BAD FAITH CLAIMS: HOLDING INSURANCE COMPANIES ACCOUNTABLE
We all rely on insurance companies to protect us when something goes wrong. But what can you do if your auto insurance company rejects your claim without an explanation, fails to adequately investigate the claim, or attempts to settle the claim for far less than it is worth?
Fortunately, the law provides recourse for people when their insurance companies unreasonably deny a claim or engage in other wrongful conduct. It’s called a bad faith lawsuit.
WHAT IS A BAD FAITH LAWSUIT?
Think of your auto insurance policy as a contract with your insurance company. You agree to pay for coverage, and the insurance company is obligated under state law to compensate you when you submit a legitimate claim for damages resulting from an accident. When an insurance company fails to act promptly on the claim, arbitrarily rejects that claim, or attempts to settle it for far less than what would be considered reasonable under the circumstances, the policy holder can file a bad faith lawsuit against the company. “Bad faith” means that the company failed to do what it promised to do under the terms of the policy.
DO I HAVE A BAD FAITH CASE?
In Colorado, an insurance company’s duties to its policyholders are specified, in part, under the Unfair Claims Protection Act. Among other prohibited practices, insurers could be found to be engaging in unfair claims practices if they:
- Misrepresent relevant facts about a claimant’s policy or coverage.
- Fail to promptly acknowledge communications related to claims.
- Fail to adopt reasonable standards for prompt investigation and settlement of claims.
- Don’t attempt in good faith to reach a fair settlement.
- Unreasonably delay payment of claims.
Important elements in bad-faith cases include being able to establish that the plaintiff suffered serious and substantial injuries, and that the situation was exacerbated by the insurance company’s conduct—for example, by prolonged delays in handling the case or outright refusal to pay. Insurance companies found to have engaged in bad-faith conduct can be liable not simply for the benefits limits specified in the policy but three times that amount, plus reasonable attorneys’ fees and costs.
HOW OUR ATTORNEYS CAN HELP YOU
Bad faith lawsuits are much more difficult to pursue than the typical personal-injury claim arising from an accident. In addition to proving the damages resulting from the accident, the plaintiff also has to establish the wrongful conduct of the insurance company, which has enormous resources it can draw upon in defense of its actions (or inaction). Insurance companies will go to great lengths to defend their bottom line, and you will need legal representation that is fully committed to getting you the compensation you deserve.
At Franklin D. Azar & Associates, our attorneys have helped thousands of injured people obtain complete and timely compensation for their losses. We have recovered millions of dollars in bad faith cases, including recent settlements of $875,000 and $921,000 against major insurance companies. Our proven track record and expertise have allowed us to grow into the largest personal-injury law firm in Colorado, and we are ranked as one of the top law firms in the nation in litigation against insurance companies. If your insurance company isn’t dealing with you fairly, please call the bad faith lawyers at FDAzar day or night at 800-716-9032 or contact us here for a free consultation and no-obligation evaluation of your case.
MANAGING YOUR FINANCES AFTER A PERSONAL INJURY SETTLEMENT
Many factors play a role in determining the amount and terms of a settlement in a personal injury case. The resolution might be negotiated over a period of months or handed down by a jury after a few hours of deliberation. Either way, few injured people have a clear idea of what to expect going into a case or give much thought to what they’re going to do with their settlement funds — until the day the check arrives.
It’s easy to feel overwhelmed when you receive your settlement, especially if the sum is larger than the kind of cash you’re used to handling. That may sound like a nice problem to have — but without proper planning, a seemingly substantial amount can be spent all too quickly, leaving you in debt and with unmet, ongoing medical needs. Here are a few steps you can take to help protect your settlement and put it to use in productive ways.
DO THE MATH
Well before the settlement check is issued, it’s important to have a candid conversation with your attorney about how the amount is to be paid out and what obligations you’re facing that could affect the amount you will receive. Many settlements involve a lump sum, but others are set up as a “structured” settlement, paid out over a period of years. While that option may seem less desirable in the short run, it may have certain long-term advantages, especially in the event of a permanent disability or other medical condition requiring ongoing care.
You should also make sure you understand the costs you have incurred in your case that will be deducted from the settlement, reducing the amount you receive. Most personal injury lawyers operate on a contingency basis and are paid a percentage of your settlement under the fee agreement that you signed. There may be other court costs or outstanding debts, such as unpaid medical bills. Some providers may have filed medical liens against the settlement, an arrangement that allows you to receive treatment without having to pay up front. (In some cases, an experienced personal injury attorney may be able to negotiate the release of a lien for less than the total amount sought.) All of these charges should be explained and taken into consideration before you start planning how you’re going to spend your settlement.
CONSULT A FINANCIAL ADVISOR
After addressing legal costs and medical debts, it makes sense to consult an accountant or legitimate investment advisor about ways to protect your settlement. One of the first issues to address is potential tax liability. The amounts paid to you as a result of physical injuries you’ve suffered or for damage to your vehicle are, in most cases, not taxable. But if the settlement includes reimbursement for lost wages, that amount is taxable; so are punitive damages or an award for emotional distress that isn’t a direct result of physical injury.
INVESTING IN THE FUTURE
You’ve paid off Uncle Sam and met your other financial obligations. What do you do with the rest of your money, assuming there’s still something left? The answer is going to be different for every client. For some, it might make sense to stuff money into a retirement account; for others, setting up a college fund for their children might be a bigger priority. Paying off a mortgage or reducing other debts may appeal to those looking for a more carefree lifestyle while investing in a proven business could make sense for those seeking to change direction. Whatever you choose to do, here are some common mistakes that financial advisors warn against:
- Impulse purchases, just because you can temporarily afford them, are almost always a bad idea. Set up a fund for real emergencies but nurture your nest egg, don’t poach it.
- Be careful about broadcasting the news of your big windfall, as such news could attract scammers and solicitors.
- Resist the pressure to “help out” relatives or friends with generous loans that they have no means to repay. It’s the fastest way to go broke — and ruin the relationship.
- Stay clear of any get-rich-quick scheme that promises to double your money in no time at all. If it sounds too good to be true, it is.
COLORADO’S “MOVE OVER” LAW: WHAT YOU NEED TO KNOW
Approaching a crash scene requires extreme caution, but too often drivers aren’t paying attention or are in too much of a hurry, with tragic results. According to figures compiled by AAA, across the country, 46 emergency responders who were working in the roadway were struck and killed in 2020, including 17 law enforcement officers, 21 tow truck operators, one mobile mechanic, three safety service patrol operators, four firefighters, and one emergency medical services worker. In 2021, more than 50 first responders were struck and killed.
Of course, it isn’t just emergency responders who are in danger at crash scenes; good Samaritans, motorists involved in the crash, and bystanders are at risk, too. Since 2015 more than 1600 people have been struck and killed while outside a disabled vehicle.
In an effort to make crash scenes safer for everyone, all 50 states now have some version of a “move over” law, which requires drivers to change lanes and slow down when approaching stopped emergency vehicles. Under Colorado’s law, drivers are expected to move a lane away from a stationary emergency vehicle with lights flashing; if that is not possible, they must at least slow down to at least 20 miles per hour less than the posted speed limit. Failure to slow down or move over is a misdemeanor careless driving offense, which could escalate to a more serious charge if the driver’s actions result in injury or death to another person.
Unfortunately, many people don’t know about the requirements or heed them. A survey by AAA suggests that close to one in four people are unaware of the move-over law in their state. AAA has safety tips for drivers to help roadside workers, including:
- Avoid distractions and focus on the task of driving.
- Maintain enough distance between your vehicle and what you can see going on ahead of you to give yourself 20-30 seconds to respond to changing conditions by changing lanes and adjusting speed.
- When you see flashing lights or a disabled vehicle in the breakdown lane, slow down and prepare well in advance for a lane change. Allow others to merge into your lane when necessary.
- Allow extra space when following semi-trucks or large vehicles.
- Avoid sudden lane changes, especially on slick roads. Signal the change early and move over gradually.
- If you are unable to move over, slow down.
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