What Is Considered Bad Faith Insurance?

If you’re searching for answers about what is considered bad faith insurance, you’re likely dealing with a situation that feels unfair and confusing. At VandenBout Law, we assist individuals and families throughout Colorado Springs who have been let down by their insurance providers. We know how disheartening it is when the company you trusted to protect your home, health, or livelihood fails to honor that commitment.

Understanding Bad Faith Insurance Practices

Definition and Key Characteristics

Bad faith insurance means your insurer isn’t living up to its end of the deal. Simply put, your provider unreasonably delays or denies a claim, ignores the facts, or manipulates contract language to avoid a payout. Colorado law outlines the insurer’s duty to handle claims fairly and promptly. According to Colorado Revised Statutes § 10-3-1115, it’s unlawful for an insurance company to delay or deny a payment without a sound reason.

This isn’t about honest errors, but bad faith involves deliberate actions prioritizing profit over policyholder responsibility.

Common Examples of Bad Faith Insurance

Bad faith doesn’t always come with flashing red lights. Sometimes it creeps in quietly, through repeated stalling tactics or unclear communication that leave you feeling abandoned. In Colorado, specific actions cross the line into bad faith conduct and signal a violation of your rights. These behaviors are outlined in the Civil Jury Instructions Chapter 25 and include patterns of conduct that go well beyond mere oversight:

1. Refusing to conduct a reasonable investigation before denying your claim, even when clear evidence is provided.
2. Knowingly misrepresenting key provisions of your policy to give the appearance that coverage doesn’t apply.
3. Offering settlements that fall dramatically short of the documented losses you’ve experienced.
4. Using excessive paperwork or irrelevant document requests to delay or discourage you.
5. Dragging out the process unnecessarily, hoping you’ll accept less or walk away from the claim altogether.

These aren’t just inconveniences—they reflect a calculated disregard for your rights. If you’re encountering one or more of these behaviors, it could be a sign that your insurer is acting in bad faith and violating Colorado law.

Legal Rights of Policyholders in Bad Faith Cases

Colorado law empowers you to pursue more than just the original payout when an insurance company acts in bad faith. You may be entitled to additional compensation that addresses the broader impact of their conduct. This can include financial strain, emotional distress, the cost of fighting for your rights, and the disruption it causes to your daily life, health, and peace of mind.

Courts in Colorado recognize that these practices don’t just harm your wallet—they affect your well-being. You can recover double the amount of your claim and attorney’s fees, especially if the insurance company’s actions were willful or malicious.

How to Recognize if Your Insurance Company Is Acting in Bad Faith

How do you know when a claim denial or delay isn’t just bureaucratic red tape but something more troubling? There are telltale signs that your insurer may be crossing the line. For instance:

• You keep getting asked for documents you’ve already provided.
• The reason for the denial keeps changing, or no apparent reason is given at all.
• Promises made when you bought the policy no longer match what you’re being told.
• Your adjuster isn’t returning your calls, or the timeline keeps getting pushed back.

It’s not always easy to distinguish between inefficiency and bad faith. That’s why careful documentation and a strong understanding of your rights matter.

Steps to Take if You Suspect Bad Faith Insurance

If things aren’t adding up, taking action quickly is essential. Bad faith insurance isn’t just unfair, it violates your rights as a policyholder. Start with the following steps:

1. Save every piece of correspondence, including emails and letters.
2. Take detailed notes of each phone conversation and who you spoke with.
3. Review your insurance policy carefully to compare what’s happening to what you were promised.
4. Collect all the supporting documents you submitted initially.
5. Keep track of the timeline from filing your claim to each communication.

Building this paper trail creates a foundation for any legal steps you may need to pursue. At this stage, many policyholders also ask: How Can Law Firms Help With Insurance Bad Faith Claims? The answer is that attorneys can step in to gather evidence, challenge unfair denials, and fight for the full compensation you deserve.

Still wondering, “Do I need a lawyer for bad faith insurance?” If your insurer continues to delay, deny, or ignore your claim without valid reason, legal support can make all the difference.

“At VandenBout Law, we focus on helping policyholders in New Mexico navigate disputes involving insurance bad faith. Our practice exclusively represents individuals and families—not insurance companies. ”

Lawrence VandenBout

Trial Lawyer

Protect Your Rights, Contact a Bad Faith Insurance Lawyer Today

We’ve seen firsthand how policyholders in Colorado Springs are left stranded by companies that fail to play fair. At VandenBout Law, we can step in when your insurance company won’t. You deserve honest answers, prompt action, and the compensation your policy promised. If you believe your provider acted in bad faith, let us help you move forward on solid legal ground. Call us today at (720) 901-2984.

Lawrence VandenBout

Mr. VandenBout has successfully tried multiple cases, he understands that many times the most efficient and effective resolution to a legal dispute occurs outside the courtroom and through the process of mediation. He has been successful in negotiating many favorable settlements for his clients. Mr. VandenBout also utilizes his experience to counsel and assist clients in developing strategies for minimizing the risk of becoming involved in potential legal disputes in the future.

Years of experience: Over 11 years
Recognition: Rising Star 2021, 2022, 2023 & 2024.
Location: Denver, CO