Bad Faith or Bad Customer Service? What to Know Before Suing Your Colorado Auto Insurer

Dealing with your auto insurance company following a car accident is often an exercise in patience. Even when your premiums are paid up and you promptly file a valid claim, your insurer may take its sweet time actually reviewing your accident before cutting you a check. And even then, your insurer may insist that you settle your claim for less than what you believe was the full amount of your loss.

Colorado Judge Rejects Claim Against State Farm

While some delays in processing an auto insurance claim are inevitable, there can come a point where the insurer’s actions cross the line from simply providing poor customer service into acting in bad faith. In the latter case, you can take your insurance company to court. Remember, an insurance policy is a legal contract, and under Colorado law if an insurer breaches that contract in bad faith, a judge can order it to pay you financial compensation.

That said, alleging bad faith and proving bad faith are two different things. Courts give insurance companies a lot of leeway when it comes to deciding how to handle claims. Consider this recent decision from a federal judge here in Colorado, Lynn v. State Farm Mutual Automobile Insurance Company.

In this case, the plaintiff sustained injuries in an auto accident caused by another driver. The negligent driver’s insurance company settled with the plaintiff for the limits of the policy. As this was insufficient to fully compensate the plaintiff, however, she then filed a claim with her own auto insurance carrier, State Farm, for underinsured motorist (UIM) benefits.

State Farm responded by offering to settle the plaintiff’s claim for $1,500. The plaintiff rejected that offer, responding that her damages from the accident were around $1.3 million. Shortly thereafter, the plaintiff sued State Farm in federal court for acting in bad faith.

The judge dismissed the case. The crux of the plaintiff’s argument was that the $1,500 settlement offer was so unreasonable that it was made in bad faith. The judge, however, said there was a “genuine dispute” over the value of the plaintiff’s claim, particularly as it related to her lost income. More to the point, in making the offer State Farm was not taking the position that the plaintiff’s claim was only worth $1,500.

The judge further determined that State Farm’s delay in responding to the plaintiff’s settlement offer–the adjuster was out of the office–might “demonstrate poor customer service, but not bad faith,” adding that “[n]ot every disagreement or communication lapse between an insured and the insurer gives rise to bad faith claims.”

Contact a Grand Junction Uninsured & Underinsured Motorist Accident Lawyer

If your insurance company is deliberately stonewalling you, or otherwise refusing to address your claim in good faith, you do not have to sit back and do nothing. You can work with an experienced Grand Junction uninsured & underinsured motorist accident lawyer who can take action on your behalf. Contact Killian, Davis & Richter, P.C., today at 970-241-0707. We serve clients throughout Colorado and Wyoming. We have a long-established practice on Colorado’s Western Slope including Grand Junction, Rifle, Delta and Montrose.

Source:

scholar.google.com/scholar_case?case=11259241163010959637