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Insurance Bad Faith Claims in Colorado

Your insurer is legally required to handle your claim fairly. When a delay or denial has no reasonable basis, Colorado law gives you a way to hold them accountable for it.

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What "Bad Faith" Actually Means Under Colorado Law

Insurance bad faith isn't just an insurer being slow or unhelpful. It has a specific legal meaning: your insurer delayed or denied a claim you were owed, without a reasonable basis for doing so.

C.R.S. § 10-3-1115(1)(a) prohibits a person engaged in the business of insurance from unreasonably delaying or denying payment of a claim for benefits owed to a first-party claimant.

Colorado courts look at this on an objective basis, whether the insurer's conduct matched the standards of the industry, not just whether the outcome felt unfair to you. That's exactly why the insurer's internal claim file, how it investigated, what it considered, and what it ignored, tends to matter more in these cases than in a standard injury claim.

What You Can Recover

Colorado gives first-party claimants a statutory remedy that goes beyond simply collecting the benefit you were always owed.

C.R.S. § 10-3-1116(1) allows a first-party claimant whose payment was unreasonably delayed or denied to recover reasonable attorney fees, court costs, and two times the covered benefit.

Separately, Colorado also recognizes a common law bad faith claim, which can allow for broader damages, including for emotional distress, in cases involving particularly egregious conduct. Which path applies, or whether both do, depends on the specifics of your policy and how the claim was handled.

How This Connects to Your Underlying Claim

Bad faith claims most often show up alongside another dispute already in progress, a denied UM/UIM claim, a lowballed property damage claim, a delayed medical benefits payout. The bad faith claim isn't a substitute for that underlying claim, it's a separate legal consequence for how the insurer handled it.

Common Questions

How do I know if my insurance company acted in bad faith?

Signs include a total failure to investigate your claim, a denial with no clear explanation, an investigation that ignored evidence you provided, or a delay with no apparent reason. No single factor is automatically bad faith on its own, it's evaluated on the specifics of how your claim was handled.

Can I sue an individual adjuster for bad faith?

No. Colorado's Supreme Court has held that an action for unreasonably delayed or denied benefits proceeds against the insurance company itself, not against an individual adjuster acting as its employee.

Does a bad faith claim replace my original insurance claim?

No. It's a separate claim about how the insurer handled the underlying benefit you were owed. You generally still need a valid, unpaid or underpaid claim underneath the bad faith claim itself.

How long do I have to bring a bad faith claim in Colorado?

The exact deadline depends on which legal theory applies to your situation, statutory or common law, and the timing isn't always straightforward. If you suspect your insurer handled your claim unreasonably, it's worth getting the timeline confirmed early rather than assuming.

What kind of insurance claims can involve bad faith?

Any first-party claim: auto, UM/UIM, homeowners, property, and disability claims among them. The common thread isn't the type of policy, it's whether the delay or denial had a reasonable basis.

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