INSURANCE DISPUTES & BAD FAITH
Denver Insurance Bad Faith Lawyer
A first-party insurance claim asks a company to do something different from every liability insurer on the rest of this site: honor its own contract.
The policyholder paid premiums in exchange for specified coverage. When a covered loss occurs, the insurer investigates the claim, interprets the policy, evaluates the evidence, and decides what it will pay.
Colorado law allows insurers to dispute claims. It does not allow them to delay or deny covered benefits without a reasonable basis. The difference between those two propositions is where insurance bad faith begins.
Separate the Insurance Roles.
A first-party claim seeks benefits owed directly to or on behalf of an insured under the insured’s own policy. Property insurance and uninsured or underinsured motorist coverage are common examples. C.R.S. § 10-3-1115 expressly defines a first-party claimant and distinguishes that person from someone merely asserting a liability claim against another person’s insured.
Third-party bad faith means something different. It generally concerns a liability insurer’s handling of a claim made by someone else against its own insured. The insurer may control investigation, defense, settlement, or other decisions that can expose its insured to liability. An injured claimant does not acquire a bad-faith claim against the other driver’s insurer merely because that insurer handles the liability claim poorly.
The distinction matters because Colorado applies different bad-faith standards to the two relationships.
Colorado Creates a Statutory Remedy.
C.R.S. § 10-3-1115 prohibits a person engaged in the business of insurance from unreasonably delaying or denying payment of benefits owed to or on behalf of a first-party claimant. For that statutory claim, a delay or denial is unreasonable when a covered benefit is delayed or denied without a reasonable basis. The statute does not require the insured to prove that the insurer knew its conduct was unreasonable.
C.R.S. § 10-3-1116 supplies the remedy. A qualifying first-party claimant whose covered benefit was unreasonably delayed or denied may recover reasonable attorney fees, court costs, and two times the covered benefit. The statute expressly provides that the action is in addition to other statutory and common-law claims rather than a substitute for them.
That distinction matters. The policyholder may have a contract claim for unpaid benefits, a statutory unreasonable-delay-or-denial claim, a common-law bad-faith claim, or more than one of them. Each asks a different legal question.
Standards Change by Claim.
Common-law first-party bad faith requires more than an unreasonable result. The insured must prove that the insurer acted unreasonably and knew its conduct or position was unreasonable, or recklessly disregarded that fact. C.R.S. § 10-3-1113(3) states that first-party standard.
The statutory first-party claim under §§ 10-3-1115 and 10-3-1116 does not contain that additional knowledge or reckless-disregard element. The central question is whether the delay or denial of the covered benefit lacked a reasonable basis.
Third-party common-law bad faith uses a different framework. Under a liability policy, § 10-3-1113(2) measures the reasonableness of the insurer’s delay or denial by whether its conduct was negligent, and third-party bad faith is generally described as unreasonable conduct in investigating, defending, or settling a claim brought against the insured.
Not Every Dispute Qualifies.
A denial is not automatically bad faith. Neither is a lower valuation than the policyholder expected.
An insurer can have a genuine dispute about whether a policy covers a loss. Two experts can reasonably disagree about repair scope, causation, medical damages, or value. Policy language can present a legitimate interpretation question. A mistake, standing alone, does not establish common-law bad faith.
The statutory claim still asks whether the insurer had a reasonable basis for delaying or denying a covered benefit. Calling a claim “disputed” does not answer that question. The investigation, the evidence available when the decision was made, the policy language, and the explanation actually given all matter.
This is why bad-faith analysis should begin with the claim rather than the accusation. The question is not whether the insurer made the policyholder angry. It is whether the insurer’s conduct crossed the legal standard that governs the claim.
Build the Claim Timeline.
Insurance bad faith is usually proved from a chronology. When was the loss reported? What did the insurer request? When did it receive the documents? What investigation followed? Who evaluated the claim? When did the insurer change its position? What explanation did it give for withholding payment?
The claim file can preserve much of that record. Adjuster notes, correspondence, emails, recorded calls, estimates, expert reports, payment histories, coverage letters, internal referrals, and supervisor involvement can show how the insurer reached its decision.
Internal claims-handling guidelines and training materials can also matter when they bear on the standards applied to the claim. Reserve information may become relevant in particular litigation, subject to discovery, privilege, and evidentiary rules, but a reserve is not simply an admission that the insurer owes that amount.
A clean communication timeline is often as important as any single document. Delay has to be measured against what the insurer knew and what remained reasonably necessary to investigate.
Regulatory Rules Still Matter.
C.R.S. § 10-3-1104(1)(h) identifies unfair claims-settlement practices. It addresses conduct including misrepresenting pertinent facts or policy provisions, failing to respond reasonably promptly to communications, refusing payment without a reasonable investigation, and failing to provide a reasonable explanation for a denial or compromise position.
An insured does not obtain a standalone private damages claim merely by alleging a violation of § 10-3-1104. Colorado treats those provisions principally as insurance-regulatory rules rather than an independent private cause of action.
That does not make them irrelevant. C.R.S. § 10-3-1113(4) permits specified willful unfair-claims conduct to be considered when evaluating whether an insurer acted unreasonably. The regulatory standard can therefore supply evidence without becoming a separate lawsuit by itself.
Keep Benefit and Conduct Separate.
The underlying insurance claim asks whether the policy provides a benefit and, if so, how much. The bad-faith claim asks whether the insurer acted unlawfully in handling that obligation. Those questions overlap, but they are not the same.
A property dispute can involve hail, wind, fire, water, exclusions, repair scope, valuation, replacement cost, or appraisal before any bad-faith question is reached. Property Insurance Claims addresses those coverage and adjustment disputes separately.
A UM/UIM claim combines first-party insurance obligations with proof of the underlying motor-vehicle loss. Auto Insurance and UM/UIM Claims addresses those issues separately and may provide an injured person with additional insurance coverage.
Paying the benefit eventually also does not necessarily answer whether an earlier delay was unreasonable. Conversely, establishing that benefits were owed does not automatically establish common-law bad faith. Coverage and conduct have to be analyzed independently.
Calendar Each Claim Separately.
The benefit claim and the bad-faith claim should not be placed on one deadline.
A common-law insurance bad-faith claim sounds in tort and is generally subject to Colorado’s two-year limitations period under C.R.S. § 13-80-102(1)(a), running from the applicable accrual date. The bad-faith tort exists independently from the insurer’s contractual liability.
C.R.S. § 10-3-1116 does not contain its own limitations period. The applicable period and accrual analysis for the statutory claim depend on how the claim is characterized under controlling law, and should be determined case by case rather than inferred from the text of the section itself.
The underlying breach-of-contract claim presents another clock. Colorado generally provides a three-year limitations period for contract actions under C.R.S. § 13-80-101(1)(a), but an insurance policy can contain its own suit-limitation language and particular coverages can present additional rules.
Continued adjustment or negotiation should not be assumed to stop any of those clocks. A claim can remain open while a legal deadline continues to run.
Rex Legal Audits the Record.
Rex Legal begins with the policy and the claim history: what coverage was purchased, what benefit was requested, what evidence the insurer had, what it did with that evidence, and why payment was delayed, reduced, or denied. Michael Rex remains directly involved in evaluating the underlying benefit claim and any separate statutory or common-law bad-faith claim.
Insurance Claims Rex Legal Handles
Two kinds of first-party claim come up often enough to have their own pages. Both begin with the policy language and with what the insurer actually did with the claim.
Insurance Bad Faith Questions.
What is insurance bad faith in Colorado?
Insurance bad faith concerns unreasonable conduct by an insurer toward its insured. In a common-law first-party claim, the insured must prove unreasonable conduct plus knowledge of that unreasonableness or reckless disregard of it. Colorado also creates a separate statutory remedy under C.R.S. §§ 10-3-1115 and 10-3-1116 when a covered first-party benefit is delayed or denied without a reasonable basis.
What is the difference between an insurance denial and bad faith?
A denial answers whether the insurer says it owes the claim. Bad faith asks whether the insurer acted unreasonably in reaching or handling that position under the applicable legal standard. An insurer can deny a claim incorrectly without necessarily committing common-law bad faith. A legitimate coverage dispute or a reasonable disagreement about value can exist. The policy, investigation, evidence, timing, and stated basis all matter.
What does Colorado’s statutory bad-faith remedy provide?
Under C.R.S. § 10-3-1116(1), a qualifying first-party claimant whose covered benefit was unreasonably delayed or denied may recover reasonable attorney fees, court costs, and two times the covered benefit. The claim works alongside other available statutory and common-law causes of action rather than replacing them. The statutory standard focuses on whether the insurer delayed or denied the covered benefit without a reasonable basis.
Can I sue my own insurance company?
Yes, if the facts support a legal claim. An insured can bring a contract action to recover benefits the policy requires and, in appropriate circumstances, separate statutory or common-law claims concerning the insurer’s conduct. Suing your own insurer does not require pretending every coverage disagreement is bad faith. The policy obligation and the claims-handling conduct should be evaluated separately.
What if my insurance company keeps delaying instead of denying the claim?
Delay can matter even without a formal denial. C.R.S. § 10-3-1115 prohibits unreasonable delay as well as unreasonable denial of covered first-party benefits. Some delay is legitimate when additional investigation is reasonably necessary. Repeated unexplained inactivity, shifting requests, failure to act on information already supplied, or withholding covered benefits without a reasonable basis can present a different issue. Keep a dated record of every submission and response.
What evidence matters in an insurance bad faith claim?
Start with the policy and the complete communication history. The claim file, adjuster notes, emails, recorded calls, estimates, expert reports, payment records, coverage letters, internal guidelines, supervisor involvement, and the timing of each request or decision can matter. Reserve information may also become relevant in some litigation, but it is not automatically an admission of what the insurer owes.
How long do I have to bring an insurance bad faith claim in Colorado?
Different claims can carry different clocks. Common-law bad faith is generally treated as a tort subject to a two-year limitations period. C.R.S. § 10-3-1116 contains no limitations period in its own text, so the applicable period and accrual analysis for the statutory claim should be determined under controlling law case by case. An underlying contract claim can have a separate deadline, and policy suit-limitation provisions may also matter.
Do I have to sue my insurer to get an insurance claim paid?
No. Claims can resolve through ordinary adjustment, supplemental documentation, negotiation, appraisal where applicable, or another procedure provided by the policy. Litigation becomes necessary when a dispute cannot otherwise be resolved or a legal remedy must be preserved. Continuing to communicate with the insurer should not be assumed to extend a filing deadline, so a claim can require legal review before negotiations have ended.
Tell Us What Happened.
If your insurer has delayed, denied, or underpaid a claim, Michael Rex can review the policy, the benefit requested, the insurer’s stated reasons, and the complete claims-handling record. Available 24 hours a day, 7 days a week.