Bad Faith Insurance Attorney Colorado

Your Rights as a Victim of Insurance Bad Faith in Colorado

Common Law vs. Statutory Claims

In Colorado, bad faith insurance litigation can proceed through two primary legal channels: common law and statutory law. Common law bad faith claims are based on judicial precedent and require demonstrating that the insurer’s conduct was both unreasonable and carried out with knowledge or reckless disregard of that unreasonableness. Essentially, the insurer must have acted with intentional disregard for your rights, which can be proven through patterns of behavior, internal communications, or failure to investigate your claim adequately.

Statutory bad faith claims, on the other hand, are grounded in legislation, specifically C.R.S. 10-3-1115 and 10-3-1116. These laws were enacted to provide additional protections for policyholders and to deter insurers from employing delay tactics or denying claims without justification. Under these statutes, policyholders can recover not only the original benefits owed but also double damages and attorney’s fees if the insurer is found to have unreasonably delayed or denied benefits. This is particularly helpful for consumers who may otherwise be dissuaded from pursuing legal action due to financial constraints.

Another distinction between the two claims lies in the burden of proof. Statutory claims focus on the reasonableness of the insurer’s actions at the time of the decision, while common law claims delve into the insurer’s state of mind and whether they acted with willful disregard. In many cases, both claims are brought simultaneously to maximize the potential for recovery and legal remedy.

Legal Grounds for Filing a Claim

To establish a valid bad-faith insurance claim, policyholders must do more than show dissatisfaction with their case handling. They must demonstrate that the insurer acted unreasonably without a legitimate basis for delaying or denying the benefits owed. This complex evidentiary process often requires collecting substantial documentation to paint a complete picture of the insurer’s behavior.

Key evidence includes written correspondence, such as emails and letters between the policyholder and insurer, detailed claim documentation, medical or repair reports, and a timeline of events surrounding the claim. Independent third-party evaluations, like expert reports from medical providers or construction professionals, can help validate the scope and legitimacy of the policyholder’s loss. Additionally, tracking the insurer’s internal procedures (when accessible through discovery) can reveal systemic flaws or patterns of negligent conduct.

In many cases, attorneys will subpoena internal documents showing whether claims adjusters followed proper investigative protocols or were incentivized to undervalue or deny claims. These internal metrics, memos, or training guidelines can reveal underlying motivations that go against the duty insurers owe their customers. Testimonies from former employees or expert witnesses in the insurance industry standards can also support your case.

A strong bad faith case is typically built on a combination of these elements, revealing that the insurer ignored evidence, misapplied policy terms, or unjustifiably delayed payouts. This doesn’t just establish the wrongdoing. It also shifts the burden toward holding the company accountable for its conduct.

Statute of Limitations in Colorado

Under Colorado law, you generally have two years from the date you discover or reasonably should have discovered the bad-faith actions to file a lawsuit. It’s critical to recognize that this time limit doesn’t start from the date of the loss or claim but rather from when you become aware of the insurer’s wrongful behavior. However, exceptions and nuances can apply, such as in cases where the conduct is ongoing or concealed.

Waiting too long to act can jeopardize your ability to recover damages, even if your claim is valid. Evidence may be lost, witnesses may become unavailable, and legal deadlines can expire. Early legal consultation is essential to evaluate timelines properly, collect records while they’re fresh, and ensure that procedural deadlines are met. Because timing is so crucial, we encourage clients to consult with an attorney as soon as they suspect their insurance company is acting in bad faith.

What Damages Can You Recover in a Bad Faith Case?

Financial Losses and Unpaid Claims

Financial loss is one of the most immediate and measurable forms of damage in a bad-faith insurance case. This includes the unpaid benefits initially owed under your policy and the cascade of additional expenses that can arise due to the insurer’s misconduct. For instance, if you were forced to pay for emergency repairs out-of-pocket or had to find alternate housing or transportation while your claim was wrongfully denied, you can pursue reimbursement for those expenditures. In business-related claims, such as commercial property damage, financial harm can extend to lost income, delayed operations, or even contract breaches resulting from the insurer’s failure to act promptly.

Moreover, bad faith conduct can have ripple effects on a policyholder’s credit, reputation, or business relationships, consequences that may be factored into the financial damages calculation. Courts may also consider whether the policyholder had to borrow money or incur interest expenses due to the insurer’s delay or denial.

Emotional Distress and Punitive Damages

Bad faith behavior often causes significant emotional harm. Being denied coverage during an already difficult time, such as recovering from a fire, injury, or loss, can compound stress, anxiety, and emotional trauma. Colorado law recognizes these harms and allows policyholders to seek compensation for the psychological impact of their insurers’ mistreatment. The more severe the misconduct and its effect on the insured’s well-being, the stronger the claim for emotional distress becomes.

Courts may also award punitive damages in situations involving egregious or malicious actions, such as deliberate deception or systemic misconduct. These damages are meant to punish the insurer and serve as a deterrent to future misconduct. Under Colorado Revised Statutes Title 10, punitive damages are only awarded when the insurer’s actions show willful and wanton disregard for the policyholder’s rights.

Legal Fees and Interest on Delayed Payments

Colorado’s bad faith laws are designed to protect consumers from being financially overburdened by the legal process. If your claim is successful, you may be entitled to recover attorney’s fees and interest on unpaid benefits, particularly under statutory provisions like C.R.S. 10-3-1116. This ensures that justice doesn’t come with a financial penalty for the victim. Interest on delayed payments is calculated from when the claim should have been paid, which helps restore the economic value lost due to the insurer’s delay.

These additional recoveries also serve a broader purpose. They hold insurers accountable for treating policyholders fairly and reinforce the legal expectation that coverage decisions must be made promptly, reasonably, and in good faith.