An unexpected claim rejection by your insurance company can be a massive setback in your recovery plans. The step is to review your policy and denial paperwork to compare the denial reasons with your policy to assess their validity. Next, you can request an internal review by filling out an official appeal form. A new adjuster will be assigned to review your claim.
Stay on top of your claim’s progress, even with a new adjuster. Insurers might use this appeal process to delay a potential lawsuit. Colorado has a 2-year limit to sue for bad faith insurance practices. Breach of contract claims have a 3-year limit.
If you tried the first two steps but still can’t get anywhere, reach out to an insurance attorney. A skilled lawyer can negotiate with your insurer, subpoena documents, gather additional evidence, and file motions in court on your behalf. If your attorney believes you have a case, you can pursue litigation for unreasonable claim delay or denial.
Understanding why insurers deny claims helps prevent issues and improve settlement chances. Four of the most common reasons are:
Filing errors
Misreading policy
Coverage lapse
Uncovered damage
Always check your forms, know your policy well, pay on time, understand what's covered, and report promptly. These four steps can help you avoid claim denials.
Insurers act in bad faith when they try to renege on their obligations. This can look like:
Unreasonably denying claims
Delaying investigations
Refusing to defend you if you are sued or potentially liable
Colorado law prohibits insurers from unreasonably delaying or denying claim payments. Insurers must promptly review policy coverage and limits, investigate, and determine loss causes. They should also request supporting documentation for claims and verify compliance with policy terms.
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