Bad Faith Insurance Litigation Lingers in Wake of Waldo Canyon Fire
While the Waldo Canyon forest fire occurred almost two and a half years ago, the harrowing inferno has receded little in the memories of those affected by it. The massive fire started four miles away from Colorado Springs and raged on for over two weeks before officials finally declared that it had been contained. Covering over 18,000 acres of national forest land and private property, the fire required the evacuation of more than 32,000 residents, many of whom returned to find their homes and personal belongings severely damaged.
Forest fires leave homeowners devastated
Notwithstanding the emotional and psychological toll the fire took on the state, many residents are also reeling from the financial fallout of substantial property damage, some of which includes severely damaged homes. Compounding the loss for many homeowners is the experience of facing intransigent insurance companies that attempt to deny payments. While this conduct is nothing new for insurance companies, it can be particularly painful for families who witness their beloved homes in ruins after years of faithfully forking over insurance premiums. Companies that take this route can and should be held accountable for insurance bad faith.
Ducking their duties?
One Colorado family did not take their insurance company’s refusal to pay benefits sitting down and filed a bad faith lawsuit related to the damages they suffered after the Waldo Canyon fire. The family in this case returned after the mandatory evacuation to find that their home had suffered severe smoke damage, with ash and char present in addition to soot residue in the air ducts and furnace. The family’s distress was worsened by the insurance payments with which they were presented, which amounted to a fraction of their loss estimate.
The discrepancy was huge in this case between the payments provided by the insurance company and the proof of loss estimate generated by a public adjuster retained by the family. In total, the insurance company offered around $175,000 in payments, while the public adjuster estimated losses at over $800,000. With regard to the family’s bad faith claim, however, the court held that since the plaintiff’s experts’ opinions were not available to the insurance company before litigation, its failure to consider such opinions in pre-litigation claims handling decisions could not be considered bad faith.
As this case illustrates, the advice and guidance of knowledgeable attorneys is critical in navigating insurance bad faith litigation.