If your insurance company has delayed, underpaid, or denied a legitimate property claim, you might be dealing with more than a typical coverage dispute. Colorado law provides some of the strongest consumer protections in the country. Understanding your rights starts with speaking to a Denver bad faith insurance attorney who knows how to hold these companies accountable. Two specific state laws, C.R.S. § 10-3-1115 and C.R.S. § 10-3-1116, give you a clear path forward when an insurer treats your claim like an inconvenience instead of a legal obligation.
At Kuhn Raslavich, we represent Denver and Front Range property owners who are tired of chasing down adjusters, resubmitting the same paperwork, and waiting for a check that never seems to arrive. This guide breaks down how Colorado bad faith law works, what qualifies as unreasonable conduct, what you can recover when an insurance company crosses the line, and how the statutory bad faith remedy compares to the older common law bad faith claim that can still apply to your case.
What Is Insurance Bad Faith in Colorado?
In plain terms, insurance bad faith happens when an insurance company fails to handle your claim honestly or fairly. Colorado builds this protection right into its state statutes. Under C.R.S. § 10-3-1115, anyone in the insurance industry is prohibited from unreasonably delaying or denying payments owed to a first-party claimant. A first-party claimant is simply the policyholder, or someone acting on their behalf, seeking benefits under their own policy.
What makes Colorado unique is that these protections are hardcoded into law rather than left entirely to court precedents. You do not have to prove that your insurer acted out of malice or tried to intentionally defraud you. You only need to show that their delay or denial was unreasonable, which is a much more achievable standard for policyholders. The Colorado Supreme Court reinforced this lower bar in Sanderson v. American Family Mutual Insurance Co., 251 P.3d 1213 (Colo. 2011), confirming that the only question in a statutory claim is whether the insurer denied or delayed benefits without a reasonable basis, regardless of what the insurer knew or intended at the time.
Statutory Bad Faith vs. Common Law Bad Faith Claims in Colorado
Colorado policyholders actually have two separate legal tools for challenging an insurer’s conduct, and knowing the difference matters when your attorney builds your case.
The statutory claim under C.R.S. § 10-3-1115 and § 10-3-1116 only requires proof that the delay or denial lacked a reasonable basis. You do not need to show what the insurer was thinking or intending at the time.
Colorado also recognizes an older common law bad faith claim, established in Travelers Insurance Co. v. Savio, 706 P.2d 1258 (Colo. 1985). This claim requires two things: that the insurer’s conduct was unreasonable and that the insurer knew the conduct was unreasonable or recklessly disregarded that fact. The Colorado Supreme Court reaffirmed this distinction in Schultz v. GEICO Casualty Co., 429 P.3d 844 (Colo. 2018), explaining that the common law claim carries a higher bar because it requires proof of the insurer’s state of mind, while the statutory claim does not.
These claims are not mutually exclusive. Colorado law allows you to pursue a statutory bad faith claim and a common law bad faith claim in the same lawsuit, and the available remedies differ between the two:
- The statutory claim under § 10-3-1116 caps recovery at two times the covered benefit, plus reasonable attorney fees and court costs.
- A successful common law bad faith claim can include compensatory damages such as emotional distress and, when the insurer’s conduct was willful or wanton, punitive damages, as recognized in Goodson v. American Standard Insurance Co. of Wisconsin, 89 P.3d 409 (Colo. 2004).
Because the two claims call for different proof and different damages, an attorney will typically evaluate your claim file under both theories before deciding which one, or both, to pursue.
What Does “Unreasonable” Mean Under Colorado Law?
Colorado law defines an unreasonable delay or denial as one where the insurance company lacked a fair or logical basis for its decision. In practice, courts look at whether the insurer’s actions align with what a competent, fair insurance company would have done under similar circumstances.
Red flags that often point to unreasonable conduct include:
- Denying a claim without conducting a thorough, real-world inspection of the damage.
- Ignoring contractor estimates, engineering reports, or other clear evidence you submitted.
- Repeatedly asking for the same documents to stall the process.
- Offering a payout far below the actual repair costs without a clear, valid explanation.
- Leaving long, unexplained gaps of silence during the claim process.
A single slow response or one clerical oversight usually is not enough to build a case. What matters is the overall pattern of how the insurer handled your claim from the moment you filed it to their final decision.
Colorado’s 60-Day Rule for Claim Decisions
Beyond the bad faith statutes, Colorado regulators also set a specific clock on how long an insurer can sit on your file. Under Colorado Division of Insurance Amended Regulation 5-1-14 (3 Colo. Code Regs. § 702-5:5-1-14), insurers authorized to write property and casualty policies in the state must decide on a claim or pay the benefits owed within 60 days of receiving a valid and complete claim, unless a reasonable dispute exists.
A claim generally becomes valid and complete once the insurer has the documentation it needs, has finished a reasonable investigation, and has no outstanding coverage questions left to resolve. If an insurer misses the 60-day window without a legitimate dispute, the Commissioner of Insurance can impose civil penalties, and that missed deadline often becomes an important piece of evidence in a broader bad faith claim.
The “Two Times Damages” Remedy Under C.R.S. § 10-3-1116
This is where Colorado law gives policyholders a real advantage. Under C.R.S. § 10-3-1116, if a court finds that your insurer unreasonably delayed or denied your covered benefits, you can recover twice the amount of that benefit, plus your reasonable attorney fees and court costs.
For example, if an insurer unreasonably denies a covered property claim worth $100,000 in repairs, a successful bad faith lawsuit could award you $200,000 in statutory damages. This is on top of recovering the original money owed, your attorney’s fees, and court costs. Colorado courts have also confirmed that this remedy does not require you to prove separate financial harm beyond the withheld benefit itself. Once an unreasonable delay or denial is established, the statute entitles you to the doubled benefit regardless of whether you can point to additional out-of-pocket losses.
There are still specific boundaries. This statute does not allow for open-ended punitive damages, and the recovery is directly tied to the value of the covered benefit itself rather than broader emotional or consequential losses. The real power of this law lies in the mandatory doubling and the fact that the insurer has to pick up your legal bills if you win.
What You Can Recover
If your statutory bad faith claim succeeds under Colorado’s framework, your recovery can include:
- Two times the insurance benefit that was unreasonably delayed or denied.
- All reasonable attorney’s fees.
- Court costs linked to your lawsuit.
These statutory penalties are awarded in addition to the underlying insurance payout you were already owed. If your claim also supports a common law bad faith theory, your recovery could extend further to compensatory damages for emotional distress and, in cases involving willful or wanton conduct, punitive damages. A Colorado property damage attorney can review the specifics of your situation to see which theory, or combination of theories, best fits your insurer’s behavior.
How Long Do You Have to File a Bad Faith Claim in Colorado?
Timing is critical, and the deadlines can be tricky. Standard contract lawsuits, like a basic breach of an insurance policy, generally must be filed within three years under C.R.S. § 13-80-101.
Statutory bad faith claims under §§ 10-3-1115 and 10-3-1116 follow a different timeline. In Rooftop Restoration, Inc. v. American Family Mutual Insurance Co., 2018 CO 44, the Colorado Supreme Court ruled that the strict one-year deadline for penalty actions under C.R.S. § 13-80-103 does not apply to these claims. Since that decision, Colorado courts have generally applied the state’s default two-year period under C.R.S. § 13-80-102 to statutory bad faith claims, though no Colorado Supreme Court decision has locked in that exact window as binding precedent.
Because deadlines are highly dependent on the facts of your case and the type of claim you bring, waiting too long only makes it harder to gather fresh evidence and accurate repair estimates. The safest approach is to treat the date of your property loss or the date of the insurer’s denial as the ticking clock, then speak with a lawyer long before any potential deadlines approach.
Why Denver and Front Range Policyholders Choose Kuhn Raslavich
From heavy hailstorms and high winds to wildfires and winter freezes, Front Range property owners face significant environmental risks. Insurers know that claim volumes skyrocket during storm seasons, and that is exactly when shortcuts, robotic denials, and lowball offers start to surface. We build your claim file from day one as if it were going to court, ensuring you are protected before a denial letter even arrives.
Kuhn Raslavich represents homeowners and commercial property owners across Denver and the Front Range. We handle the heavy lifting, the continuous documentation, and the stressful back-and-forth with adjusters so you can focus on rebuilding your property and getting life back to normal.
When a carrier’s conduct crosses the line, we also know how to use every pressure point available, including filing a complaint with the Colorado Division of Insurance to help document a pattern of mishandling while your legal claim moves forward.
Talk to a Colorado Bad Faith Insurance Attorney Today
If your Denver or Front Range property claim has been delayed, underpaid, or denied without a clear explanation, you do not have to face the insurance company alone. Contact Kuhn Raslavich for a free consultation or call us at 970-400-7732 to discuss your claim and learn how Colorado law protects your investment.
Frequently Asked Questions
What is bad faith insurance in Colorado, and how is it different from other states?
Bad faith happens when an insurance company unreasonably delays or denies a valid claim. Unlike many states where this is governed solely by prior court rulings, Colorado has explicitly written these consumer protections into state statutes (C.R.S. § 10-3-1115 and 10-3-1116), making the legal standards and penalties incredibly clear.
What is the difference between statutory and common law bad faith in Colorado?
The statutory claim under § 10-3-1115 and 10-3-1116 only requires proof that the insurer’s delay or denial lacked a reasonable basis. The common law claim, recognized in Travelers Insurance Co. v. Savio also requires proof that the insurer knew its conduct was unreasonable or recklessly disregarded that fact. The two claims can be brought together, and each offers different remedies.
What can I recover if my Colorado insurer acts in bad faith?
Under the statutory claim, you can recover twice the value of the delayed or denied benefit, plus your reasonable attorney fees and legal costs, in addition to the original payout you are owed under your policy. If a common law bad faith claim also applies, you may be able to recover compensatory damages for emotional distress and, in cases of willful or wanton conduct, punitive damages.
What counts as an “unreasonable” delay or denial under Colorado law?
An action is unreasonable if the insurer lacks a fair, justifiable basis for its decision. Courts evaluate the entire claims-handling process to see if the insurer’s conduct matches how a professional, fair-minded company would behave under similar circumstances.
Can I recover for emotional distress if my Colorado insurer acted in bad faith?
Emotional distress damages are generally not available under the statutory bad faith claim, which is limited to two times the covered benefit plus fees and costs. However, Colorado courts have allowed emotional distress damages under a common law bad faith claim, as recognized in Goodson v. American Standard Insurance Co. of Wisconsin. Whether that theory applies depends on the facts of your case.
How long do I have to file a bad faith insurance lawsuit in Colorado?
While standard contract claims generally have a three-year window under C.R.S. § 13-80-101, statutory bad faith claims are generally treated as subject to a two-year period following the Colorado Supreme Court’s 2018 ruling in Rooftop Restoration, Inc. v. American Family Mutual Insurance Co. Because these timelines vary by claim type and are not all settled by binding precedent, you should consult an attorney immediately rather than assuming how much time you have left.