Castle Rock Insurance Bad Faith Lawyers

When your insurance company breaks its promise, Colorado law gives you the power to hold them accountable.

Your Insurance Company Owes You More Than a Policy. It Owes You Good Faith.

A bad faith insurance attorney in Colorado fights for policyholders whose insurance companies have unreasonably delayed or denied legitimate claims. Under Colorado Revised Statutes § 10-3-1115 and § 10-3-1116, if an insurer delays or denies payment of a covered benefit without a reasonable basis, you can recover two times the covered benefit, plus attorney fees and court costs. Colorado also recognizes common law bad faith claims that can yield compensatory damages for emotional distress, economic harm, and in egregious cases, punitive damages. At Rampart Injury Lawyers, we prepare every bad faith case as though a jury will see it. Because when an insurance company breaks its word to a catastrophically injured person, a jury should see it.

Every Insurance Policy Is a Promise. The Industry Breaks Them for Profit.

You paid your premiums. Every month, every quarter, every year. You held up your end of the contract. And somewhere inside a building you will never visit, a person you will never meet decided your claim was worth less than you were owed. Or decided it was worth nothing at all.

That is not a glitch in the system. It is the system. Industry data reported by Verisk and the American Property Casualty Insurance Association shows the U.S. property and casualty sector took in over a trillion dollars in direct written premiums in 2024, continuing a multi-year run of record-setting premium growth. (See Insurance Journal coverage of the Verisk/APCIA 2024 industry recap.) Investment income pushed insurer net income to $95 billion in the first half of 2024 alone, per Verisk/APCIA data. According to plaintiffs’ bar analysis by the American Association for Justice, insurance industry profits surged to historic highs in 2023, a dramatic increase over the prior year.

They did not accumulate that kind of money by paying every claim promptly and fairly. They accumulated it by building systems designed to delay, diminish, and deny. When those systems cross the line, Colorado calls it what it is: bad faith.

What Is Insurance Bad Faith in Colorado?

Bad faith is not just an insult. It is a legal term with statutory teeth. In Colorado, bad faith insurance conduct falls into two categories, each with its own legal framework and each carrying real consequences for insurers who cross the line.

Statutory Bad Faith: C.R.S. §§ 10-3-1115 and 10-3-1116

In 2008, the Colorado General Assembly passed HB 08-1407, titled “An Act Concerning Strengthening Penalties For The Unreasonable Conduct Of An Insurance Carrier.” That law created two new statutory sections that changed the rules for Colorado policyholders.

C.R.S. § 10-3-1115(1)(a) states that a person engaged in the business of insurance shall not unreasonably delay or deny payment of a claim for benefits owed to a first-party claimant. The standard is objective: under § 10-3-1115(2), “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.”

The remedy is spelled out in C.R.S. § 10-3-1116(1): a first-party claimant whose benefits were unreasonably delayed or denied may bring an action in district court to recover reasonable attorney fees, court costs, and two times the covered benefit. Critically, under Nibert v. GEICO Casualty Co., 2017 COA 23, the Colorado Court of Appeals confirmed that this two-times multiplier applies even when the insurer has already paid the benefit, resulting in an effective payout of three times the original benefit amount.

These statutory claims carry a lower burden of proof than common law bad faith. As the Colorado Civil Jury Instructions, Chapter 25 explains, the statutory standard requires only that the delay or denial was “without a reasonable basis,” compared to the common law requirement of showing the insurer acted unreasonably and either knew or recklessly disregarded the unreasonableness of its conduct. See Kisselman** v. Am. Family Mut. Ins. Co., 292 P.3d 964 (Colo. App. 2011).

Common Law Bad Faith: The Duty of Good Faith and Fair Dealing

Colorado has long recognized an implied covenant of good faith and fair dealing in every insurance contract. This common law claim predates the statutory framework and provides broader protections. As the Colorado Supreme Court established in Ballow v. PHICO Ins. Co., 878 P.2d 672 (Colo. 1994), an insurer’s duties of good faith extend beyond just paying claims on time. They cover the entire relationship between the insurer and the insured.

The standard for common law bad faith was articulated in Am. Family Mut. Ins. Co. v. Allen, 102 P.3d 333 (Colo. 2004) (en banc): the reasonableness of the insurer’s conduct is judged objectively according to industry standards. Common law bad faith allows recovery of damages that the statutory claim does not, including compensation for emotional distress, inconvenience, economic losses caused by the delay, and in cases of willful and wanton conduct, punitive damages under C.R.S. § 13-21-102.

How Insurance Companies Act in Bad Faith: The Playbook

Insurance bad faith is rarely a single dramatic act. It is a series of small decisions, each one designed to wear you down. Colorado’s Unfair Claims Settlement Practices Act, C.R.S. § 10-3-1104(1)(h), catalogs the specific conduct that crosses the line. As United Policyholders explains, these standards define what insurers owe you. Here is what that misconduct looks like in practice.

Misrepresenting Your Policy

Under C.R.S. § 10-3-1104(1)(h)(I), an insurer commits a prohibited act when it misrepresents pertinent facts or policy provisions. In practice, this means telling you a treatment is not covered when it is. It means citing exclusions that do not apply to your claim. It means burying the truth under a wall of jargon designed to make you give up. If you have been in a truck accident and the adjuster tells you the policy does not cover certain damages, verify that against the actual policy language. Misrepresentation is one of the most common bad faith tactics because it relies on the policyholder’s lack of expertise.

Failing to Investigate

Under C.R.S. § 10-3-1104(1)(h)(III) and (IV), insurance companies must adopt reasonable standards for prompt investigation and cannot refuse claims without a reasonable investigation based on all available information. When an insurer denies a traumatic brain injury claim without consulting the neuropsychological testing, the neuroimaging, or the treating physician’s records, that is not a disagreement. It is a refusal to look at the evidence.

The Lowball Offer

Under C.R.S. § 10-3-1104(1)(h)(VII), it is unlawful for an insurer to attempt to settle a claim for less than a reasonable person would believe they are entitled to. When you have a spinal cord injury requiring substantial lifetime care and the insurer offers a fraction of documented medical costs, that is not a “negotiation.” It is a calculated bet that you are too tired, too broke, or too desperate to fight back.

The Delay Machine

Colorado Division of Insurance Regulation 5-1-14 provides that insurers face penalties for failing to make a decision on payment within sixty days of receiving a valid claim. But the regulation only captures the most egregious delays. The real delay machine is subtler: requesting the same documents twice, transferring your claim to a new adjuster who needs to “get up to speed,” asking for authorizations you already provided, scheduling an independent medical examination months out when your bills are due now. Each step is defensible in isolation. Together they form a pattern. Under C.R.S. § 10-3-1104(1)(h)(IX), requiring duplicate submissions is specifically prohibited.

Compelling You to Sue

Under C.R.S. § 10-3-1104(1)(h)(VII), insurers cannot compel policyholders to file a lawsuit to recover amounts due under a policy by offering substantially less than the amounts ultimately recovered. In wrongful death cases under Colorado’s recently increased damages cap of $2.125 million (HB 24-1472), some carriers offer pennies against documented damages, knowing most families cannot afford to litigate. This tactic turns the courthouse door into a cost barrier. That is exactly what the statute was designed to prevent.

Incentivizing Denials

Colorado specifically prohibits insurers from compensating claims adjusters based on the volume of denials or the amount of money saved. Under C.R.S. § 10-3-1104(1)(hh), it is unlawful to base compensation of claims employees on the use of arbitrary quotas or caps that limit claims payments without consideration of the merits. When an adjuster’s bonus depends on keeping payouts low, the entire claims process is contaminated.

What You Can Recover in a Colorado Bad Faith Claim

When an insurer acts in bad faith in Colorado, the financial consequences can be significant. Consider how the recovery framework can stack on a single unpaid covered benefit. Assume a $100,000 covered benefit unreasonably denied. Under § 10-3-1116(1), the statutory penalty is two times the covered benefit—an additional $200,000 on top of the benefit itself. Add reasonable attorney fees (insurer-paid under the statute) and court costs. Add common law compensatory damages for emotional distress and economic loss. Add prejudgment interest at 9% compounded annually under C.R.S. § 5-12-102. In willful and wanton cases, add punitive damages capped at actual damages (or up to three times actual damages on clear and convincing evidence). The insurer’s exposure on the same $100,000 obligation can multiply several-fold once every layer stacks.

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.

Here is what the recovery framework looks like:

Statutory Damages

Under C.R.S. § 10-3-1116(1), you can recover two times the covered benefit that was unreasonably delayed or denied, plus reasonable attorney fees and court costs. No proof of separate “damages” is required beyond the unreasonable delay or denial itself. The covered benefit amount is the measure of recovery.

Common Law Compensatory Damages

Economic damages include all financial harm caused by the bad faith conduct: medical bills you could not pay because the insurer withheld funds, lost wages from being unable to afford treatment, interest on the delayed benefits, and any other out-of-pocket losses flowing from the denial. Non-economic damages compensate for the emotional distress, frustration, anxiety, and disruption to your life caused by the insurer’s conduct.

Punitive Damages

In cases of willful and wanton conduct, C.R.S. § 13-21-102 allows an award of punitive damages. These are not compensation. They are punishment designed to deter the insurer from doing this to someone else. Colorado generally caps punitive damages at the amount of actual damages, though the court can award up to three times actual damages in egregious cases.

Attorney Fees and Costs

Unlike most civil litigation in Colorado where each side pays their own attorney fees, bad faith claims explicitly allow recovery of reasonable attorney fees. This is critical. It means that taking on an insurance company does not require you to fund the fight out of pocket. It means the insurer pays the cost of forcing you to hold them accountable.

First-Party vs. Third-Party Bad Faith Claims

The distinction matters because it determines which legal tools are available to you.

First-Party Claims: You vs. Your Own Insurer

A first-party bad faith claim arises when your own insurance company fails to honor its obligations under your policy. You paid the premiums. You filed a claim for covered benefits. They delayed or denied without a reasonable basis. Under C.R.S. § 10-3-1115, a “first-party claimant” is any individual or entity asserting an entitlement to benefits owed directly to or on behalf of an insured. This includes UM/UIM claims where your own insurer handles the claim for an accident caused by an uninsured or underinsured driver.

The Colorado Supreme Court confirmed in Skillett v. Allstate Fire & Casualty Insurance Co., 2022 CO 12, that the statutory bad faith provisions apply to insurance companies, not individual adjusters. As the Colorado Lawyer’s analysis of that ruling detailed, the Court held that throughout §§ 10-3-1115 and 10-3-1116, first-party claimants whose insurance claims have been unreasonably delayed or denied may bring suit against their insurers, but not against individual claims adjusters.

Third-Party Claims: You vs. Someone Else’s Insurer

A third-party bad faith claim involves the at-fault party’s insurance company. Colorado’s statutory bad faith framework under §§ 10-3-1115 and 10-3-1116 applies specifically ONLY to first-party claimants. Third-party bad faith claims are not recognized under Colorado law (with limited exceptions). This is because as a third-party claimant, you do not have a contract with the other person’s insurance that they could breach or handle in bad faith, their duties are to their insured not to you as the claimant under the contract. That being said, if a trucking company’s insurer refuses to settle a clear liability claim within policy limits, forcing the case to trial where the verdict exceeds the policy, that conduct may give rise to a bad faith claim.

Statute of Limitations for Bad Faith Claims in Colorado

Time limits apply. Miss them and your claim disappears regardless of its merit.

For common law bad faith claims, Colorado applies a two-year statute of limitations from the date the injury and its cause are or should have been discovered through reasonable diligence. See Wardcraft Homes, Inc. v. Emps. Mut. Cas.** Co., 70 F. Supp. 3d 1198, 1212 (D. Colo. 2014); Cork v. Sentry Ins., 194 P.3d 422 (Colo. App. 2008).

For statutory bad faith claims under §§ 10-3-1115 and 10-3-1116, the precise limitations period remains legally unsettled. As the Property Insurance Coverage Law Blog analysis explains, courts have determined the one-year penal statute limitations period does not apply, and federal decisions generally apply a two-year period mirroring common law bad faith. But this area remains in flux. Do not wait to find out where the line falls.

Why Bad Faith Claims Matter After Catastrophic Injuries

Bad faith is not an abstract legal concept. It is the reason a person with a traumatic brain injury cannot get the neuropsychological evaluation they need because the insurer will not authorize payment. It is the reason a family facing wrongful death sits in limbo for months while the insurance company “reviews” a claim with clear liability. It is the reason someone with a spinal cord injury faces lifetime care costs that, for a 25-year-old with high tetraplegia (C1–C4), first-year costs average roughly $1.4 million, with lifetime costs exceeding $6 million per the National Spinal Cord Injury Statistical Center 2024 Facts and Figures, and still gets offered a settlement that would not cover two years of care.

The insurance company is betting that you are too broken to fight. A bad faith claim turns that bet on its head. It says: the injury claim is one thing. What you did after the injury is another. And Colorado law makes you pay separately for both.

How Rampart Injury Lawyers Handles Bad Faith Cases

Most personal injury firms treat the insurance company like a negotiation partner. We give them the chances to the right thing over and over, but sometimes insurance companies cannot help themselves and engage in bad faith no matter how long of a leash they have.

When the evidence shows the insurer crossed the line from “difficult” to “unreasonable,” we sometimes have to file a bad faith lawsuit. We pursue the statutory damages, the common law damages, and where the conduct warrants it, punitive damages. We prepare the case for trial, because insurance companies settle bad faith cases for meaningful numbers only when they believe the alternative is a courtroom.

Rampart Injury Lawyers serves the I-25 corridor from Greenwood Village to Colorado Springs. Our hub office in Castle Rock sits at the center of the communities we represent: Castle Rock, Lone Tree, Parker, Highlands Ranch, Monument, Fountain, and Woodland Park. We take fewer cases. We prepare them as though every one is going to trial. That is the difference between negotiating a bad faith claim and litigating one.

Frequently Asked Questions About Colorado Insurance Bad Faith

What does “bad faith” mean in Colorado insurance law?

Bad faith occurs when an insurance company unreasonably delays or denies payment of a covered benefit without a reasonable basis for doing so. Colorado defines this conduct in C.R.S. § 10-3-1115 (statutory) and through the common law duty of good faith and fair dealing implied in every insurance contract. The statutory standard requires only “unreasonableness,” while the common law standard requires showing the insurer knew or recklessly disregarded the unreasonableness of its conduct.

How much can I recover in a bad faith insurance claim in Colorado?

Under C.R.S. § 10-3-1116(1), you can recover two times the covered benefit, attorney fees, and court costs. Common law claims add compensatory damages for emotional distress and economic harm. Punitive damages under C.R.S. § 13-21-102 may apply in cases of willful and wanton insurer conduct. The layers stack. Recovery depends on the facts of each case.

What is the statute of limitations for filing a bad faith claim in Colorado?

Common law bad faith claims carry a two-year statute of limitations. The precise period for statutory claims under §§ 10-3-1115/1116 is unsettled, though federal decisions generally apply two years. The clock begins when you know or should have known the insurer acted in bad faith. Do not rely on ambiguity. Consult an attorney immediately if you suspect bad faith.

Can I sue my own insurance company for bad faith in Colorado?

Yes. First-party bad faith claims are specifically what §§ 10-3-1115 and 10-3-1116 were designed to address. If your own insurer unreasonably delays or denies payment of benefits you are owed under your policy, you have the right to file suit in district court for double benefits, attorney fees, and costs.

What are the signs that my insurance company is acting in bad faith?

Red flags include: repeated requests for documents you have already submitted, long periods without any communication, denying your claim without explanation, offering a settlement far below documented damages, citing policy exclusions that do not apply, failing to investigate your claim, and transferring your file to new adjusters multiple times. See Signs Your Claim Is Being Denied in Bad Faith.

Does filing a bad faith claim affect my underlying injury case?

A bad faith claim is separate from your underlying injury claim. The injury case addresses the harm the at-fault party caused you. The bad faith case addresses the harm your insurer caused by failing to honor its obligations. Both can proceed simultaneously, and the bad faith claim can significantly increase the total recovery.

What is the difference between statutory and common law bad faith in Colorado?

Statutory bad faith (C.R.S. §§ 10-3-1115/1116) has a lower burden of proof and provides a fixed remedy of two times the covered benefit plus attorney fees. Common law bad faith requires proving the insurer’s conduct was both unreasonable and that the insurer knew or recklessly disregarded that fact, but allows broader damages including emotional distress and punitive damages. Most bad faith cases assert both claims.

Can insurance adjusters personally be held liable for bad faith in Colorado?

No. The Colorado Supreme Court ruled in Skillett v. Allstate Fire & Casualty Insurance Co., 2022 CO 12, that statutory bad faith claims under §§ 10-3-1115 and 10-3-1116 apply to insurance companies, not individual claims adjusters. The claim must be brought against the insurer entity itself.

Explore Related Insurance Bad Faith Topics

What Is Bad Faith Insurance? /what-is-bad-faith-insurance-colorado/ – The complete guide to understanding bad faith claims, the legal standards, and how Colorado law defines unreasonable insurer conduct.

Signs Your Claim Is Being Denied in Bad Faith /insurance-company-denying-claim-colorado/ – The red flags that signal your insurer has crossed from “difficult” to “unlawful.”

Colorado Bad Faith Insurance Statutes Explained /colorado-bad-faith-insurance-statutes/ – A deep dive into C.R.S. §§ 10-3-1115 and 10-3-1116, including key case law and how courts interpret the statutory framework.

How to Sue Your Insurance Company for Bad Faith /sue-insurance-company-bad-faith-colorado/ – The process, the timeline, and what to expect when you take your insurer to court.

Insurance Company Delay Tactics /insurance-company-delay-tactics/ – The playbook insurers run to exhaust you into accepting less. And how to beat it.

Bad Faith Damages in Colorado /bad-faith-insurance-damages-colorado/ – Statutory treble damages, common law compensatory damages, punitive damages, and how they stack.

Cross-Pillar Links

Colorado Truck Accident Lawyers – Trucking insurers frequently delay catastrophic claims involving FMCSA violations.

Colorado Brain Injury (TBI) Lawyers – TBI claims are disproportionately denied because the injury is invisible to adjusters who refuse to review neuroimaging.

Colorado Spinal Cord Injury Lawyers – SCI lifetime care costs create massive incentives for insurer delay. NSCISC data documents the scale of those costs.

Wrongful Death Lawyer Colorado – Wrongful death claims under Colorado’s updated $2.125M damages cap (HB 24-1472) are frequent targets of bad faith delay.

Colorado Car Accident Lawyers – Auto insurers account for the highest volume of bad faith claims in Colorado.

Colorado Motorcycle Accident Lawyers – Motorcycle injury claims face bias-driven denials that constitute bad faith.

Colorado Uninsured/Underinsured Motorist Lawyer – UM/UIM claims are first-party claims. Statutory bad faith applies directly.

Colorado Pedestrian Accident Lawyers – Pedestrian claims often involve commercial policies and third-party insurer conduct.

Colorado Bicycle Accident Lawyers – Bicycle claims face the same bias-driven denial patterns as motorcycle cases.

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/

HB 24-1472 – Wrongful Death Damages Cap Update: https://leg.colorado.gov/bills/hb24-1472

Key Case Law

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

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

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

Ballow v. PHICO Ins. Co., 878 P.2d 672 (Colo. 1994) (insurer duties extend to entire relationship)

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

Soicher v. State Farm Mut. Auto. Ins. Co., 2015 COA 46, 351 P.3d 559 (delay of full value constitutes unreasonable delay)

Etherton v. Owners Ins. Co., 829 F.3d 1209 (10th Cir. 2016) (applies to disputed benefits)

Industry Data

Insurance Journal – 2024 Industry Recap (Verisk/APCIA): https://www.insurancejournal.com/blogs/right-street/2025/03/25/817100.htm

American Association for Justice – Insurance Industry Record Profits (Plaintiffs’ Bar Analysis): https://www.justice.org/resources/research/insurance-industry-is-quietly-making-record-profits

Insurance Business Mag / Verisk–APCIA – 1H 2024 $95B Gain: https://www.insurancebusinessmag.com/us/news/breaking-news/us-insurers-report-95-billion-gain-in-1h2024-driven-by-strong-premium-growth–verisk-504598.aspx

NSCISC – 2024 Facts and Figures at a Glance: https://www.nscisc.uab.edu/public/Facts%20and%20Figures%202024%20-%20Final.pdf

Regulatory & Practice Resources

Colorado Civil Jury Instructions, Ch. 25 – Bad Faith Breach of Insurance Contract: https://www.courts.state.co.us

United Policyholders – Insurance Consumer Rights in Colorado: https://uphelp.org/claim-guidance-publications/insurance-consumer-legal-rights-in-colorado/

Colorado Lawyer – Insurance Adjuster Liability in Bad Faith Claims: https://cl.cobar.org/features/insurance-adjuster-liability-in-bad-faith-claims/

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

Property Insurance Coverage Law Blog – Statute of Limitations: https://www.propertyinsurancecoveragelaw.com/blog/statute-of-limitations-in-colorado-insurance-bad-faith-and-delay-denial-cases/

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