Colorado Bad Faith and Unreasonable Delay or Denial of Insurance Benefits

You paid your premiums for years. You did everything right. Then, when you finally needed the coverage you paid for, your insurance company delayed, underpaid, or denied your claim outright — often with excuses that don’t hold up to scrutiny.

In Colorado, this type of misconduct is known by two names that are often used interchangeably: insurance bad faith and unreasonable delay or denial of insurance benefits. Both describe the same basic problem — an insurer that fails to keep the promises in its own policy — but they refer to two distinct legal claims, each with its own standard of proof and its own remedies. A policyholder can often bring both in the same lawsuit.

Our firm represents Colorado policyholders in first-party bad faith and unreasonable delay or denial claims against insurance carriers. We hold insurers accountable when they put their own profits ahead of the promises they made to the people they insure.

What Is First-Party Bad Faith?

A “first-party” claim is a claim you make under your own insurance policy — as opposed to a “third-party” claim against someone else’s insurer. When you submit a first-party claim, Colorado law imposes a duty on your insurance company to handle it reasonably, promptly, and in good faith.

When an insurer breaches that duty, Colorado provides policyholders with two separate and powerful legal remedies:

Common Law Bad Faith. This is the claim most people think of when they hear the phrase “insurance bad faith.” Colorado courts have long recognized that the relationship between an insurer and its insured is a special one. An insurer that unreasonably handles a claim — and that knew, or recklessly disregarded the fact, that its conduct was unreasonable — can be sued in tort. A successful common law bad faith claim can recover economic damages, compensation for emotional distress, and in cases of willful misconduct, punitive damages.

Statutory Unreasonable Delay or Denial Under C.R.S. §§ 10-3-1115 and 10-3-1116. In 2008, the Colorado legislature enacted a powerful statute that many lawyers and judges refer to simply as the “unreasonable delay or denial” statute, or “UDD.” It allows a first-party claimant whose benefits have been unreasonably delayed or denied to recover two times the covered benefit, plus reasonable attorney fees and court costs. Under the statute, an insurer’s conduct is unreasonable if it delayed or denied payment “without a reasonable basis” — a lower standard than common law bad faith, and one that does not require proof that the insurer knew its conduct was unreasonable.

These two claims — common law bad faith and statutory unreasonable delay or denial — are cumulative, not alternative. A policyholder can bring both in the same lawsuit, and the statutory remedy is “in addition to, not in lieu of,” the common law remedy.

Types of First-Party Claims We Handle

We litigate bad faith and unreasonable delay or denial matters across a wide range of first-party coverages, including:

Underinsured and Uninsured Motorist (UIM/UM) Claims

UIM and UM coverage is designed to protect you when you are injured by a driver who has no insurance or not enough insurance to cover your losses. Unfortunately, the same insurance company you trusted to protect you often becomes your adversary the moment you make a claim. Common tactics include lowballing medical damages, disputing causation, dragging out the investigation, and demanding repetitive independent medical examinations. We know these playbooks and litigate them aggressively.

Directors and Officers (D&O) Insurance

D&O policies protect corporate executives, board members, and the companies themselves from claims arising out of business decisions. When a carrier wrongfully denies a defense, refuses to advance defense costs, or disputes indemnity coverage for a covered claim, the financial consequences for the insured can be catastrophic. We represent insureds in coverage disputes under D&O policies, including wrongful denials, reservation-of-rights overreach, and bad-faith refusals to settle within limits.

Event Cancellation Insurance

Event cancellation policies are meant to protect organizers, promoters, and businesses from the financial fallout when circumstances outside their control force an event to be cancelled, postponed, or curtailed. When carriers invoke narrow exclusions, dispute covered perils, or delay payment until the policyholder is financially desperate, we step in to enforce the contract.

Other First-Party Coverages

We also represent policyholders in disputes involving:

  • Homeowners and commercial property insurance
  • Business interruption coverage
  • Commercial general liability (first-party aspects)
  • Life insurance
  • Disability insurance (both short-term and long-term)
  • Professional liability and E&O coverage
  • Builder’s risk and inland marine policies

If you paid premiums and the carrier isn’t paying what it owes, we want to hear from you.

What Does “Unreasonable” Delay or Denial Look Like?

The heart of both a bad faith claim and a statutory unreasonable delay or denial claim is the same question: was the insurer’s handling of the claim reasonable? Colorado courts and juries have found insurer conduct unreasonable in many situations, including:

  • Failing to conduct a prompt, thorough, and fair investigation
  • Failing to investigate at all, or ignoring evidence that supports the claim
  • Refusing to provide a reasoned explanation for a denial
  • Misrepresenting policy language or coverage
  • Cherry-picking facts or experts to justify a predetermined denial
  • Creating new “evidence” after the claim decision to justify the denial after the fact
  • Using in-house incentives or quotas that reward adjusters for minimizing payouts
  • Demanding unnecessary or repeated examinations and documentation to wear the insured down
  • Failing to make a decision within a reasonable time after receiving the necessary information

Importantly, even a claim that is “fairly debatable” can still be handled in bad faith. The question is not whether the carrier ultimately had a colorable argument — it is whether the carrier acted reasonably in reaching and communicating its decision.

Why These Cases Matter

Insurance companies are sophisticated, well-funded institutions. They understand that most policyholders will give up, accept a lowball offer, or never discover what the policy actually required the carrier to pay. Bad faith litigation is one of the few tools that meaningfully changes that calculation.

When an insurer faces the prospect of double damages, attorney fees, and potential punitive damages — in addition to the benefit itself — it has a real financial incentive to treat the claim seriously. Holding carriers accountable not only makes individual policyholders whole; it also helps deter the same conduct against others.

How We Handle Bad Faith Cases

Every case begins with a careful review of your policy, the claim file, and the carrier’s correspondence and conduct. From there, our approach typically includes:

  • A detailed coverage analysis, including identification of all applicable coverages, endorsements, and exclusions
  • A review of the carrier’s claim-handling conduct against Colorado’s bad faith and unreasonable delay or denial standards under both common law and statute, as well as applicable regulations such as Colorado Division of Insurance Regulation 5-1-14
  • Strategic pre-suit communication with the carrier where appropriate
  • Litigation in state or federal court when the carrier refuses to do the right thing
  • Full discovery into claim file materials, adjuster notes, reserves, training materials, internal performance metrics, and other evidence of how the claim was actually handled

We are trial lawyers. We prepare every case as if it will be tried to a jury, because that is often what it takes to get full value for our clients.

Important Deadlines

Colorado imposes strict deadlines on bad faith and insurance-related claims. Common law bad faith claims are generally subject to a two-year statute of limitations. Breach-of-contract claims against insurers have their own deadlines. Statutory unreasonable delay or denial claims under §§ 10-3-1115 and 10-3-1116 are subject to their own limitations framework, which has been the subject of ongoing litigation.

Because these deadlines can be shorter than people expect — and because evidence gets harder to recover as time passes — it is important to speak with an attorney promptly if you believe your insurer has mishandled your claim.

Fees

We handle bad faith insurance cases on a contingency fee basis. You pay no attorney fees unless we recover on your behalf. Initial consultations are confidential and free of charge.

Frequently Asked Questions

Is “unreasonable delay or denial” the same as “bad faith”?

They are closely related but not identical. “Bad faith” usually refers to the common law tort claim that Colorado courts have recognized for decades, which requires proof that the insurer acted unreasonably and knew (or recklessly disregarded the fact) that its conduct was unreasonable. “Unreasonable delay or denial” — or “UDD” — usually refers to the statutory claim under C.R.S. §§ 10-3-1115 and 10-3-1116, which requires only that the insurer delayed or denied payment without a reasonable basis. Many lawyers and clients use the two phrases interchangeably, and most bad faith lawsuits against Colorado insurers plead both claims in the same complaint.

How much is my bad faith claim worth?

There is no single formula, because the value depends on the policy limits, the amount of the covered benefit, the severity of the insurer’s misconduct, and the damages you suffered as a result. That said, Colorado’s framework gives policyholders several layers of potential recovery: the unpaid benefit itself (through breach of contract), two times the covered benefit plus attorney fees and costs under the statute, and — through a common law bad faith claim — consequential economic damages, non-economic damages such as emotional distress, and potentially punitive damages in cases of willful misconduct. We evaluate each of these categories during our initial review.

What does “two times the covered benefit” actually mean?

Under C.R.S. § 10-3-1116, a successful statutory claim lets you recover two times the “covered benefit” — meaning the amount of benefits the insurer unreasonably delayed or denied — on top of your attorney fees and court costs. Colorado appellate courts have confirmed that this amount is available even when the insurer eventually pays the underlying benefit, which can result in the policyholder effectively receiving three times the covered benefit (the original payment plus the two-times statutory award).

Can I sue the individual adjuster who handled my claim?

Generally, no. In Skillett v. Allstate Fire and Casualty Insurance Co. (2022), the Colorado Supreme Court held that a statutory unreasonable delay or denial claim under §§ 10-3-1115 and 10-3-1116 can be brought against the insurance company itself, but not against individual adjusters acting solely as employees of the insurer. The focus of these cases is the carrier’s conduct as an institution.

My insurer eventually paid my claim. Can I still sue for bad faith?

Often, yes. Colorado law is clear that an insurer’s eventual payment does not erase its prior misconduct. If the carrier unreasonably delayed payment of benefits, you may still have a viable claim for the delay itself — including the statutory two-times remedy — even if the benefit has since been paid. The question is how the claim was handled, not just what was ultimately paid.

What if my claim is “fairly debatable” — does that give the insurer a free pass?

No. Colorado and federal courts applying Colorado law have held that the denial of a “fairly debatable” claim can still be unreasonable. An insurer does not get to escape liability simply because it can articulate some argument against coverage. The carrier still has to investigate the claim reasonably, apply the policy fairly, and communicate a reasoned basis for its decision.

How long do I have to file a bad faith lawsuit in Colorado?

Deadlines vary depending on the type of claim. Common law bad faith is generally subject to a two-year statute of limitations as a tort action. Breach of contract claims against insurers have their own limitations periods. The statute of limitations for statutory unreasonable delay or denial claims under §§ 10-3-1115 and 10-3-1116 remains an evolving area of Colorado law. Because deadlines can be shorter than people expect — and because important evidence can disappear over time — you should consult with an attorney as soon as you suspect your claim has been mishandled.

What does a bad faith case cost me out of pocket?

We handle bad faith and unreasonable delay or denial cases on a contingency fee basis. You do not pay attorney fees unless we recover on your behalf. Initial consultations are free and confidential.

Talk to a Colorado Bad Faith and Unreasonable Delay or Denial Attorney

If you believe your insurance company has unreasonably delayed, underpaid, or denied a first-party claim — whether you call it bad faith or unreasonable delay or denial — we would welcome the opportunity to review your situation. Bring your policy, your correspondence with the carrier, and any denial or reservation-of-rights letters you have received — and we will give you an honest assessment of your options.

Bad Faith Insurance Litigation

Colorado Bad Faith and Unreasonable Delay or Denial of Insurance Benefits

You paid your premiums for years. You did everything right. Then, when you finally needed the coverage you paid for, your insurance company delayed, underpaid, or denied your claim outright — often with excuses that don’t hold up to scrutiny.

In Colorado, this type of misconduct is known by two names that are often used interchangeably: insurance bad faith and unreasonable delay or denial of insurance benefits. Both describe the same basic problem — an insurer that fails to keep the promises in its own policy — but they refer to two distinct legal claims, each with its own standard of proof and its own remedies. A policyholder can often bring both in the same lawsuit.

Our firm represents Colorado policyholders in first-party bad faith and unreasonable delay or denial claims against insurance carriers. We hold insurers accountable when they put their own profits ahead of the promises they made to the people they insure.

What Is First-Party Bad Faith?

A “first-party” claim is a claim you make under your own insurance policy — as opposed to a “third-party” claim against someone else’s insurer. When you submit a first-party claim, Colorado law imposes a duty on your insurance company to handle it reasonably, promptly, and in good faith.

When an insurer breaches that duty, Colorado provides policyholders with two separate and powerful legal remedies:

Common Law Bad Faith. This is the claim most people think of when they hear the phrase “insurance bad faith.” Colorado courts have long recognized that the relationship between an insurer and its insured is a special one. An insurer that unreasonably handles a claim — and that knew, or recklessly disregarded the fact, that its conduct was unreasonable — can be sued in tort. A successful common law bad faith claim can recover economic damages, compensation for emotional distress, and in cases of willful misconduct, punitive damages.

Statutory Unreasonable Delay or Denial Under C.R.S. §§ 10-3-1115 and 10-3-1116. In 2008, the Colorado legislature enacted a powerful statute that many lawyers and judges refer to simply as the “unreasonable delay or denial” statute, or “UDD.” It allows a first-party claimant whose benefits have been unreasonably delayed or denied to recover two times the covered benefit, plus reasonable attorney fees and court costs. Under the statute, an insurer’s conduct is unreasonable if it delayed or denied payment “without a reasonable basis” — a lower standard than common law bad faith, and one that does not require proof that the insurer knew its conduct was unreasonable.

These two claims — common law bad faith and statutory unreasonable delay or denial — are cumulative, not alternative. A policyholder can bring both in the same lawsuit, and the statutory remedy is “in addition to, not in lieu of,” the common law remedy.

Types of First-Party Claims We Handle

We litigate bad faith and unreasonable delay or denial matters across a wide range of first-party coverages, including:

Underinsured and Uninsured Motorist (UIM/UM) Claims

UIM and UM coverage is designed to protect you when you are injured by a driver who has no insurance or not enough insurance to cover your losses. Unfortunately, the same insurance company you trusted to protect you often becomes your adversary the moment you make a claim. Common tactics include lowballing medical damages, disputing causation, dragging out the investigation, and demanding repetitive independent medical examinations. We know these playbooks and litigate them aggressively.

Directors and Officers (D&O) Insurance

D&O policies protect corporate executives, board members, and the companies themselves from claims arising out of business decisions. When a carrier wrongfully denies a defense, refuses to advance defense costs, or disputes indemnity coverage for a covered claim, the financial consequences for the insured can be catastrophic. We represent insureds in coverage disputes under D&O policies, including wrongful denials, reservation-of-rights overreach, and bad-faith refusals to settle within limits.

Event Cancellation Insurance

Event cancellation policies are meant to protect organizers, promoters, and businesses from the financial fallout when circumstances outside their control force an event to be cancelled, postponed, or curtailed. When carriers invoke narrow exclusions, dispute covered perils, or delay payment until the policyholder is financially desperate, we step in to enforce the contract.

Other First-Party Coverages

We also represent policyholders in disputes involving:

  • Homeowners and commercial property insurance
  • Business interruption coverage
  • Commercial general liability (first-party aspects)
  • Life insurance
  • Disability insurance (both short-term and long-term)
  • Professional liability and E&O coverage
  • Builder’s risk and inland marine policies

If you paid premiums and the carrier isn’t paying what it owes, we want to hear from you.

What Does “Unreasonable” Delay or Denial Look Like?

The heart of both a bad faith claim and a statutory unreasonable delay or denial claim is the same question: was the insurer’s handling of the claim reasonable? Colorado courts and juries have found insurer conduct unreasonable in many situations, including:

  • Failing to conduct a prompt, thorough, and fair investigation
  • Failing to investigate at all, or ignoring evidence that supports the claim
  • Refusing to provide a reasoned explanation for a denial
  • Misrepresenting policy language or coverage
  • Cherry-picking facts or experts to justify a predetermined denial
  • Creating new “evidence” after the claim decision to justify the denial after the fact
  • Using in-house incentives or quotas that reward adjusters for minimizing payouts
  • Demanding unnecessary or repeated examinations and documentation to wear the insured down
  • Failing to make a decision within a reasonable time after receiving the necessary information

Importantly, even a claim that is “fairly debatable” can still be handled in bad faith. The question is not whether the carrier ultimately had a colorable argument — it is whether the carrier acted reasonably in reaching and communicating its decision.

Why These Cases Matter

Insurance companies are sophisticated, well-funded institutions. They understand that most policyholders will give up, accept a lowball offer, or never discover what the policy actually required the carrier to pay. Bad faith litigation is one of the few tools that meaningfully changes that calculation.

When an insurer faces the prospect of double damages, attorney fees, and potential punitive damages — in addition to the benefit itself — it has a real financial incentive to treat the claim seriously. Holding carriers accountable not only makes individual policyholders whole; it also helps deter the same conduct against others.

How We Handle Bad Faith Cases

Every case begins with a careful review of your policy, the claim file, and the carrier’s correspondence and conduct. From there, our approach typically includes:

  • A detailed coverage analysis, including identification of all applicable coverages, endorsements, and exclusions
  • A review of the carrier’s claim-handling conduct against Colorado’s bad faith and unreasonable delay or denial standards under both common law and statute, as well as applicable regulations such as Colorado Division of Insurance Regulation 5-1-14
  • Strategic pre-suit communication with the carrier where appropriate
  • Litigation in state or federal court when the carrier refuses to do the right thing
  • Full discovery into claim file materials, adjuster notes, reserves, training materials, internal performance metrics, and other evidence of how the claim was actually handled

We are trial lawyers. We prepare every case as if it will be tried to a jury, because that is often what it takes to get full value for our clients.

Important Deadlines

Colorado imposes strict deadlines on bad faith and insurance-related claims. Common law bad faith claims are generally subject to a two-year statute of limitations. Breach-of-contract claims against insurers have their own deadlines. Statutory unreasonable delay or denial claims under §§ 10-3-1115 and 10-3-1116 are subject to their own limitations framework, which has been the subject of ongoing litigation.

Because these deadlines can be shorter than people expect — and because evidence gets harder to recover as time passes — it is important to speak with an attorney promptly if you believe your insurer has mishandled your claim.

Fees

We handle bad faith insurance cases on a contingency fee basis. You pay no attorney fees unless we recover on your behalf. Initial consultations are confidential and free of charge.

Frequently Asked Questions

Is “unreasonable delay or denial” the same as “bad faith”?

They are closely related but not identical. “Bad faith” usually refers to the common law tort claim that Colorado courts have recognized for decades, which requires proof that the insurer acted unreasonably and knew (or recklessly disregarded the fact) that its conduct was unreasonable. “Unreasonable delay or denial” — or “UDD” — usually refers to the statutory claim under C.R.S. §§ 10-3-1115 and 10-3-1116, which requires only that the insurer delayed or denied payment without a reasonable basis. Many lawyers and clients use the two phrases interchangeably, and most bad faith lawsuits against Colorado insurers plead both claims in the same complaint.

How much is my bad faith claim worth?

There is no single formula, because the value depends on the policy limits, the amount of the covered benefit, the severity of the insurer’s misconduct, and the damages you suffered as a result. That said, Colorado’s framework gives policyholders several layers of potential recovery: the unpaid benefit itself (through breach of contract), two times the covered benefit plus attorney fees and costs under the statute, and — through a common law bad faith claim — consequential economic damages, non-economic damages such as emotional distress, and potentially punitive damages in cases of willful misconduct. We evaluate each of these categories during our initial review.

What does “two times the covered benefit” actually mean?

Under C.R.S. § 10-3-1116, a successful statutory claim lets you recover two times the “covered benefit” — meaning the amount of benefits the insurer unreasonably delayed or denied — on top of your attorney fees and court costs. Colorado appellate courts have confirmed that this amount is available even when the insurer eventually pays the underlying benefit, which can result in the policyholder effectively receiving three times the covered benefit (the original payment plus the two-times statutory award).

Can I sue the individual adjuster who handled my claim?

Generally, no. In Skillett v. Allstate Fire and Casualty Insurance Co. (2022), the Colorado Supreme Court held that a statutory unreasonable delay or denial claim under §§ 10-3-1115 and 10-3-1116 can be brought against the insurance company itself, but not against individual adjusters acting solely as employees of the insurer. The focus of these cases is the carrier’s conduct as an institution.

My insurer eventually paid my claim. Can I still sue for bad faith?

Often, yes. Colorado law is clear that an insurer’s eventual payment does not erase its prior misconduct. If the carrier unreasonably delayed payment of benefits, you may still have a viable claim for the delay itself — including the statutory two-times remedy — even if the benefit has since been paid. The question is how the claim was handled, not just what was ultimately paid.

What if my claim is “fairly debatable” — does that give the insurer a free pass?

No. Colorado and federal courts applying Colorado law have held that the denial of a “fairly debatable” claim can still be unreasonable. An insurer does not get to escape liability simply because it can articulate some argument against coverage. The carrier still has to investigate the claim reasonably, apply the policy fairly, and communicate a reasoned basis for its decision.

How long do I have to file a bad faith lawsuit in Colorado?

Deadlines vary depending on the type of claim. Common law bad faith is generally subject to a two-year statute of limitations as a tort action. Breach of contract claims against insurers have their own limitations periods. The statute of limitations for statutory unreasonable delay or denial claims under §§ 10-3-1115 and 10-3-1116 remains an evolving area of Colorado law. Because deadlines can be shorter than people expect — and because important evidence can disappear over time — you should consult with an attorney as soon as you suspect your claim has been mishandled.

What does a bad faith case cost me out of pocket?

We handle bad faith and unreasonable delay or denial cases on a contingency fee basis. You do not pay attorney fees unless we recover on your behalf. Initial consultations are free and confidential.

Talk to a Colorado Bad Faith and Unreasonable Delay or Denial Attorney

If you believe your insurance company has unreasonably delayed, underpaid, or denied a first-party claim — whether you call it bad faith or unreasonable delay or denial — we would welcome the opportunity to review your situation. Bring your policy, your correspondence with the carrier, and any denial or reservation-of-rights letters you have received — and we will give you an honest assessment of your options.