Fight Insurance Bad Faith After a Colorado Hail Storm

By: Jon t
PublishedMay 6, 2024
9 minute read

Living in Colorado has its perks, but the high elevation comes with drawbacks, like severe hailstorms. The “mile high” altitude along the Front Range doesn’t allow enough space for hail to melt before hitting the ground. This can cause significant damage to homes and businesses.

Dealing with hail damage is stressful enough. But the situation is made worse when your insurance company denies a claim. That’s where my team comes in. We can help you fight insurance bad faith after a Colorado hail storm.

Bottom Line: 

Colorado law no longer tilts toward insurance companies and away from policyholders. If your insurer unreasonably denies or delays your claim, you could recover up to twice the claim amount — plus interest, attorney fees, and court costs.

In This Article: 

Colorado’s History of Hail 

Colorado, located in “Hail Alley,” has the most severe hail season in North America from mid-April to mid-September. The Rocky Mountain Insurance Information Association (RMIIA) reports hail destruction as the most expensive insured catastrophe.

In fact, Colorado hail storms have caused over $5 billion in damage since 2009. This is why it’s crucial that homeowners and small businesses to have hail damage insurance.

The Biggest Hail Storms 

The May 8, 2017 hailstorm that struck Denver and its metropolitan area caused over $2 billion in damages. It’s currently the most expensive in terms of insurable damage. The event left severe destruction in Golden and Lakewood with baseball-sized hail. Hail damage even shuttered the Colorado Mills Mall for months.

The four other worst Colorado hail storms include:

  • July 11, 1990, Denver: On this day, 1.75-inch hailstones fell for over 30 minutes, causing $625 million* in damage to cars, buildings, infrastructure, and Stapleton International Airport.
  • June 6-15, 2009, Denver Metro Area: A series of severe hailstorms over the course of ten days caused $1.4 billion* in damage. One of the worst storms, on June 7, damaged thousands of homes and cars.
  • July 20, 2009, Colorado Springs: Hailstones up to 4 inches in diameter led to $353 million* in damage to homes, cars, and the landscape.
  • August 6, 2018, Colorado Springs: Three-inch hailstones caused $172.8 million* in damage to automobiles and homes. Hailstones also ravaged the Cheyenne Mountain Zoo, resulting in animal deaths and 14 injured people.

*Amounts adjusted for inflation.

The Destructive Power of Hail Storms 

It doesn’t take long for hail to cause significant damage to various parts of your property. In Colorado, you may file claims for:

  • Roof damage: dents, cracks, broken tiles, missing or bruised shingles
  • Chimney and vent damage: leaks and future water damage
  • Window damage: cracks, chips, torn screens, broken glass
  • Siding damage: cracks, holes, loss of flexibility, peeling paint, dents
  • Gutter damage: dents, loosened screens and downspouts, potential foundation issues
  • Air conditioner system damage: restricted air flow due to damaged fins, dented blades and fins
Commercial and Church Property Damage 

Any commercial property can sustain the same damage that residences do. However, certain kinds of destruction are unique to commercial properties. These damages can halt business and erode your profits as you wait for repairs.

This can include damage to:

  • Signs and fences
  • Outdoor assets, such as vehicles, machinery, and equipment
  • Outdoor merchandise
  • Indoor merchandise exposed by a damaged roof or windows
  • Tents, kiosks, and screened-in areas

Anything exposed to the sky is vulnerable to hail damage. Unfortunately, this can include your employees. They can be injured by falling hail while working outdoors during a storm.

The Cost of Fixing Hail Damage 

Costs vary depending on the amount of damage done to various types of property and materials you own. Some of it is already built into your insurance premiums, which are higher than the national average. Colorado homeowners policies have skyrocketed in recent years. Where you live in the state can affect your annual premiums.

The good news? Filing a claim probably won’t increase your insurance premiums. You don’t control the weather, and there’s only so much you can do to prepare for Mother Nature’s wrath.

Want to compare homeowner insurance premiums offered in Colorado? Check out the Homeowners Insurance Interactive Premium Comparison Report developed by the Colorado Department of Regulatory Agencies Insurance Division.

What is Insurance Bad Faith? 

Insurance companies are for-profit businesses. In fact, homeowner’s insurance carriers made a whopping $147.8 billion in revenue from 2018 to 2023. They make money from your premiums and lose money when they pay your claims. Despite their sympathetic public image, insurers avoid paying whenever possible.

Insurance adjusters often look for policy loopholes instead of coverage. In fact, many policies contain deliberately confusing, awkwardly worded, and conflicting exclusions. A skilled attorney knows how to interpret these provisions and use them to obtain the benefits you deserve.

Signs of Possible Bad Faith by Your Insurer 

Insurers must verify honest claims, but they should also be engaged with processing them. An insurer acts unreasonably when it attempts to thwart legitimate claims with shady tactics. 

Insurance bad faith occurs when an insurer unreasonably:

  • denies your claim
  • underpays your claim
  • misrepresents policy language
  • fails to communicate with you after your claim is filed
  • resorts to abusive or intimidating tactics to discourage your claim
  • delays investigating or processing your claim
  • refuses to defend and indemnify you against claims by others

All of the above violates Colorado law, which states:

“A person engaged in the business of insurance shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party claimant.”— Colorado Revised Statutes 10-3-1115 (1) (a)

A Typical Hail Damage + Insurance Bad Faith Scenario 

In another one of our insurance bad faith articles, I gave an example of what can happen after hail damages a roof. I’ll repeat it here:

After a hail event, a contractor will assess the damage and estimate repair costs. Your insurance company will then send its own adjuster to review the damage. Cue the problems.

Fixing a Roof 

After a hail storm, your contractor claims your entire roof needs to be replaced. He says the materials to repair the portion of your damaged roof are no longer manufactured. Using current standard materials in conjunction with the outdated roof could lead to leaks. This is why a total roof replacement is best.

Your insurance company doesn’t care. They will only pay to fix the area that’s been damaged, and not a penny more. This leaves you with a $20,000 shortfall.

This is a common scenario. In fact, a nearly identical real-life matter arose after the May 2017 hailstorms.

Bertisen v. Travelers Home & Marine Ins. 

The Bertisen home in Golden was damaged in the May 2017 hail storm. Travelers, their insurance company, paid for a lot of the damage,  but it refused to replace the roof. After an appraisal, Travelers only covered $98,000 of the total $150,000 estimate. The Bertisens sued Travelers in December 2020.

Both sides gathered evidence and asked the Tenth Circuit court to decide without a trial. The Bertisens sued for breach of contract and bad faith. Travelers argued that 1, the appraisal did not establish the cause or date of the roof damage, and 2, replacing the roof was an unnecessary “cosmetic” repair.

The sum of the court’s rulings favored the Bertisens. Judge Nina Wang said that under the circumstances, cosmetic damage was for the court to decide, not the insurer. The appraisal award was binding, and Travelers failed to challenge it. Travelers also failed to show that their policy excluded cosmetic matching.

If you find yourself in a similar situation, it’s time to talk with an attorney. You might have an insurance bad faith case to pursue.

Damages and Compensation for Insurance Bad Faith 

Types of Damages in Bad Faith Matters 

Should you prevail in a bad faith claim, compensation will come in the form of both economic damages and non-economic damages.

Economic damages compensate you for direct financial loss as the result of the insurer’s bad faith conduct.

Non-economic damages compensate you for any harm you endured that isn’t measured financially. These can include:

  • The frustration caused by your insurer denying your claim
  • Inconvenience caused due to the insurer’s failure to provide needed financial support
  • Emotional distress

Punitive damages may apply when insurers act willfully in bad faith, not just unreasonably. Punitive damages awards take into account both the insured’s losses and the insurer’s financial status.

The amount of compensation for damages you can recover depends on what kind of bad faith claim (or claims) you file. You can file more than one, if the facts allow. 

What You are Entitled to Under a Common Law Bad Faith Claim 

In this claim, you must prove the insurer failed to act in good faith and fair dealing. You must show the insurer knew and recklessly disregarded the fact it acted unreasonably when it delayed or denied your claim.

If your common-law claim prevails, you can recover economic damages and non-economic damages like compensation for emotional distress. Willful wrongdoing by the insurer can even lead to punitive damages equal to actual damages.

What You Are Entitled to Under a Statutory Bad Faith Claim 

An insurer’s unreasonable delay or denial of payment without a valid reason qualifies as statutory bad faith. This enables you to bring an action in district court to recover attorney fees, court costs, and double the covered benefit.

Statutory bad faith provides remedies in addition to, not in place of, common-law bad faith remedies. This means you could reap two times your covered benefit, plus attorney fees and court costs.

Breach of Contract Claim 

You can also file a breach of contract claim to recover the money the insurance company owed you. To prevail, you must show that you fulfilled your duties, like paying premiums on time. You also must prove the insurer failed to meet its obligations by not fully paying your claim. You won’t get double damages like in a statutory claim.

Understanding Your Hail Damage Insurance Coverage 

Most Colorado homeowners’ policies include coverage for hail damage — but not all of them. Some only offer hail and windstorm damage as additional protection. If you’re paying a mortgage, your bank or lender probably requires that you carry hail and windstorm damage protection.

Insurance providers wil value hail damage claims in one of two ways:

  • Actual Cash Value (ACV): This is the cost to fix your home, minus the decrease in value due to age or use. This is also known as Depreciated Cash Value.
  • Replacement Cost Value (RCV): This is the cost to repair your home at today’s prices. This includes the prices of building supplies or your belongings at today’s cost of similar items.
How Replacement Cost Works 

If you have RCV, the insurance company may first pay you the actual cash value. Next, the insurer reimburses you once the item is repaired or replaced, and you’ve submitted the receipts. This is called recoverable depreciation. Know how your policy will pay replacement cost.

Hail Insurance Deductibles 

However much your insurance pays out, you’ll still be expected to pay a portion. This is called a deductible. Depending on your policy, hail damage could have a different deductible than other types such as fires or flooding. Review your policy or contact your insurance agent to see what your deductible is for hail damage.

Understanding Commercial Property Coverage 

Your basic commercial property insurance typically includes three main components:

  • Building coverage covers losses related to buildings, permanently installed fixtures, equipment, and machinery. This coverage might be subject to limits and conditions described in your policy.
  • Business property coverage protects inventory. This can include stock and supplies, non-permanent fixtures, furniture, important documents, and other equipment not insured under building coverage.
  • Personal property coverage insures personal items within the commercial property owner’s custody, control, or care.

Commercial property owners base insurance protection on their property’s needs, and the ability to continue generating income after a disaster. Your coverage requirements will vary according to your type of business.

Filing Your Hail Damage Insurance Claim 

Whether you’re a homeowner, someone who owns a small business, or both, your reaction to hail damage is likely the same: You hate it. During the storm, you hope the impact won’t be too bad. After you see the actual damage, you want it fixed as soon as possible.

Unfortunately, after major weather events like hail storms, soon is not always possible. The sudden surge of claims overwhelms insurance companies, causing frustration and payment delays. This is normal, and is no indication of insurance bad faith.

What You Should Do When Filing 

To make the process go more easily, it’s important to start you claim process as soon as possible. Here are some tips to help you get a fair payout for hail damage:

  • Document the Damage: Take photos and videos of anything affected by hail, including: roof damage, torn shingles, damaged siding, water damage, and broken windows. This step is crucial to prove that the damage was caused by hail and not normal wear and tear.
  • Review Home Insurance or Business Insurance Coverage: Familiarize yourself with your insurance coverage, including the type of claim (Actual Cash Value or Replacement Cost Value) and what it means.
  • Get a Third-Party Repair Estimate: Seek an independent estimate of the damage apart from your insurance provider. You can hire a contracting company, public adjuster, or a roofer to provide an estimate for repairs or replacements.
  • Seek Help from an Experienced Property Damage Attorney: An attorney can be invaluable in helping you efficiently navigate the insurance claims process. Your lawyer can understand paperwork and deadlines, and will ensure fair compensation from your insurance company.
  • File Your Hail Damage Claim: Finally, carefully fill out and submit the necessary insurance paperwork as soon as possible. Timing is crucial.

What You Should Not Do When Filing 

It’s natural to want to get everything back to normal as soon as possible. Unfortunately, the desire for a quick solution can lead to more problems. Avoid these mistakes that could harm the outcome of your claim:

  • Don’t Sign Anything Right Away: Make sure you have a reputable and experienced attorney review the terms before agreeing to a payout.
  • Don’t Let the Insurer Dictate Repairs: You can choose your own repair services. After all, you’re the person who has to live with it.
  • Don’t Neglect Leaks: Promptly and professionally repair any leaks, even while your claim is pending. You can hurt your claim by not taking steps to prevent further damage. You can save the receipts and get reimbursed later.

Remember, you’re not alone in this process. By taking proactive steps and seeking the right support, you can navigate this difficult time and work towards a fair resolution for your hail damage claim.

Steps to Take if Your Hail Damage Claim Is Denied 

If your hail damage insurance claim is denied, take immediate action. As a policyholder, you have the right to contest the denial.

Here are some steps to take if your insurer rejects your hail damage claim:

  1. Go over the rejection letter thoroughly to understand the stated reasons for the rejection.
  2. Gather proof to refute those reasons.
  3. Make sure you’re up to date on any balances you owe.
  4. Keep all documentation from the claim filing. Preserve all communication with the insurance adjuster, including emails, texts, and notes after phone calls.
  5. Contact your insurance company and request a re-evaluation.
  6. If they deny your claim again, contact an attorney and set up a consultation.
Why Hire a Lawyer for Your Hail Damage Claim? 

Hail and wind damage insurance claims can be complex. Every detail matters. As I’ve seen with several clients, one missed item can lead to rejection.

An experienced lawyer can help from the start, even if your claim is accepted. They ensure everything is done correctly and on time by:

  • Reviewing your insurance policy (spotting tricky language)
  • Maximizing your hail damage claim (knowing the law has advantages)
  • Negotiating with the insurance company (saving you the stress)
  • Representing you in court, if needed.

Has Your Claim Been Unjustly Denied or Delayed? Give ‘em ‘Hail!’ 

Insurance companies used to get away with a lot. Not anymore. Colorado law now protects policyholders from insurers who act unreasonably and in bad faith. We understand that dealing with a denied claim can be frustrating. You need not face it alone. Our experienced, tenacious  attorneys are here to help you understand your legal rights and explore your options. Call 303-688-0944 for a case assessment.

More Than Just Lawyers. Lawyers for Your Life.

Learn more about our law firm’s philosophy and values.