We’ve all been there, or we know someone who has; feeling the frustration of waiting for an insurance company to decide on a claim, or seeing an offer that is substantially less then your expenses come in, or having a legitimate claim flatly denied. Sadly, up until recently, there was little that could be done about it. Sure, there were a few lawsuits that you could file, a few complaints you could make, but all of these had huge obstacles to success. Basically, unless things were horrendously and catastrophically bad, unless the insurance company was behaving in an almost criminal manner or endangering the public, there was nothing to be done. At the end of the day, you just had to take it.
But not any more, thanks to a historic bill passed by the Colorado Congress and signed into law by Governor Bill Ritter. House Bill 1407 will, to cut through the legalese and put it simply, allow normal people to file a lawsuit when their insurance company delays, decreases, or denies a claim on an unreasonable basis. You and I, and every individual, are held to a “reasonable person” standard, and now that is the same standard that will apply to insurance companies when they make claim decisions.
This shouldn’t tread on any insurance company toes. If a claim is clearly excessive, it can be denied, so can a frivolous claim. All this means is that insurance companies must behave reasonably; they can’t delay a decision indefinitely, they can’t offer substantially less then a claim in the hopes that the injured person will take the lesser amount and just go away, and they can’t arbitrarily deny a valid claim. And if an insurance company does any of these things, if they fail to live up to the requirements of their insurance policies and contracts, then the law will help individuals to recover that which is owed to them. It even allows for increased damages and attorney’s fees, maximizing both the penalty to the insurer and easing any burden on the injured person.
All in all, this new law will serve as a powerful tool for helping injured people, and the only people that it will harm are those insurance companies who are attempting to put the screws to their customers.
Nathan T. Swanson
JD Candidate, 2009
University of Denver