Colorado Bad Faith Insurance Statutes Explained: C.R.S. §§ 10-3-1115 and 10-3-1116

The two statutes that changed the balance of power between Colorado policyholders and insurance companies. Every section. Every remedy. Every case that defines them.

The Two Statutes That Hold Colorado Insurers Accountable

Colorado’s bad faith insurance statutes are C.R.S. § 10-3-1115 and C.R.S. § 10-3-1116. Enacted in 2008 through HB 08-1407, formally titled “An Act Concerning Strengthening Penalties For The Unreasonable Conduct Of An Insurance Carrier,” these two sections created a private right of action for any first-party claimant whose benefits have been unreasonably delayed or denied. The remedy: two times the covered benefit, plus reasonable attorney fees and court costs. The standard is objective: did the insurer delay or deny payment without a reasonable basis? If yes, the insurer is liable. No proof of malice. No proof of intent. Just unreasonableness. These statutes exist alongside, not in place of, Colorado’s common law bad faith framework. For the full overview of both paths, see What Is Bad Faith Insurance in Colorado?.

Why the Legislature Acted: The Problem These Statutes Were Built to Solve

Before 2008, Colorado policyholders had only one path to hold insurers accountable for bad faith: the common law tort of bad faith breach of an insurance contract. That claim required proof that the insurer acted unreasonably and that the insurer knew or recklessly disregarded the unreasonableness of its conduct. Goodson v. American Standard Insurance Co., 89 P.3d 409 (Colo. 2004). That two-part test was hard to satisfy. Insurers could delay payments for months, lowball catastrophically injured claimants, and argue that their conduct, while perhaps aggressive, did not rise to the level of knowing or reckless disregard.

The General Assembly saw the gap. As then-Speaker Andrew Romanoff explained during hearings on HB 08-1407, the purpose of the new statutes was to create a private right of action and to reduce the showing required under the common law standard. See Riccatone** v. Colo. Choice Health Plans, 315 P.3d 203 (Colo. App. 2013) (citing legislative testimony). The bill title itself made the target clear: insurance carriers, not individual adjusters. The legislature intended to strengthen penalties, create an accessible remedy, and shift the cost of unreasonable conduct back to the companies engaging in it.

C.R.S. § 10-3-1115: The Prohibition

Subsection (1)(a): The Core Rule

The statute’s operative command is a single sentence: “A person engaged in the business of insurance shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party claimant.” C.R.S. § 10-3-1115(1)(a). Two prohibited acts. Two verbs. Delay. Deny. Each is independently actionable. An insurer that pays your claim six months late has delayed. An insurer that refuses to pay at all has denied. Both trigger the statute’s remedies.

The Colorado Court of Appeals confirmed in Soicher v. State Farm Mut. Auto. Ins. Co., 2015 COA 46, 351 P.3d 559, that delay and denial are distinct claims. When an insurer makes a partial payment but disputes the full value, the policyholder can assert unreasonable delay as to the unpaid portion. You do not have to wait for a complete denial to have a statutory claim. Delay of the full value is the violation.

Subsection (1)(b): Who Is a “First-Party Claimant”?

§ 10-3-1115(1)(b)(I) defines a first-party claimant as any individual or legal entity asserting an entitlement to benefits owed directly to or on behalf of an insured under an insurance policy. This is broad. It covers you making a claim on your own auto policy, your health insurer, your UM/UIM policy, or your homeowners policy.

The definition also extends beyond the named insured. In Kyle W. Larson Enterprises v. Allstate Insurance, 2012 COA 160M, 305 P.3d 409, the Court of Appeals held that repair vendors asserting benefits on behalf of an insured qualify as first-party claimants. The court emphasized that the statute does not require a contractual relationship with the insurer or a right of subrogation as a prerequisite. Since 2016, HB 16-1165 added subsection (7), which extends first-party claimant status to public entities that have paid claims due to an insurer’s unreasonable delay or denial.

The statute explicitly excludes third-party claimants: a person asserting a claim against an insured under a liability policy. § 10-3-1115(1)(b)(II). If someone else hit you and you are making a claim against their insurer, the statutory bad faith framework does not apply. Your remedy in that scenario is the common law bad faith tort or, more commonly, a direct claim against the at-fault party.

Subsection (2): The Standard of Unreasonableness

This subsection defines when conduct crosses the line: “An insurer’s delay or denial was unreasonable if the insurer delayed or denied authorizing payment of a covered benefit without a reasonable basis for that action.” § 10-3-1115(2). The Colorado Supreme Court interpreted this standard in Schultz v. GEICO Casualty Co., 429 P.3d 844, 848 (Colo. 2018): the only element at issue in the statutory claim is whether an insurer denied benefits without a reasonable basis.

This is a lower bar than the common law. Under Kisselman v. A**m. Family Mut. Ins. Co., 292 P.3d 964, 975 (Colo. App. 2011), the statutory standard is less onerous than that required to prove a claim under the common law for breach of the duty of good faith and fair dealing. The common law requires both unreasonableness and knowing or reckless disregard. The statute requires only unreasonableness. That single-element simplification is the core of what the legislature accomplished.

Reasonableness is measured objectively based on industry standards. Am. Family Mut. Ins. Co. v. Allen, 102 P.3d 333, 344 (Colo. 2004). Expert testimony is often helpful but not required where the conduct at issue falls within the common knowledge of ordinary people. Allen, 102 P.3d at 343. The Colorado Division of Insurance Regulation 5-1-14 provides further evidence of industry standards, including the 60-day claims decision deadline. See TBL Collectibles, Inc. v. Owners Ins. Co., 285 F. Supp. 3d 1170, 1203-04 (D. Colo. 2018).

What “Covered Benefit” Means

The phrase “covered benefit” is the measure of damages under the statute. It means the benefit the policy covers for the claim at issue. Determining the covered benefit requires construing both the applicable statutes and the insurance policy. Rockhill Ins. Co. v. CFI-Global Fisheries Mgmt., 591 F. Supp. 3d 1020 (D. Colo. 2021). The court noted that part of the intent behind this section was to create a simplified remedy that is easier to determine than the actual damages needed to establish a breach of contract or common law bad faith claim.

The Tenth Circuit addressed the interaction between disputed benefits and the statute in Etherton v. Owners Ins. Co., 829 F.3d 1209 (10th Cir. 2016). The court rejected the argument that the statutory provisions apply only to undisputed amounts, holding that the statute applies to benefits that have been unreasonably delayed or denied, including disputed benefits. This prevents insurers from manufacturing a dispute to evade the statute.

C.R.S. § 10-3-1116: The Remedies

Subsection (1): Two Times the Covered Benefit Plus Fees

§ 10-3-1116(1) provides the remedy: “A first-party claimant . . . whose claim for payment of benefits has been unreasonably delayed or denied may bring an action in a district court to recover reasonable attorney fees and court costs and two times the covered benefit.” Three components: attorney fees, court costs, and a doubled benefit.

The two-times multiplier is a penalty, not compensatory damages. As Speaker Romanoff explained during the legislative hearings: the statute increases the penalties on companies that unreasonably delay or deny payment. See Kisselman, 292 P.3d at 975 (quoting legislative testimony). This means the multiplier applies on top of the covered benefit itself. Under Nibert v. GEICO Casualty Co., 2017 COA 23, the Court of Appeals held that the two-times multiplier applies even when the insurer has already paid the benefit. A policyholder who eventually receives the $100,000 benefit after unreasonable delay can recover an additional $200,000 as a statutory penalty. Total recovery: effectively three times the covered benefit.

This is illustrated by the damages analysis in Vaccaro v. Am. Family Ins. Grp., 275 P.3d 750 (Colo. App. 2012), where the district court doubled a $75,000 policy limit to $150,000 in statutory penalties, then added prejudgment interest, costs, and attorney fees. See the Property Insurance Coverage Law Blog analysis of the damages calculation.

Illustrative example only. Not a case result. Every case is unique and outcome depends on the specific facts, evidence, applicable law, and the strategic decisions of the parties. Past results do not guarantee, warrant, or predict future outcomes.

Subsection (2): The Discretionary Clause Ban

Section 10-3-1116(2) addresses a practice that insurers used to insulate themselves from judicial review. Before this statute, many health and disability insurance policies contained “discretionary clauses” that purported to give the insurer or plan administrator sole discretion to interpret policy terms and determine eligibility. These clauses meant courts would defer to the insurer’s interpretation, even if unreasonable. The statute voids any such provision in policies issued in Colorado. If your health or disability policy contains a discretionary clause, that clause has no legal effect.

Subsection (3): Independent Review for Health, Life, and Disability Claims

For health, life, and disability claims that are denied in whole or in part, § 10-3-1116(3) guarantees the right to independent external review after exhausting administrative remedies. The insurer must include a provision in the policy giving the claimant the right to have the claim reviewed by an independent reviewer who has not been a party to the initial claim determination. This creates a check on insurer decision-making that exists outside the litigation process.

Subsection (4): The Frivolous Action Safeguard

The statute includes protection for insurers against baseless claims. Under § 10-3-1116(5), if the court determines that a statutory bad faith action was frivolous or groundless, the court may award reasonable attorney fees and court costs to the insurer. This provision ensures the statute is used as a shield for legitimately wronged policyholders, not as a weapon for frivolous litigation.

The “In Addition To” Clause: Stacking With Other Claims

Section 10-3-1116 explicitly states: “The action authorized in this section is in addition to, and does not limit or affect, other actions available by statute or common law, now or in the future.” This language is critical. It means your statutory bad faith claim stacks on top of your common law bad faith claim, your breach of contract claim, and any claim for punitive damages under C.R.S. § 13-21-102. The only limitation: damages awarded under this section shall not be recoverable in any other action or claim. You cannot double-count the same statutory penalty. But you can pursue every other remedy Colorado law provides alongside it. Full damages breakdown: Bad Faith Damages in Colorado.

What the Statutes Do Not Provide: Punitive Damages

Punitive damages are not available under the statutory framework. The U.S. District Court for the District of Colorado held in Residences at Olde Town Square Ass’n v. Travelers Cas. Ins. Co. of Am., 430 F. Supp. 3d 743 (D. Colo. 2019), that a § 10-3-1116 claim is not a claim for “a wrong done to the person or to personal or real property” under 13-21-102(1)(a). To recover punitive damages, you must prove common law bad faith and show that the insurer’s conduct was willful and wanton. This is one reason most bad faith cases assert both statutory and common law claims: the statutory path provides the guaranteed two-times multiplier and attorney fees, while the common law path opens the door to emotional distress and punitive damages.

Who Can Be Sued: Insurance Companies, Not Individual Adjusters

The Colorado Supreme Court resolved this question definitively in Skillett v. Allstate Fire and Casualty Insurance Co., 2022 CO 12. The Court held that an action for unreasonably delayed or denied insurance benefits under Colorado law may be brought against the insurance company, not individual adjusters. The Colorado Lawyer analyzed the legislative history: HB 08-1407 was titled as an act concerning the unreasonable conduct of an insurance carrier. The prohibition targets a person engaged in the business of insurance, and the Court concluded that phrase refers to the insurer entity, not its employees.

This followed earlier appellate guidance. In Riccatone v. Colorado Choice Health Plans, 315 P.3d 203 (Colo. App. 2013), the Court of Appeals found the statute ambiguous but ultimately ruled that third-party plan administrators were not proper defendants. The federal district court in Seiwald v. Allstate Property and Casualty Insurance Co., 2020 WL 6946563 (D. Colo. 2020), had reached the opposite conclusion on adjusters, creating a split that Skillett resolved in favor of limiting liability to the insurance company itself.

How These Statutes Apply After Catastrophic Injuries

The statutory framework becomes most powerful in high-value cases where the insurer’s unreasonable conduct caused the most harm. When a truck accident leaves someone with a spinal cord injury requiring lifetime care, and the insurer delays payment for months while medical bills accumulate, the two-times multiplier applies to the full covered benefit. When a car accident results in a traumatic brain injury and the insurer denies the claim based on a paper review that contradicts the treating physician, the statutory framework provides an independent path to accountability that does not require proving the insurer’s subjective state of mind.

In wrongful death cases and motorcycle accident claims with high policy limits, the statutory penalty alone can exceed six figures. Combined with common law bad faith damages, emotional distress, and punitive damages, the total exposure for the insurer dwarfs the original claim amount. That exposure is what changes the insurer’s behavior. And that is precisely what the legislature intended.

Why Trial Preparation Determines the Outcome

At Rampart Injury Lawyers, we build statutory bad faith claims with the same discipline we bring to every injury case: evidence-first, prepared for trial. We identify the covered benefit, document every day of delay, preserve every communication, and quantify the statutory penalty before sending the first demand. When the insurer knows the statutory exposure from the outset, the calculation shifts. We serve the I-25 corridor from Greenwood Village to Colorado Springs. Return to Colorado Insurance Bad Faith Lawyers (Pillar Page).

Frequently Asked Questions: Colorado Bad Faith Statutes

What is the difference between C.R.S. § 10-3-1115 and C.R.S. § 10-3-1116?

Section 10-3-1115 establishes the prohibition: insurers cannot unreasonably delay or deny payment of covered benefits. Section 10-3-1116 establishes the remedy: two times the covered benefit plus attorney fees and court costs. Together, they create a complete cause of action. Section 1115 defines the wrong; Section 1116 defines the consequences.

Can I still sue if the insurance company eventually paid my claim?

Yes. Under Nibert v. GEICO Casualty Co., 2017 COA 23, the two-times multiplier applies even after the benefit has been paid. And under Soicher v. State Farm, 2015 COA 46, delay of the full value is itself a statutory violation. The insurer cannot erase the consequences of unreasonable delay by eventually paying what it owed all along.

Do I need an expert witness to prove statutory bad faith?

Not always. Under Am. Family Mut. Ins. Co. v. Allen, 102 P.3d 333, 344 (Colo. 2004), expert testimony is not required where the insurer’s conduct falls within the common knowledge of ordinary people. Whether an insurer conducted an adequate investigation, provided a reasonable explanation for a denial, or responded to communications promptly are questions most jurors can assess based on their own experience. For more technical questions about industry standards, expert testimony may be helpful.

Can I sue the individual adjuster who denied my claim?

No. The Colorado Supreme Court held in Skillett v. Allstate, 2022 CO 12, that statutory bad faith claims can be brought only against the insurance company, not individual adjusters. The adjuster who made the decision may be deposed as a witness, but the company bears the legal liability.

Explore More About Colorado Insurance Bad Faith

Pillar: Colorado Insurance Bad Faith Lawyers – Complete overview of bad faith law and how we fight these cases.

Spoke 1: What Is Bad Faith Insurance in Colorado? – Legal definition, both frameworks, and the quasi-fiduciary duty.

Spoke 2: Signs Your Claim Is Being Denied in Bad Faith – Red flags that expose an insurer crossing the line.

Spoke 4: How to Sue Your Insurance Company for Bad Faith – The process, timeline, and what to expect.

Spoke 5: Insurance Company Delay Tactics – The playbook they run and how to defeat it.

Spoke 6: Bad Faith Damages in Colorado – Statutory penalties, compensatory damages, punitive damages, and how they stack.

Sources and Legal Citations

Colorado Statutes

C.R.S. § 10-3-1115 – Improper Denial of Claims: https://law.justia.com/codes/colorado/2021/title-10/article-3/part-11/section-10-3-1115/

C.R.S. § 10-3-1116 – Remedies for Unreasonable Delay or Denial: https://law.justia.com/codes/colorado/2021/title-10/article-3/part-11/section-10-3-1116/

C.R.S. § 10-3-1104(1)(h) – Unfair Claims Settlement Practices: https://law.justia.com/codes/colorado/title-10/regulation-of-insurance-companies/article-3/part-11/section-10-3-1104/

C.R.S. § 13-21-102 – Exemplary (Punitive) Damages: https://law.justia.com/codes/colorado/title-13/article-21/section-13-21-102/

C.R.S. § 13-80-102 – General Statute of Limitations: https://law.justia.com/codes/colorado/title-13/article-80/section-13-80-102/

Key Case Law

Goodson v. Am. Standard Ins. Co., 89 P.3d 409 (Colo. 2004): https://caselaw.findlaw.com/court/co-supreme-court/1058662.html

Schultz v. GEICO Cas. Co., 429 P.3d 844 (Colo. 2018) (statutory standard: “without a reasonable basis”)

Kisselman v. Am. Family Mut. Ins. Co., 292 P.3d 964 (Colo. App. 2011) (statutory vs. common law burden)

Am. Family Mut. Ins. Co. v. Allen, 102 P.3d 333 (Colo. 2004) (objective reasonableness, expert testimony)

Nibert v. GEICO Casualty Co., 2017 COA 23 (two-times multiplier applies after benefit paid)

Soicher v. State Farm, 2015 COA 46, 351 P.3d 559 (delay vs. denial as distinct claims)

Vaccaro v. Am. Family Ins. Grp., 275 P.3d 750 (Colo. App. 2012) (damages calculation)

Etherton v. Owners Ins. Co., 829 F.3d 1209 (10th Cir. 2016) (statute applies to disputed benefits): https://casetext.com/case/etherton-v-owners-ins-co

Skillett v. Allstate Fire & Cas. Ins. Co., 2022 CO 12 (adjusters not individually liable)

Riccatone v. Colo. Choice Health Plans, 315 P.3d 203 (Colo. App. 2013) (legislative history)

Kyle W. Larson Enters. v. Allstate Ins., 2012 COA 160M, 305 P.3d 409 (vendors as first-party claimants)

Rockhill Ins. Co. v. CFI-Global Fisheries Mgmt., 591 F. Supp. 3d 1020 (D. Colo. 2021) (“covered benefit” definition)

Residences at Olde Town Square Ass’n v. Travelers, 430 F. Supp. 3d 743 (D. Colo. 2019) (no punitive damages under statute)

TBL Collectibles v. Owners Ins., 285 F. Supp. 3d 1170 (D. Colo. 2018) (Regulation 5-1-14 as evidence)

Practice Resources

Colorado Lawyer – Insurance Adjuster Liability and Legislative History: https://cl.cobar.org/features/insurance-adjuster-liability-in-bad-faith-claims/

Property Insurance Coverage Law Blog – Statutory Bad Faith Standard: https://www.propertyinsurancecoveragelaw.com/blog/what-is-the-bad-faith-standard-under-the-colorado-insurance-code/

Property Insurance Coverage Law Blog – Damages Calculation Under §§ 1115/1116: https://www.propertyinsurancecoveragelaw.com/blog/calculation-of-damages-under-colorados-insurance-prompt-payment-statutes-crs-1031115-and-1031116-part-iii/

Property Insurance Coverage Law Blog – Claims Handling Requirements: https://www.propertyinsurancecoveragelaw.com/blog/claims-handling-requirements-by-state-colorado/

Colorado Civil Jury Instructions, Ch. 25: https://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Committees/Civil_Jury_Instructions_Committee/Chapter%2025.pdf

Colorado Attorney General Opinion No. 10-2 (HB 08-1407 Scope): https://coag.gov/app/uploads/2019/08/No.-10-2-The-Scope-of-HB08-1407-which-became-Effective-August-5-2008-and-Increased-the-Penalties-the-Colorado-Commissioner-of-Insurance-may-Impose-Against-Insurance-Companies-Providing-Benefit-Pl.pdf

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