El Dueno: Insurer’s Expert Reliance in Bad Faith Disputes, Published in the Colorado Real Estate Journal

In an article published on 9/2 in the Colorado Real Estate Journal, Segal McCambridge Shareholder Daniel DiLizia explores the concept of “statutory bad faith” in Colorado and its role in property insurance claims. He provides insight into the commonly overlooked exclusions and conditions within these contracts, as well as the reliance of independent expert opinion during estimate assessments by highlighting a recent ruling that gives clarity on when an insurance company is legally determined to have acted in bad faith.

DiLizia provides context to ‘bad faith,’ saying, “An insurer violates the implied duty of good faith and fair dealing when it both engages in unreasonable conduct and either knows that its claim delay or denial was unreasonable or when it ‘recklessly disregards the fact that its claim delay or denial was unreasonable.’4 Stated differently, this claim, which is sometimes called ‘common law bad faith,’ requires ‘a showing that the insurer subjectively knew of, or recklessly disregarded, the unreasonableness of its conduct.’”

In El Dueno, LLC v. Mid-Century Insurance Company, the dispute centered around an insurance claim for hail damage in Colorado. The property owner, El Dueno, estimated higher costs than presented by the original insurer’s adjuster, which caused the Mid-Century Insurance Company to bring on a new insurer’s adjuster who concluded that no further hail damage was sustained – a decision which El Dueno challenged.

In the end, “the court found that the insurer did not act unreasonably even when its engineer’s opinion differed from the initial adjuster’s opinion concerning the extent of hail-related roof damage,” DiLizia explained. “Without any proof that the insurer violated an ‘industry standard,’ the court concluded that the case amount to a mere coverage disagreement, which is insufficient to state a claim for bad faith.”

Read the article in full, click here (page 29).