You pay your insurance premiums every month with the understanding that if disaster strikes, you’re insurer will be there to protect you. Whether it is an auto accident or a homeowner’s claim, you expect a fair and timely resolution. However, insurance companies are for-profit corporations that often prioritize their bottom line over their legal obligations to policyholders. When an insurer uses “lowball” offers, ignores evidence, or drags out a claim for months without reason, they may be acting in “bad faith.” At 5280 Injury Law, we know that an insurance policy is a contract of trust. When that trust is broken, a Colorado bad faith insurance lawyer can use the state’s powerful consumer protection laws to hold them accountable.
Understanding the Two Pillars of Bad Faith in Colorado
Colorado is unique because it offers policyholders two distinct paths to seek justice when an insurer fails against them. These are known as Common Law Bad Faith and Statutory Bad Faith.
1. Common Law Bad Faith
This is a “tort” claim based on the implied covenant of good faith and fair dealing. To win, you must prove that the insurer acted unreasonably and that they knew or recklessly disregarded the fact that their conduct was unreasonable.
Damages: Under common law, you can recover “consequential damages” (like emotional distress or economic losses beyond the policy limit) and potentially punitive damages.
2. Statutory Bad Faith (CRS 10-3-1115 and 1116)
This is often the more powerful tool for a Colorado bad faith insurance lawyer. Under CRS 10-3-1115, an insurer “shall not unreasonably delay or deny payment of a claim for benefits.” Unlike common law, you do not have to prove the insurer knew they were being unreasonable; you only must prove that their actions were, in fact, unreasonable.
The Power of Double Damages: Under CRS 10-3-1116, if an insurer is found to have unreasonably delayed or denied a claim, the court shall award the plaintiff two times the covered benefit, plus reasonable attorney fees and court costs.
Common Insurance Delay Tactics and Red Flags
Insurance companies rarely admit they are acting in bad faith. Instead, they use a series of subtle insurance delay tactics designed to wear you down until you accept a settlement for pennies on the dollar.
Watch for these warning signs:
- The “Silent Treatment”: Failing to acknowledge a claim or respond to communications within a reasonable timeframe (usually 20 days in Colorado).
- The “Paperwork Loop”: Repeatedly asking for the same documents or requesting “new” information that is irrelevant to the claim.
- Unreasonable Denial Benefits: Denying a claim based on an “internal investigation” without explaining the facts or the specific policy language used for the denial.
- Biased Investigations: Hiring “independent” doctors or engineers who consistently provide reports favoring the insurance company.
- Lowballing: Offering a settlement that is significantly lower than the actual value of the medical bills or property damage proven by the evidence.
| Tactic | What It Looks Like | How We Fight It |
|---|---|---|
| Undervaluation | Ignoring your doctor’s surgery recommendation | Hiring independent medical experts |
| Investigation Delay | Claiming “weather” prevents an inspection for 3 months | Filing a “Notice of Bad Faith” |
| Misrepresentation | Lying about what your policy covers | Citing the specific CRS 10-3-1115 statutes |
| Partial Payment | Paying only the ER bill and ignoring therapy | Demanding the full “undisputed” amount |
Documenting Bad Faith: Building Your Paper Trail
To hold an insurer accountable, you must treat every interaction as potential evidence. At 5280 Injury Law, we advise our clients to:
- Communicate in Writing: Whenever possible, use email so there is a time-stamped record of what was said.
- Keep a Log: Note the date, time, and name of every adjuster you speak with.
- Request Explanations: If a claim is denied, ask for the specific section of the policy they are relying on.
- Save All Mail: Keep the envelopes to prove when a letter was actually postmarked versus the date on the letter.
According to the Colorado Division of Insurance (DORA), the state receives thousands of consumer complaints annually regarding claim handling. While DORA can investigate and fine companies, they cannot award you the “double damages”. For that, you need a civil lawsuit.
Colorado Insurance Market Statistics (2024-2025)
| Metric | Recent Trend | Legal Impact |
|---|---|---|
| Avg. Claim Cycle Time | Increasing due to staffing shortages | Often leads to insurance delay tactics |
| Litigation Rates | Higher in UM/UIM claims | High risk of statutory bad faith CO |
| Consumer Complaints | Focus on “Slow Pay” and “No Pay” | Basis for unreasonable denial of benefits |
| Average Settlement | Decreasing for self-represented victims | Proof of “Lowballing” strategies |
Holding Your Insurer to the Terms of the Contract
When you are at your most vulnerable, the last thing you need is a legal battle with the company that promised to protect you. Insurance companies rely on the fact that most people will eventually give up and accept a low offer just to end the stress. We don’t let them get away with it. At 5280 Injury Law, we speak the language of the insurance industry, and we know how to use CRS 10-3-1115 to turn the tables on aggressive adjusters. If your insurer is playing games with your future, let us put the “double damages” statute to work for you. To protect your rights and ensure you receive every dollar your policy provides, please contact us today for a comprehensive evaluation of your claim.
Frequently Asked Questions (FAQs)
Does a denied claim automatically mean "Bad Faith"?
No. An insurer has a right to deny a claim if there is no coverage or if the facts do not support the loss. Bad faith only occurs if the denial or delay was unreasonable based on the information available to the insurer.
Can I get "Double Damages" for a car insurance claim?
Yes. CRS 10-3-1115 applies to first-party claims, which include your own Uninsured/Underinsured Motorist (UM/UIM) coverage, MedPay, and comprehensive/collision coverage. It does not apply to a claim you file against the “other driver’s” insurance.
What if my insurer offers a "final" settlement that is too low?
Do not sign a release without a review. Once you sign, you likely waive your right to pursue a bad faith claim. A Colorado bad faith insurance lawyer can evaluate the offer to see if it meets industry standards.
How long do I have to sue for bad faith in Colorado?
Generally, the statute of limitations for bad faith is two years from the date the bad faith occurred. However, because these claims are often tied to an underlying injury case, the timeline can be complex.
Can I recover attorney fees in a bad faith case?
Yes. One of the best features of CRS 10-3-1116 is that the insurer is required to pay your reasonable attorney fees and court costs if you win the statutory bad faith claim.
