Basics of Bad Faith Insurance Claims

Filing a bad faith insurance claim in Colorado is fairly straightforward. To do so, the insured must file a civil lawsuit against the insurance carrier, typically for three claims (1) breach of contract, (2) statutory bad faith, and (3) common law bad faith. These claims arise from the insurance policy itself as well as Colorado laws mandating that insurance companies act in good faith toward their policyholders. (Learn more about Colorado insurance basics at the Colorado Division of Insurance’s website).


  • Can I sue my insurance carrier for failing to pay my insurance claim? Yes. You can sue them for breach of contract and also possibly bad faith.
  • Can I obtain “double” or “triple” damages if the insurance company acts in bad faith? Yes. Under Colorado law, insurance carriers can be held liable for more than just the amount they owe under the policy and may be liable for “two times” the “covered benefit.”
  • What is bad faith insurance conduct? It is when an insurance carrier fails to investigate or pay an insurance claim and acts unreasonably in doing so. (i.e. does not even investigate the claim or has a pattern of simply denying claims).
  • What does a bad faith insurance lawyer do? A bad faith insurance lawyer can assist you in bringing a claim against your insurance carrier for breaching the policy and can possibly obtain more for you if bad faith can be shown.


What Duties Does an Insurance Carrier Owe?

Colorado insurance companies owe a duty to their policyholders to act in good faith and to settle insurance claims fairly. If the insurance company fails to do so and their actions are unreasonable, they may be liable for acting in “bad faith.” Generally, insurance companies are required to do the following things during the claims-adjusting process:

  1. Promptly investigate the insurance claim;
  2. Promptly settle claims once it becomes clear that a benefit is owed;
  3. Communicate with the insured;
  4. Explain the terms of the policy;
  5. Affirm or deny coverage of claims within a reasonable time after the loss has been submitted; and,
  6. Numerous other duties.

Although insurance companies have a number of stringent duties they must follow in handling claims, it is fair to say that most people know bad faith when they see it. Actions like (1) denying coverage without any investigation, (2) offering ridiculously low offers to settle insurance claims, and (3) generally being unresponsive to the insured are all examples of conduct most people would consider unacceptable.


Can You Sue for Bad Faith Breach of the Insurance Contract?

Yes. Under Colorado bad faith law, if an insurance carrier does indeed act unreasonably, the insured may be entitled to three times the amount of damages and attorney fees and costs. The statute that allows such damages is C.R.S. § 10-3-1116(1) and states:

A first-party claimant as defined in section 10-3-1115 whose claim for payment of benefits has been unreasonably delayed or denied may bring an action in a district court to recover reasonable attorney fees and court costs and two times the covered benefit.

Although the statute says “two times the covered benefit” the third multiple comes from the fact that the insured is also entitled to damages for breach of the insurance contract to begin with. High-dollar insurance claims are the ones most likely to be disputed. Those claims are often claims brought by commercial property owners, community associations, and other owners of valuable real estate where the losses sustained are enormous.

Griffiths Law represents policyholders in bad faith insurance claims related to all kinds of perils including hail, wind, and fire insurance claims as well as insurance claims arising from water leaks and other common hazards. Griffiths Law also represents policyholders in “unique” insurance claims related to less common issues such as theft and personal liability.