When Your Own Insurance Company Becomes the Problem

Key Takeaways: Colorado’s bad faith insurance law under §§ 10-3-1115 and 10-3-1116, C.R.S. gives first-party policyholders a private right of action when an insurer unreasonably delays or denies payment of a covered benefit. The statutory claim requires only two elements: benefits were denied or delayed, and the insurer lacked a reasonable basis. This is generally a lower bar than the common-law bad faith claim in Savio, which also requires knowledge or reckless disregard. A successful claim may allow recovery of two times the covered benefit plus reasonable attorney fees and court costs. The jury determines the covered benefit amount, while the court applies the statutory multiplier and awards fees. In Rooftop Restoration, the Colorado Supreme Court held these claims are not subject to the one-year penalty limitations period. Outcomes remain fact-dependent, turning on the claim file, policy language, and procedural posture.

Colorado’s statutory bad faith law, found at §§ 10-3-1115 and 10-3-1116, C.R.S., gives policyholders a private right of action when an insurer unreasonably delays or denies payment of a covered benefit. For a Centennial driver waiting on uninsured motorist benefits after a collision, this statute can be the difference between a stalled claim and real accountability.

If an insurer has been sitting on your car accident claim without explanation, the team at Jacobs Law is available to review what happened. Call 303-529-4040 or reach out to our team today to discuss whether a statutory claim may apply.

What Colorado Bad Faith Insurance 10-3-1116 Actually Provides

The statute creates a standalone lawsuit for first-party claimants whose benefits were unreasonably delayed or denied. Under § 10-3-1116(1), C.R.S., a first-party claimant may bring an action to recover reasonable attorney fees, court costs, and two times the covered benefit. That remedy structure gives the statute more force than a breach of contract suit, which ordinarily recovers only the benefit itself.

This remedy generally works alongside other claims. Colorado’s civil jury instructions explain that §§ 10-3-1115 and 10-3-1116 provide a private right of action in addition to, and separate from, a common-law claim for first-party bad faith breach of an insurance contract.

One important limitation appears in the statute itself. Under § 10-3-1116(4), C.R.S., damages awarded under that section are not recoverable in any other action or claim. This prevents duplicate recovery, though Colorado appellate authority permits the statutory award in addition to contract damages for the unpaid benefit.

The Two Elements That Make a Statutory Bad Faith Colorado Claim

Colorado’s statutory claim has only two elements, proven by a preponderance of the evidence. According to the Colorado civil jury instructions on insurance claims, the plaintiff must show that the insurer denied or delayed payment of benefits, and that the denial or delay was without a reasonable basis. There is no separate element requiring proof of the insurer’s state of mind.

That second element is where most disputes live. Whether a basis was "reasonable" is fact-dependent, evaluated against industry standards, policy language, and what the insurer knew at the time.

Why This Is Generally a Lower Bar Than Common-Law Bad Faith

The common-law first-party claim from Travelers Ins. Co. v. Savio, 706 P.2d 1258 (Colo. 1985), generally requires more. Under Savio, a plaintiff must show unreasonable conduct plus the insurer’s knowledge of, or reckless disregard for, the fact that its conduct was unreasonable. Colorado appellate authority, including Kisselman v. American Family Mutual Insurance Co., 292 P.3d 964 (Colo. App. 2011), recognizes that the statutory claim requires only proof that the insurer acted without a reasonable basis.

Practically speaking, that difference may matter at trial. Removing the knowledge-or-recklessness element means a policyholder generally does not have to prove what an adjuster subjectively believed. However, a genuine dispute over coverage or value may supply a reasonable basis.

The Duty May Extend Beyond the Payment Decision Itself

An insurer’s good-faith obligation generally covers the insurer-insured relationship as a whole. Colorado authority, including Ballow v. PHICO Ins. Co., 875 P.2d 1354 (Colo. 1993), and Dunn v. American Family Insurance, 251 P.3d 1232 (Colo. App. 2010), reflects that the duty extends beyond the moment a check is written. Investigation, communication, and overall claim handling may all be examined.

Conduct prohibited by Colorado’s unfair claims practices statute can also come into evidence. Under § 10-3-1113(4), C.R.S., the trier of fact may consider statutorily prohibited insurer conduct (of the kind set forth in § 10-3-1104(1)(h)(I) to (XIV)) as evidence of unreasonable delay or denial. That evidence does not automatically establish liability, but it can be persuasive when a pattern emerges.

💡 Pro Tip: Request a complete copy of your claim file and every written communication early. Documentation of what the insurer asked for, when you provided it, and how long the file sat is often the backbone of an unreasonable delay case.

Common Conduct That May Support a Bad Faith Insurance Claim

Not every disagreement about value amounts to bad faith. An insurer may investigate, request records, and dispute causation or injury extent. Conduct that may be scrutinized includes:

• Failing to conduct a reasonable investigation before denying a covered benefit
• Ignoring or discounting treating physician records without a sound basis
• Prolonged silence or repeated requests for information already provided
• Misrepresenting policy terms or coverage limits
• Delaying payment of undisputed portions while disputing the rest

How you interact with the adjuster from day one may shape the record later. Our guide on dealing with insurance adjusters walks through practical steps to preserve evidence of delay.

Who Counts as a First-Party Claimant

The definition may reach further than many assume. Under § 10-3-1115(1)(b)(I), C.R.S., "first-party claimant" is not limited to individual consumers. In Kyle W. Larson Enterprises, Inc. v. Allstate Insurance Co., 2012 COA 160M, 305 P.3d 409, a contractor authorized by the insured to handle a claim was held to qualify under §§ 10-3-1115 and 10-3-1116.

For car accident victims, the practical application is often first-party coverage under their own policy. Uninsured and underinsured motorist benefits and medical payments coverage are common settings.

How Damages Work Under Colorado Revised Statutes 10-3-1116

The jury and court each play a distinct role in damages calculation. As explained in Hall v. American Standard Insurance Co., 2012 COA 201, 292 P.3d 1196, the jury determines the dollar amount of the covered benefit that was unreasonably delayed or denied. The court then applies the statutory multiplier and addresses fees and costs after trial.

These figures depend entirely on the underlying benefit at issue. A modest covered benefit generally produces a modest statutory award, subject to fees and costs.

Deadlines and the Rooftop Restoration Decision

In Rooftop Restoration, Inc. v. American Family Mutual Insurance Co., 2018 CO 44, 418 P.3d 1173, the Colorado Supreme Court addressed which limitations period applies. Answering a certified question from the federal district court in case number 17SA31, the court held that claims under §§ 10-3-1115 and 10-3-1116 are not "penalties" subject to the one-year limitations period in § 13-80-103(1)(d), C.R.S. Policyholder advocates who participated in that appeal, including the organization behind this insurance policyholder amicus brief, have noted that the opinion did not fix the precise limitations period that does apply.

Because the decision resolved what the deadline is not, the applicable period may depend on how the claim is characterized. Longer general or contract-based periods are often argued to apply.

Separately, the deadline for the underlying injury claim against the at-fault driver is its own analysis. Civil statutes of limitation, administrative notice requirements, and contractual notice provisions may all run on different tracks. Missing any one can be case-ending, so early consultation with a Centennial car accident lawyer is advisable.

💡 Pro Tip: Calendar your policy’s own notice and suit-limitation provisions separately from statutory deadlines. Some policies impose contractual time limits that operate independently of state law.

Frequently Asked Questions

1. Do I have to prove my insurer acted intentionally?

Generally, no. Under the statutory claim, a policyholder must show only that benefits were denied or delayed and that the insurer lacked a reasonable basis. Proof of knowledge or reckless disregard is associated with the common-law Savio claim, not the statute.

2. Can I bring both a statutory and a common-law bad faith claim?

In many cases, yes. Colorado authority describes the statutory right of action as being in addition to and separate from a common-law first-party bad faith claim.

3. Does a low settlement offer alone constitute bad faith?

Generally not by itself. Insurers may dispute value, causation, and treatment scope. A denial or delay may become actionable when the record shows the insurer’s position lacked a reasonable basis, which usually requires evidence about the investigation and claim file.

4. Does this statute apply to a claim against the other driver’s insurer?

Usually not directly. Sections 10-3-1115 and 10-3-1116 address first-party claimants seeking benefits under a policy. Claims involving another driver’s liability insurer generally proceed under different legal theories.

5. How long do I have to file an insurance bad faith lawsuit?

The Colorado Supreme Court held these claims are not subject to the one-year penalty limitations period, but the opinion did not identify the period that governs. Because the analysis can be fact-dependent, prompt legal review is advisable.

Protecting Your Rights After an Unreasonable Delay

Colorado’s statutory bad faith framework may give injured policyholders a meaningful tool when an insurer stops treating a valid claim seriously. With only two elements to prove and a potential remedy of two times the covered benefit plus fees and costs, the statute reflects a legislative judgment that unreasonable delay can have consequences.

If your claim has stalled or been denied without clear explanation, Jacobs Law is prepared to review the file and explain your options. Call 303-529-4040, visit our firm’s website, or schedule a consultation now to get started.

Disclaimer: This content is for informational purposes only and is not legal advice. Every case is unique, and results may vary. Consult an attorney about your specific circumstances.