CAN YOU SUE AN INSURANCE COMPANY FOR NOT HANDLING YOUR CASE PROPERLY?

As a car accident attorney, my goal is to get my clients the most money possible, whether by settlement or a jury verdict. Oftentimes, it will seem that an at-fault driver’s insurance company is not being fair in settlement negotiations. Maybe the insurance adjuster assigned to your case is being lazy, not returning phone calls, not paying attention to your car accident attorney’s correspondence and emails. This happens more frequently than one would suspect.

 

WHAT HAPPENS WHEN AN INSURANCE ADJUSTER IS NOT PLAYING FAIR?

As your car accident attorney, when a particular insurance adjuster is not properly handling your case, I have several options:

1. I point out to the adjuster that he or she is not paying proper attention to this claim and this is a serious claim with serious injuries and effects on my client’s life. I can do this both over the phone and by email.
2. If talking directly to the adjuster does not work, then I can ask to speak directly to the adjuster’s manager or supervisor. Oftentimes, a manager or supervisor can get things back on track and can admonish the adjuster to pay more attention to your claim/car accident case.
3. Oftentimes the manager or supervisor will get things straightened out. If that does not work, an experienced and knowledgeable attorney will mention the duties that an insurance company has towards an injured victim’s case especially when the injuries were directly caused by the negligence of the insurance company’s insured.

If the insurance company and his or her adjuster continues to behave badly, negligently and does not pay attention to your car accident claim, then your attorney must show them the applicable law on this subject. For example, I recently had a car accident case where the other driver was clearly at fault and his injuries were clearly caused by the negligence of the other driver. Unfortunately, the at-fault driver only had the state minimum bodily injury coverage of $25,000. I attempted to contact the adjuster for my client’s own insurance company through their Underinsured Motorist coverage. The $25,000 was not nearly enough to cover my client’s damages, so I had to go after my client’s insurance company as well.

WHEN AN ATTORNEY GOES AFTER UNDERINSURED MOTORIST COVERAGE, THAT IS CALLED FIRST PARTY COVERAGE

In the example above, the underinsured motorist adjuster was not dealing fairly with my client’s claim and was unreasonably delaying my client’s claim. This is known as bad faith under the law. When an insurance company like my client’s insurance company is delaying or acting negligently in handling the claim, then that particular adjuster and insurance company can be guilty of bad-faith claim’s handling. Under Colorado Law, a first party insurer can be sued for bad-faith handling of claims:

Colorado Revised Statutes Title 10. Insurance § 10-3-1104. Unfair methods of competition–unfair or deceptive practices

(1) The following are defined as unfair methods of competition and unfair or

deceptive acts or practices in the business of insurance:

(a) Misrepresentations and false advertising of insurance policies:  Making,

issuing, circulating, or causing to be made, issued, or circulated, any estimate,

circular, statement, sales presentation, omission, or comparison which:

(I) Misrepresents the benefits, advantages, conditions, or terms of any insurance

policy; or

(II) Misrepresents the dividends or share of the surplus to be received on any

insurance policy; or

(III) Makes any false or misleading statements as to the dividends or share of

surplus previously paid on any insurance policy; or

(IV) Is misleading or is a misrepresentation as to the financial condition of any

person, or as to the legal reserve system upon which any life insurer operates; or

(V) Uses any name or title of any insurance policy or class of insurance policies

misrepresenting the true nature thereof; or

(VI) Is a misrepresentation for the purpose of inducing or tending to induce the

lapse, forfeiture, exchange, conversion, or surrender of any insurance policy; or

(VII) Is a misrepresentation for the purpose of effecting a pledge or assignment of

or effecting a loan against any insurance policy; or

(VIII) Misrepresents any insurance policy as being a security; or

(IX) Misrepresentation shall not be construed where a written comparison of

policies is made factually disclosing relevant features and benefits for which the

policy is issued and by which an informed decision can be made;

(b) False information and advertising generally:

(I) Making, publishing, disseminating, circulating, or placing before the public, or

causing, directly or indirectly, to be made, published, disseminated, circulated, or

placed before the public, in a newspaper, magazine, or other publication, or in the

form of a notice, circular, pamphlet, letter, or poster, or over any radio or television

station, or in any other way, an advertisement, announcement, or statement

containing any assertion, representation, or statement with respect to the business

of insurance, or with respect to any person in the conduct of his or her insurance

business, which is untrue, deceptive, or misleading;

(II) Knowingly filing with the commissioner or other public official, or with any

employee or agent of the division of insurance in the department of regulatory

agencies, a written, false statement of material fact as to the financial condition of

an insurer;

(III) Knowingly making any false entry of a material fact in any book, report, or

other written statement of any insurer; knowingly omitting or failing to make a true

entry of a material fact pertaining to the business of the insurer in any book, report,

or other written statement of the insurer; or knowingly making any written, false

material statement to the commissioner or any employee or agent of the division of

insurance in the department of regulatory agencies;

(c) Defamation:  Making, publishing, disseminating, or circulating, directly or

indirectly, or aiding, abetting, or encouraging the making, publishing,

disseminating, or circulating of any oral or written statement or any pamphlet,

circular, article, or literature which is false, or maliciously critical, or derogatory to

the financial condition of any person, and which is calculated to injure such

person;

(d) Boycott, coercion, and intimidation:  Entering into any agreement to commit, or

by any concerted action committing, any act of boycott, coercion, or intimidation

resulting in or tending to result in unreasonable restraint of, or monopoly in, the

business of insurance;

(e) Stock operations and advisory board contracts:  Issuing or delivering, or

permitting agents, officers, or employees to issue or deliver, agency company stock

or other capital stock, or benefit certificates or shares, in any corporation, or

securities, or any special or advisory board contracts, or other contracts of any kind

promising returns and profits as an inducement to insurance;

(f)(I) Unfair discrimination:  Making or permitting any unfair discrimination

between individuals of the same class and equal expectation of life in the rates

charged for any contract of life insurance or of life annuity, or in the dividends or

other benefits payable thereon, or in any other of the terms and conditions of such

contract;

(II) Making or permitting any unfair discrimination between individuals of the

same class or between neighborhoods within a municipality and of essentially the

same hazard in the amount of premium, policy fees, or rates charged for any policy

or contract of insurance, or in the benefits payable thereunder, or in any of the

terms or conditions of such contract, or in any other manner whatever;

(III) Making or permitting to be made any classification solely on the basis of

marital status or sex, unless such classification is for the purpose of insuring family

units or is justified by actuarial statistics;

(IV) Making or permitting to be made any classification solely on the basis of

blindness, partial blindness, or a specific physical disability unless such

classification is based upon an unequal expectation of life or an expected risk of

loss different than that of other individuals;

(V) Repealed by Laws 1980, S.B.114, § 2, eff. April 10, 1980.

(VI) Inquiring about or making an investigation concerning, directly or indirectly,

an applicant’s, an insured’s, or a beneficiary’s sexual orientation in:

(A) An application for coverage; or

(B) Any investigation conducted in connection with an application for coverage;

(VII) Using information about gender, marital status, medical history, occupation,

residential living arrangements, beneficiaries, zip codes, or other territorial

designations to determine sexual orientation;

(VIII) Using sexual orientation in the underwriting process or in the determination

of insurability;

(IX) Making adverse underwriting decisions because an applicant or an insured has

demonstrated concerns related to AIDS by seeking counseling from health-care

professionals;

(X) Making adverse underwriting decisions on the basis of the existence of

nonspecific blood code information received from the medical information bureau,

but this prohibition shall not bar investigation in response to the existence of such

nonspecific blood code as long as the investigation is conducted in accordance

with the provisions of section 10-3-1104.5;

(XI) Reducing benefits under a health insurance policy by the addition of an

exclusionary rider, unless such rider only excludes conditions which have been

documented in the original underwriting application, original underwriting medical

examination, or medical history of the insured, or which can be shown with clear

and convincing evidence to have been caused by the medically documented

excluded condition;

(XII) Denying health-care coverage subject to article 16 of this title to any

individual based solely on that individual’s casual or nonprofessional participation

in the following activities:  Motorcycling; snowmobiling; off-highway vehicle

riding; skiing; or snowboarding;

(XIII) Making or permitting any unfair discrimination between individuals of the

same class and of essentially the same hazard in the amount of premium, policy

fees, or rates charged for any policy of sickness and accident insurance, in the

benefits payable under such policy, in the terms or conditions of the policy, or in

any other manner;

(XIV) Making or permitting any unfair discrimination between individuals or risks

of the same class and of essentially the same hazard by refusing to insure, refusing

to renew, canceling, or limiting the amount of insurance coverage on a property

and casualty risk solely because of the geographic location of the risk, unless the

action is the result of the application of sound underwriting and actuarial principles

related to actual or reasonably anticipated loss experience;

(XV) Making or permitting any unfair discrimination between individuals or risks

of the same class and of essentially the same hazards by refusing to insure, refusing

to renew, canceling, or limiting the amount of insurance coverage on the residential

property risk, or the personal property contained therein, solely because of the age

of the residential property;

(XVI) Terminating or modifying coverage or refusing to issue or renew any

property or casualty policy solely because the applicant or insured or any employee

of either is mentally or physically impaired; except that this subparagraph (XVI)

does not:

(A) Apply to accident and health insurance sold by a casualty insurer; or

(B) Modify any other provision of law relating to the termination, modification,

issuance, or renewal of any insurance policy or contract;

(XVII) Refusing to insure a person solely because another insurer has refused to

write a policy, or has canceled or has refused to renew an existing policy, in which

the person was the named insured. Nothing in this subparagraph (XVII) prevents

an insurer from terminating an excess insurance policy based on the failure of the

insured to maintain any required underlying insurance.

(g) Rebates:  Except as otherwise expressly provided by law, knowingly

permitting, or offering to make, or making any contract of insurance or agreement

as to such contract, other than as plainly expressed in the insurance contract issued

thereon, or paying, or allowing, or giving, or offering to pay, allow, or give,

directly or indirectly, as inducement to such insurance or annuity, any rebate of

premiums payable on the contract, or any special favor or advantage in the

dividends or other benefits thereon, or any valuable consideration or inducement

whatever not specified in the contract;  or giving, or selling, or purchasing, or

offering to give, sell, or purchase, as inducement to such insurance contract or

annuity or in connection therewith any stocks, bonds, or other securities of any

insurance company or other corporation, association, or partnership, or any

dividends or profits accrued thereon, or anything of value whatsoever not specified

in the contract;

(h) Unfair claim settlement practices:  Committing or performing, either in willful

violation of this part 11 or with such frequency as to indicate a tendency to engage

in a general business practice, any of the following:

(I) Misrepresenting pertinent facts or insurance policy provisions relating to

coverages at issue; or

(II) Failing to acknowledge and act reasonably promptly upon communications

with respect to claims arising under insurance policies; or

(III) Failing to adopt and implement reasonable standards for the prompt

investigation of claims arising under insurance policies; or

(IV) Refusing to pay claims without conducting a reasonable investigation based

upon all available information; or

(V) Failing to affirm or deny coverage of claims within a reasonable time after

proof of loss statements have been completed; or

(VI) Not attempting in good faith to effectuate prompt, fair, and equitable

settlements of claims in which liability has become reasonably clear; or

(VII) Compelling insureds to institute litigation to recover amounts due under an

insurance policy by offering substantially less than the amounts ultimately

recovered in actions brought by such insureds; or

(VIII) Attempting to settle a claim for less than the amount to which a reasonable

man would have believed he was entitled by reference to written or printed

advertising material accompanying or made part of an application; or

(IX) Attempting to settle claims on the basis of an application which was altered

without notice to, or knowledge or consent of, the insured; or

(X) Making claims payments to insureds or beneficiaries not accompanied by

statement setting forth the coverage under which the payments are being made; or

(XI) Making known to insureds or claimants a policy of appealing from arbitration

awards in favor of insureds or claimants for the purpose of compelling them to

accept settlements or compromises less than the amount awarded in arbitration; or

(XII) Delaying the investigation or payment of claims by requiring an insured or

claimant, or the physician of either of them, to submit a preliminary claim report,

and then requiring the subsequent submission of formal proof of loss forms, both

of which submissions contain substantially the same information; or

(XIII) Failing to promptly settle claims, where liability has become reasonably

clear, under one portion of the insurance policy coverage in order to influence

settlements under other portions of the insurance policy coverage; or

(XIV) Failing to promptly provide a reasonable explanation of the basis in the

insurance policy in relation to the facts or applicable law for denial of a claim or

for the offer of a compromise settlement; or

(XV) Raising as a defense or partial offset in the adjustment of a third-party claim

the defense of comparative negligence as set forth in section 13-21-111, C.R.S.,

without conducting a reasonable investigation and developing substantial evidence

in support thereof. At such time as the issue is raised under this subparagraph

(XV), the insurer shall furnish to the commissioner a written statement setting forth

reasons as to why a defense under the comparative negligence doctrine is valid.

(XVI) Excluding medical benefits under health-care coverage subject to article 16

of this title to any covered individual based solely on that individual’s casual or

nonprofessional participation in the following activities:  Motorcycling;

snowmobiling; off-highway vehicle riding; skiing; or snowboarding; or

(XVII) Failing to adopt and implement reasonable standards for the prompt

resolution of medical payment claims;

(i) Failure to maintain complaint handling procedures:  Failing of any insurer to

maintain a complete record of all the complaints which it has received since the

date of its last examination. This record shall indicate the total number of

complaints, their classification by line of insurance, the nature of each complaint,

the disposition of these complaints, and the time it took to process each complaint.

For purposes of this paragraph (i), “complaint” shall mean any written

communication primarily expressing a grievance.

(j) Misrepresentation in insurance applications:  Making false or fraudulent

statements or representations on or relative to any application for an insurance

policy, for the purpose of obtaining a fee, commission, money, or other benefit

from any person;

(k) Requiring, directly or indirectly, any insured or claimant to submit to any

polygraph test concerning any application for or any claim under any policy of

insurance;

(l) Violation of or noncompliance with any insurance law in part 6 of article 4 of

this title;

(m) Failure to make promptly a full refund or credit of all unearned premiums to

the person entitled thereto upon termination of insurance coverage;

(n) Requiring or attempting to require or otherwise induce a health-care provider,

as defined in section 13-64-403(12)(a), C.R.S., to utilize arbitration agreements

with patients as a condition of providing medical malpractice insurance to such

health-care provider;

(o) Failure to comply with all the provisions of section 10-3-1104.5 regarding HIV

testing;

(p) Violation of or noncompliance with any provision of part 13 of this article;

(q) Increasing the premiums unilaterally or decreasing the coverage benefits on

renewal of a policy of insurance, increasing the premium on new policies, or

failing to issue an insurance policy to barbers, cosmetologists, estheticians, nail

technicians, barbershops, or beauty salons, as regulated in article 105 of title 12,

regardless of the type of risk insured against, based solely on the decision of the

general assembly to stop mandatory inspections of the places of business of such

insureds;

(r) Repealed by Laws 2013, Ch. 338, § 4, eff. Mar. 31, 2015.

(s) Certifying pursuant to section 10-16-107.2 or issuing, soliciting, or using a

policy form, endorsement, or rider that does not comply with statutory mandates.

Such solicitation or certification shall be subject to the sanctions described

in sections 10-2-704, 10-2-801, 10-2-804, 10-3-1107, 10-3-1108, and 10-3-1109.

(t) Certifying pursuant to section 10-4-419 or issuing, soliciting, or using a claims-

made policy form, endorsement, or disclosure form that does not comply with

statutory mandates. Such solicitation or certification shall be subject to the

sanctions described in sections 10-3-1107, 10-3-1108, and 10-3-1109.

(u) Certifying pursuant to section 10-4-633 or issuing, soliciting, or using an

automobile policy form, endorsement, or notice form that does not comply with

statutory mandates. Such solicitation or certification shall be subject to the

sanctions described in sections 10-3-1107, 10-3-1108, and 10-3-1109.

(v) Failure to comply with all provisions of section 10-16-108.5 concerning fair

marketing of health benefit plans and section 10-16-105 concerning guaranteed

issuance of individual and small employer health benefit plans;

(w) Failure to comply with the provisions of section 10-16-105.1 concerning the

renewability of health benefit plans;

(x) Violation of the provisions of part 8 of article 1 of title 25, C.R.S., concerning

patient records;

(y) Violating any provision of the “Consumer Protection Standards Act for the

Operation of Managed Care Plans”, part 7 of article 16 of this title by those subject

to said part 7;

(z) Willfully violating any provision of section 10-16-113.5;

(aa) Certifying pursuant to section 10-10-109(3) or 10-10-109(4), issuing,

soliciting, or using a credit insurance policy form, certificate of insurance, notice of

proposed insurance, application for insurance, endorsement, or rider that does not

comply with Colorado law. Such certification, issuance, solicitation, or use shall be

subject to the sanctions described in sections 10-3-1107, 10-3-1108, and 10-3-

1109.

(bb) Certifying pursuant to section 10-15-105(1), issuing, soliciting, or using a

preneed funeral contract form or a form of assignment that does not comply with

Colorado law. Such certification, issuance, solicitation, or use shall be subject to

the sanctions described in sections 10-3-1107, 10-3-1108, and 10-3-1109.

(cc) Violation of the provisions of section 10-16-122(4) concerning an

unauthorized transfer of a covered person or subscriber’s prescription;

(dd) Failing to comply with the provisions of section 10-4-628(2)(a)(V) or 10-16-

201(5);

(ee) Willfully or repeatedly violating section 10-11-108(1)(c) or (1)(d), including a

willful or repeated violation through the creation or operation of an improper

affiliated business arrangement;

(ff) Violation of the “Physician and Dentist Designation Disclosure Act”, article 38

of title 25, C.R.S.;

(gg) Violation of section 10-16-705(6.5) or (10.5);

(hh) Unfair compensation practices:  Basing the compensation of claims employees

or contracted claims personnel, including compensation in the form of performance

bonuses or incentives, on any of the following:

(I) The number of policies canceled;

(II) The number of times coverage is denied;

(III) The use of a quota limiting or restricting the number or volume of claims;  or

(IV) The use of an arbitrary quota or cap limiting or restricting the amount of

claims payments without due consideration of the merits of the claim;

(ii) Violation of section 8-43-401.5, C.R.S.;

(jj) Violation of part 6 of article 43 of title 8, C.R.S.;

(kk) Violation of section 10-7-703 of the “Insurable Interest Act”, part 7 of article

7 of this title;

(ll) Engaging in stranger originated life insurance;

(mm) Paying a fee or rebate or giving or promising anything of value to a jailer,

peace officer, clerk, deputy clerk, an employee of a court, district attorney or

district attorney’s employees, or a person who has power to arrest or to hold a

person in custody as a result of writing a bail bond;

(nn) Unless the indemnitor consents in writing otherwise, failure to post a bail

bond within twenty-four hours after receipt of full payment or a signed contract for

payment, and if the bail bond is not posted within twenty-four hours after receipt of

full payment or a signed contract for payment, failure to refund all moneys

received, release all liens, and return all collateral within seven days after receipt of

good funds;

(oo) Failure to report, preserve without use, retain separately, or return after

payment in full, collateral taken as security on any bail bond to the principal,

indemnitor, or depositor of the collateral;

(pp) Soliciting bail bond business in or about any place where prisoners are

confined, arraigned, or in custody;

(qq) Failure to pay a final, non appealable judgment award for failure to return or

repay collateral received to secure a bond;

(rr) Certifying pursuant to section 8-44-102, C.R.S., or issuing, soliciting, or using

a workers’ compensation form, endorsement, rider, letter, or notice that does not

comply with statutory mandates. The solicitation or certification is subject to the

sanctions described in sections 10-3-1107, 10-3-1108, and 10-3-1109.

(ss) A violation of section 10-16-704(3)(d) or (5.5).

(2) Nothing in paragraph (f) or (g) of subsection (1) of this section shall be

construed as including within the definition of discrimination or rebates any of the

following practices:

(a) In the case of any contract of life insurance or life annuity, paying bonuses to

policyholders or otherwise abating their premiums in whole or in part out of

surplus accumulated from nonparticipating insurance, if any such bonuses or

abatement of premiums shall be fair and equitable to policyholders and for the best

interests of the company and its policyholders;

(b) In the case of life insurance policies issued on the industrial debit plan, making

allowance to policyholders who have continuously for a specified period made

premium payments directly to an office of the insurer in an amount which fairly

represents the saving in collection expenses;

(c) Readjustment of the rate of premium for a group insurance policy based on the

loss or expense thereunder, at the end of the first or any subsequent policy year of

insurance thereunder, which may be made retroactive only for such policy year;

(d) Requests by a person that an applicant or insured take an HIV related test when

such request has been prompted by either the health history or current condition of

the applicant or insured or by threshold coverage amounts which are applied to all

persons within the risk class, as long as such test is conducted in accordance with

the provisions of section 10-3-1104.5.

(3) Repealed by Laws 1981, H.B.1256, § 5, eff. June 4, 1981.

(4) The following is defined as an unfair practice in the business of insurance:  For

an insurer to deny, refuse to issue, refuse to renew, refuse to reissue, cancel, or

otherwise terminate a motor vehicle insurance policy, to restrict motor vehicle

insurance coverage on any person, or to add any surcharge or rating factor to a

premium of a motor vehicle insurance policy solely because of:

(a) A conviction under section 18-13-122(3), or section 44-3-901(1)(c), or any

counterpart municipal charter or ordinance offense or because of any driver’s

license revocation resulting from such conviction. This subsection (4)(a) includes,

but is not limited to, a driver’s license revocation imposed under section 42-2-

125(1)(m) prior to its repeal in 2021.

(b) The licensee’s inability to operate a motor vehicle due to physical incompetence

if the licensee obtains an affidavit from a rehabilitation provider or licensed

physician acceptable to the department of revenue.

(5) It shall not be an unfair practice in the business of insurance for an insurer to

pay an assignee if the insurer believes in good faith that the claim is subject to a

written assignment from the insured. The insurer shall remain responsible to the

insured for such amounts pursuant to the applicable policy terms in the event the

person paid did not hold a written assignment and did not provide services or

goods to the insured at the insured’s request.

If you think you may have a bad-faith case, Doug Allen has handled hundreds of

bad-faith cases in his 32 years of practicing personal injury and car accident law.

If you think you may have a bad-faith case, Doug Allen has handled hundreds of

bad-faith cases in his 32 years of practicing personal injury and car accident law.