How We Turned a Denied Insurance Claim Into a Hefty Settlement

Robinson & Henry’s knowledgeable attorneys give their professional insight in “From Our Perspective,” where we take a closer look at successful outcomes achieved by our attorneys. 

In this episode, Robinson & Henry Litigation Partner Alex Lowe discusses a case involving a water heater disaster that shut down a new dental practice. Having exhausted all options, the dentist hired Alex and Associate Nicholas Catalano to help resolve the issue. 

Our team successfully negotiated a settlement nearly twice the insurance company’s initial offer, helping the client get the dental practice back on track.

Past results afford no guarantee of future results; each matter is different and must be judged on its own merits. Facts are those of an actual Robinson & Henry litigation case. 

Starting a new business is always challenging. But for one Colorado dentist, his grand opening turned into a nightmare. Just as he prepared to launch his new dental practice, a subcontractor installed a water heater improperly.

The unit leaked, flooding the floors, damaging drywall, and destroying critical equipment, including a private patient data server. The damage forced the practice to shut down for several weeks.

After receiving little help from the insurance company, the dentist hired Lowe and his team to pursue compensation for the losses. 

The subcontractor’s insurance provider covered some of the physical damage to the building but denied the dentist’s claim for lost income and replacement of expensive dental equipment.

With no resolution in sight, the dentist brought in Robinson & Henry’s legal expertise to pursue the claim.

The insurance company’s initial offer — about $26,000 — fell far short of the actual losses. Lowe’s team responded by gathering a comprehensive set of evidence, including profit and loss statements, receipts for damaged equipment, and photo evidence of the damage.

Our legal team communicated with the insurer frequently to illustrate the full scope of financial harm the flooding and shutdown caused.

What turned the tide? Our attorneys’ in-depth knowledge of Colorado’s insurance bad faith laws. 

Under state law, insurance companies that unreasonably deny valid claims can be held liable for twice the damages, and policyholders can get reimbursed for attorney fees and other costs. Lowe’s team educated the insurance company about Colorado’s bad faith laws, which prompted the insurance company to take the claim more seriously and re-evaluate its position.

By emphasizing those legal consequences and continuing to provide hard evidence, the insurance company finally agreed to a more realistic settlement.

After weeks of negotiation and document review, the insurance company agreed to a $47,000 settlement, an amount nearly double the original offer.

The financial recovery covered the dental practice’s lost income and the cost to replace the damaged equipment, allowing the client to resume his business plans.

Lowe offers guidance for other business owners in similar situations:

• Document everything: Take photos of all damage, no matter how small. Save receipts. Keep your profit and loss statements and balance sheets up to date.

• Communicate in writing: Keep a paper trail with the insurance company.

• Don’t accept the first offer: Insurance companies often try to settle for less than what’s fair. You don’t have to accept it.

• Get legal help early: If the insurer is dragging its feet or denying your losses, seek legal counsel immediately.

Insurance companies are often focused on minimizing payouts. A knowledgeable legal team can help ensure your damages are fully covered.

If your business has suffered property damage and you’re struggling to get the compensation you deserve, our team is ready to help.

Read this video’s full transcript:

Question:  Alex, thank you so much for joining me. Tell me more about what happened to our client and why he reached out?

Alex: Our client contacted us because he was a dentist opening a new practice and was having the space built out and a subcontractor put in the water heater wrong. A leak occurred, flooded the floor, hit the drywall, hit a lot of his equipment, and he had to close down his business for several weeks.

He worked through the subcontractor’s insurance company, tried to get the repairs covered. While they were great at covering the damages to the building, through the construction professional that was building it out. They refused to pay for the loss of revenue on behalf of our client, and refused to pay for a lot of the equipment that was damaged. When he was having no luck with them, he reached out to us to assist.

Question: You touched on that a little bit, but how extensive was the damage? And really, how did that impact his practice? 

Alex: The damage to the building really just kind of hit the flooring in the bottom part of the drywall, so a few thousand dollars in that damage. What really hit was the water coming down on his server system and computers, where he was holding private medical data and just needed equipment in order to operate his dental practice.

Then having to replace that, get it fix, and then shut down his business again for three weeks was substantial lost revenue. 

Question: And how did the insurance claim process unfold? 

Alex: We reached out to the insurance company when he first retained us, put in the claim. They originally offered I think $26,000, approximately.

We told him his damages were well in excess of that, and we started working with the insurance company to supply the appropriate documentation. We went back and forth several times over profit and loss statements and other materials and, receipts for some of the equipment, and ultimately were able to reach a favorable outcome. 

Question: How did you get the insurance company to revisit the claim and increase their offer?

Alex: Ultimately we gathered all the information pointed out to the insurance company, some of the Colorado laws around, bad faith insurance denial claims. 

That would entitle us to the award of attorney fees and, two times the amount of damages. And they started to listen. So we were able to provide the documentation, and they were willing to evaluate that.

Question: Ultimately, what was the outcome of this case? 

Alex: At the end of the day, the insurance came up to around a $47,000 settlement on behalf of our client that covered his lost revenue and the materials that were damaged. 

Question: In these types of cases, what advice do you give to clients for documenting losses and the damages to really help their claim?

Alex: I always tell clients to make sure you're pulling as much information as possible, pull your profit and loss statements, pull your balance sheets, pull all records you can from your business. 

Pull all pictures you can from any of the damages inside so no matter how small the equipment is, the insurance company is going to want an exact picture of what you're making a request for.

And then receipts if at all possible, so get everything that you can to the insurance company. And there's no way they should be able to deny your claim on a reasonable basis. 

Question: What lessons can other business owners learn from this type of case regarding insurance claims?

Alex: When you're dealing with the insurance company, keep your communications in writing to the best of your ability. Make sure you aren't settling for their first offer or settling for something that doesn't make you whole. 

If the insurance starts acting unreasonably, reach out to legal counsel as soon as possible so that we can get involved and negotiate on your behalf with that insurance company and make sure your damages are fully covered.