David Furtado – Property Insurance Coverage Law Blog – February 25, 2014
In a previous post regarding proving a first-party bad faith case in Colorado, I wrote about C.R.S. §§10-3-1113 and 10-3-1104. These statutes provide the first place to look when taking actions in representing policyholders, and provide guidance regarding the questions I ask in letters to claims representatives. They also provide a road map during the discovery process when I am litigating a case for a policyholder. The key to a bad faith claim is showing the trier of fact that the poor conduct of the insurer towards the policyholder is the insurer’s routine conduct when adjusting or appraising a loss. Bad faith is about the insurer’s repeated conduct, not conduct that occurred once.
Using the above-referenced statutes, I take discovery in the form of written questions, written requests for admissions, written requests for the insurer’s documents regarding its adjustment of the claim in which I am representing the policyholder and like claims which it has adjusted and is currently adjusting. In depositions, I ask representatives of the insurance company questions in an attempt to undercover whether or not the they believe the insurer owes its insured the duty of good faith and fair dealing, and whether or not the insurer’s position, regarding its denial or delay of the policyholder’s claim, was reasonable. I then ask questions regarding the facts that the representative examined in making its claim decision and ensure that the insurer’s representative discloses every single fact taken into account in making the decision that was adverse to the policyholder’s interests. Analyzing the facts used by the representative in making the adverse decision will provide evidence as to whether the delay or denial was unreasonable or whether the insurer recklessly disregarded the fact that its delay or denial was unreasonable.
The next step is to apply the facts I learn throughout the discovery process and apply them to factors as set forth in C.R.S. §10-3-1104(1)(h)(I) to C.R.S. §10-3-1104(1)(h)(XV) that define unfair claim settlement practices. This is the key to showing a jury what factors the insurer violated, why the insurer should be punished for its actions, and how punishment will assist other policyholders who have claims with the insurer.
In my next blog I will share the types of written questions, request for admissions, and written requests for production of documents I use in attempting to discover facts necessary to prove the insurance company’s bad faith.