Furtado Law - A Tradition of Excellence | Denver, CO


The Elusive “Great Case”


Lawyers do not get many opportunities to litigate great cases as great cases settle. The reason is simple: if the liability and damages were clear, the Defendant would settle early to avoid the high risk of losing at trial. In insurance property bad faith claims, liability is hard to establish, and that is why proper case development is so important. In my time litigating insurance property bad faith cases, one thing is for sure – insureds and their advocates do not properly communicate with the insurance companies during the adjustment of the claim. For example, our firm recently handled a case where before litigation, the insurance company opened coverage (i.e. agreed a full roof replacement was warranted) and then backpedaled after the claim was submitted to the insurer’s management team. Based upon all evidence presented in litigation, the insurer’s management team became involved in the claim only after the claim became worth more than $100,000.00.

Typically, in these kinds of cases, the insurers internally set artificial settlement authority amounts called ’reserve amounts’ where lower level adjusters can settle a claim without additional approval. Here, the insurer was notified that the claim might be worth several hundred thousand dollars and then the management team kicked the claim back to its field adjuster to obtain an opinion from an engineer to reduce the amount of the covered damages. The insurer picked an engineering firm that had a history of being favorable to its interests to inspect the underlying property and conclude in its favor that no hail damage existed. The above facts are significant points in an insurance property bad faith claim. The above facts occurred without legal counsel and point to insurer behavior that is contrary to industry standard. The insurer in question, in fact, has an internal written policy of only involving an engineering firm when there is a genuine dispute with the policyholder regarding coverage and not an internal insurer dispute regarding coverage. Regardless, the insured’s damages were not presented as well as they should have been.

When we received this case we realized that the repair work performed at that time was more than $100,000.00 and the only estimate the insured provided its insurer was the initial 2014 estimate. That is a major problem. Although we were able to update the insurance company with the amount of the damage to the client’s property, this should have been done during the adjustment phase, not during litigation as we received the file two years after the hail loss. For this reason, the damages for the insurer’s delay were reduced by the insured’s failure to internally investigate their claim before litigation. The lesson is that a case settles or can successfully be litigated only if all-hands-on-deck provide the information an insurance company requires to evaluate the amount of damage its insured sustained in a covered loss. A client should understand their damages throughout the adjustment process and throughout litigation to have any measure of success at mediation. Practically speaking, the insured, or if there is a public adjuster on a claim, the public adjuster, should draft an updated estimate throughout the adjustment and litigation phases of a property case.

Before going to court, an insured or its public adjuster should be working very closely with the insurance company’s adjuster to ensure the adjuster has everything they need to properly and fully adjust the loss. Only then is an unreasonable delay and denial and bad faith claim is ripe for litigation.

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    Nathanael Archuleta Written by:

    Mr. Archuleta is a licensed Colorado attorney and has represented clients in personal injury and property bad faith cases. During law school, Mr. Archuleta was a staff editor for the Criminal Law Review and worked at the prestigious law firm Leventhal and Puga, P.C. handling complex medical malpractice and car accident cases. After Mr. Archuleta was admitted to the Colorado bar, he worked at Speights and Worrich, LLC as an attorney managing property bad faith cases. Mr. Archuleta has a undergraduate degree in business administration from John Brown University, a undergraduate degree in political science from the University of Northern Colorado and a law degree from the University of Denver Sturm College of Law.

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