Whether you caused an accident or are the victim, you probably hope an insurance company will just take care of it. After all, these huge companies collect monthly premiums with the understanding that they’ll help when needed. Insurance companies have a contractual obligation to cover losses. But they also have a fiduciary obligation to represent the best interests of their insured. Not doing so may be bad faith. If you cause an accident, your insurance company must promptly resolve any covered injury or property damage claims within the policy limits. In Colorado, the legal minimum for bodily injury liability coverage is $25,000.00. In a serious wreck, it doesn’t take much to rack up $25,000.00 in medical bills. But no matter what, the insurance company agrees to protect its insured from any injured person making a claim.
What if the insurance company is committing bad faith?
As soon as an insurance company has enough information to justify paying the policy limits, they should promptly offer their policy limits. That protects their insured from future lawsuits. If a company fails to settle a claim within the policy limits, that could be bad faith. This is a type of civil action which an insured person can bring against their own insurance company. Colorado law describes bad faith in its statutes: C.R.S. 10-3-1104 and C.R.S. 10-3-1113. These laws describe what insurance companies must do for their insured and the consequences for failing to do it.
Bad faith lawsuits are an effective way to make sure insurance companies fulfill their obligations. While you can’t sue someone else’s insurance company for bad faith, there are some options. If an injured person files a lawsuit because the at-fault party’s insurance refuses to settle their claim in a prompt or reasonable manner, counsel for the plaintiff may seek to enter into what is known as a Bashor/Nunn Agreement. This is where the plaintiff agrees not to seek the defendant’s assets and in exchange, the defendant signs over to the plaintiff their right to file a bad faith lawsuit against their insurance company. It’s important to note that such agreements are rare and certain steps must happen first. Nonetheless, the possibility of a Bashor Agreement can help persuade an insurance company to act in good faith.
What should you do?
If you’re injured in a car accident and the insurance company is dragging its feet, call an attorney you can trust. Schedule a consultation and see what we can do to help you. It’s important to have someone on your side who will hold the insurance company accountable for fulfilling its obligations.