Punitive damages may be recoverable in a bad faith insurance claim in addition to statutory damages. These cases stem from unfair insurance practices, where there is a failure to meet contractual obligations. If the insurance company’s actions are malicious, willful and especially egregious, a Denver law firm may help plaintiffs pursue punitive damages in addition to statutory damages.
How Statutory & Punitive Damages are Awarded in Bad Faith Insurance Claim
Revised statutes in Colorado (§10-3-115 and 116), address statutory damages. These are damages that are set in place and don’t require proof that the person filing the claim is entitled to them.
Unlike actual damages, which are designed to help an injured person be financially restored and requires establishing actual losses, with statutory damages this isn’t the case. The only thing that has to be shown is the other party broke the law.
Statutory damages are generally awarded in cases where a contract has been breached, such as a bad faith insurance claim. This may allow for a significant recovery. In Colorado, statutory damages include twice the amount in question, along with attorney fees. So if the claim was worth $20,000, the party filing a bad faith insurance claim could potentially collect $40,000 in damages, not including legal costs.
When it comes to seeking punitive damages in Colorado, this kind of recovery is meant to punish the other party and requires evidence that the insurance company acted in an egregious and malicious manner. Normal negligence or mistakes do not warrant pursuit of punitive damages. Claimants can talk to a lawyer at a Denver law firm if they’re unsure whether these damages may be pursued.
Actions That May Call for a Bad Faith Insurance Claim
When deceptive or unfair practices of an insurance company prevent a claimant from receiving what is rightfully owed, a claim could be filed. There are certain actions that would warrant a bad faith insurance claim. A ‘normal’ bad faith insurance claim, the plaintiff must show the absence of any reasonably arguable reason for the denial of a claim.
The following are examples of some of the actions that could result in an insurance company being sued for bad faith:
- refusal to pay claim without an investigation based on the information that is available;
- failure to deny or approve a claim within a reasonable time period;
- despite clear evidence of liability, not settling a claim promptly and fairly;
- offer is significantly less than what is contractually owed; and
- delay in payment of claim or investigation by requesting information from the claimant that was already provided.
Considering a bad faith claim? Consult a Denver Law Firm
It can be difficult to know if a claim has been handled in bad faith. When there are questions or concerns regarding the practices of an insurance company, seek legal counsel at a Denver law firm.
The Law Office of D.J. Banovitz is a Denver law firm that will take the time to analyze details of the case and help establish the types of damages that could be available, including actual, statutory and punitive damages.