One of the most common questions our clients ask us is whether there is any way to make an insurance company pay for the legal fees and costs they have incurred in order to secure the coverage they're entitled to. Because claims are based upon the insurance policy, the answer to that question is, "usually not, except in rare circumstances."
Proving that insurance companies have acted in bad faith
Insurance companies tend to have a distinct advantage in their relationships with policyholders. Therefore, they are generally expected to act in good faith when dealing with a customer. There are many ways that states define bad faith on the part of an insurance provider. However, as a general rule, there are two elements that must be shown to prove that an action was especially egregious. First, it must be shown that a valid claim was denied.
Colorado Bad Faith Claims
Under Colorado common law, insurance companies owe a duty of good faith and fair dealing to their insureds. When an insurer acts in bad faith, it breaches this implied duty of good faith and fair dealing and a claimant can take legal action against it. To succeed, a claimant must prove that the insurance company unreasonably delayed and/or denied payment of a claim and did so with knowledge or reckless disregard that its actions were unreasonable.
