpedal. Suddenly, what you thought was covered isn’t, and you’re left holding the bag.

Misrepresentation can be as simple as an agent telling you one thing when you buy the policy, but the fine print says something else entirely. Or it can be more insidious, like vague wording in the policy that leaves too much room for interpretation.

In Colorado, where wildfires and natural disasters often occur, misrepresentation can put you in a very precarious position.

Wrapping Up

The whole point of insurance is protecting yourself when life throws you a curveball. But when the companies supposed to have your back instead turn their back on you, it’s a betrayal.

If you ever find yourself in a situation where you suspect your insurance company isn’t playing fair, don’t just accept it.

Colorado has laws to protect you, and you have the right to challenge bad faith practices. Because at the end of the day, it’s your home, your health, and your life on the line, and that’s worth fighting for.