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Understanding Colorado Insurance Law

Colorado insurance law governs howinsurance companiesare able to conduct business in the state. The Revised Statutes contain important provisions related to how the insurance company must behave towards those they insure. Penalties are also detailed for insurance companies who fail to behave properly when faced with a claim. The Colorado Unfair Claims Practice Act is located in Colorado Revised Statutes §10-2-1104 and states the following:

  • Insurance companies are not allowed to misrepresent relevant details or policy provisions related to coverage;
  • Insurance companies must recognize and take action promptly regarding claims;
  • Insurance companies must approve and apply standards for a quick investigation of claims;
  • Insurance companies may not refuse to pay a claim without benefit of a reasonable investigation;
  • Insurance companies must either confirm or disallow a claim within a judicious period of time;
  • Insurance companies may not act in such a manner that the insured must instigate litigation in order to recover the amount due them;
  • Insurance companies may not attempt to settle a claim for a substantially smaller amount than the amount a reasonable person would believe he or she was entitled to;
  • Insurance companies may not settle a claim based on an altered application of which the insured has no knowledge;
  • Insurance companies may not make payments for claims without an accompanying explanation of coverage under which the payment is being made;
  • Insurance companies may not delay the investigation or payment of claims by requiring both the insured and the physician to submit preliminary claim reports;
  • When the liability of the insurance company is reasonably clear, the insurance company may not exhibit a failure to promptly settle the claim;
  • If a denial of a claim is made, the insurance company must provide a reasonable explanation;
  • Insurance companies may not deny medical benefits based solely on an individual’s participation in motorcycling, skiing, snowboarding, snowmobiling or off-highway vehicle riding.

There is considerably more to Colorado insurance law, however the basic tenet is that insurance companies are required to be honest and above-board with those they insure as well as third-party claimants, and should always provide a factual reason in the event of a denial of a claim. Insurance companies are also not allowed to use the threat of insurance cancellation in order to force a low settlement.

If your insured acts in bad faith, you may be able to collect up to double your actual damages as well as your attorney’s fees. “Bad faith” exists when your insurance company treats you unfairly, or fails to offer you a reasonable standard of care.

Ensure You Are Treated Fairly By Your Insurance Company

Being treated unfairly or dishonestly by your insurance company following a car accident is like adding insult to injury. You are first injured, perhaps by the negligence of another driver, then your insurance company refuses to compensate you for your injuries and damages. Whether a particular practice will support a lawsuit will, of course, depend upon the facts of your case. If your insurance company has used more than one unfair practice to deny your claim, this could certainly present a strong case for bad faith. Those who have a strong personal injury attorney by their side from the time of their accident forward are much less likely to experience unfair treatment by insurance companies.

In most cases, when the insurance company realizes you have an advocate in your corner who knows the laws and has no intention of letting you be taken advantage of, there will be no more unfair treatment. If you have been injured in a Colorado car accident speak to a knowledgeable Colorado car accident attorney as soon as possible—you will be glad you took that one simple step.