Why Do Insurance Companies Delay Paying Valid Claims?

If you get involved in a car accident or another harmful type of incident in Colorado, you might assume that your losses will be covered by an insurance company – especially if you have never missed a premium payment or if you are not at fault. Unfortunately, insurance companies are known for using tactics to try to protect their own profits, including delaying valid claims.

This is where a Fort Collins insurance lawyer at Cannon Law can be invaluable. They can advocate on your behalf, help you navigate complex insurance policies, and ensure you receive the compensation you are entitled to under the law. Whether you’re a cyclist, driver, or even a Fort Collins pedestrian accident lawyer seeking support for your client’s delayed claim, legal help can make all the difference.

How Claim Delays Benefit an Insurance Company 

Making a claimant wait to receive a settlement check for a valid claim can have many benefits for an insurance provider. Insurance companies rely on the fact that most people who file claims are unaware of their rights. They may not realize they can request case updates, for example, or take legal action against an insurer that is not handling a claim in a timely manner. 

By making a claimant wait, an insurance company increases the odds that the individual will eventually give up or be more willing to accept a lowball settlement offer. Claimants who have been made to wait are more likely to jump at the first offer even if it is unfair. Delaying payments can pressure claimants to accept lower payments out of financial need or frustration.

Another reason for insurance companies to delay payouts is to enhance interest earned on financial reserves. The longer an insurance company waits to pay a claim, the more interest it collects. Finally, an insurance company may delay a payout in the hopes that the claimant will make a mistake while waiting, such as missing a deadline or providing a reason for claim denial.

Reasonable vs. Unreasonable Claim Delays 

It is important to recognize the difference between a necessary and an unnecessary insurance delay. There are valid reasons why an insurance company may need additional time to process a claim, such as:

• Complex case: challenges such as multiple liable parties or catastrophic injuries will typically mean a longer claims-processing time.
• Administrative delay: the company may be overwhelmed with other claims, especially after a natural disaster in your area.
• Incomplete documentation: if you are missing information on your claim, the insurance company may request more details or proof of your losses before proceeding.

Colorado law requires insurance companies to settle claims “reasonably promptly.” Since this does not give a specific amount of time, insurance companies can take advantage by delaying claims processing. If there is no explanation for the delay, it could be a sign of insurance bad faith.

These tactics are not limited to policyholders in Fort Collins. Individuals in surrounding areas, such as Longmont, may also encounter issues with insurance carriers. Whether you’re working with a Longmont personal injury attorney, a Longmont car accident lawyer, or a Longmont truck accident attorney, legal representation can help hold insurers accountable and ensure you’re not taken advantage of.

How Can You Tell If an Insurance Company Is Using Bad-Faith Delay Tactics? 

Insurance bad faith means that an insurance carrier is not processing a claim according to applicable insurance laws or in an honest and good-faith attempt to resolve the legal issue. Examples include unnecessary claim delays, wrongful claim denials, and refusing to offer a reasonable settlement.  

If an insurance company cannot give a good reason as to why your payment has not been sent for a valid or approved claim, consider the possibility of insurance bad faith. Evidence of bad faith can give you the right to file a lawsuit against the insurer in pursuit of additional damages. Insurance companies can be held responsible for wrongful acts committed while processing claims.

If you need advice about how to deal with an insurance claim delay, contact Cannon Law to request a free consultation with a Fort Collins insurance attorney.