Colorado Insurance Bad Faith Attorney
Bad faith is what Colorado law calls it when an insurer unreasonably denies, delays, or underpays a valid claim. State law makes that expensive. We prove the insurer had no reasonable basis, and we pursue the benefits you were owed plus the statutory penalty.
The short answer
An insurer may not unreasonably deny, delay, or underpay a valid claim. If it does, Colorado law lets you recover the benefit plus a penalty.
Deadline
Two to three years, depending on which claim you bring.
The law
What counts as insurance bad faith in Colorado?
Colorado’s bad-faith law is blunt: an insurer may not unreasonably deny or delay payment of a claim for benefits owed to its insured. That sentence is Colorado’s bad-faith statute, nearly word for word. Deny a valid claim without a reasonable basis? Bad faith. Sit on one for months while your contractor waits? Bad faith. Pay a fraction of what the policy owes and mark the file closed? Still bad faith.
There are two versions of the claim, and they work differently. The statutory claim — the one written into Colorado’s insurance code — asks one question: was the insurer’s conduct reasonable? The common-law claim asks more — that the insurer acted unreasonably and knew it, or recklessly didn’t care. In practice we usually plead both, because the statutory claim is easier to prove and the common-law claim reaches damages the statute doesn’t.
And here’s the part insurers hope you never learn: paying late doesn’t erase the violation. Even if the insurer eventually cuts the check (which many do, once a lawsuit is filed), the unreasonable delay itself remains actionable under the statute. The claim doesn’t vanish because they finally did what the policy required all along.
Bad faith isn’t limited to one kind of policy, either. It shows up in the wildfire total loss where the adjuster’s estimate ignores half the house. In the UM/UIM claim where your own carrier suddenly treats you like the opposing party. In the long-term disability file where “independent review” means a doctor who never examined you. Same statute, same standard, every line of coverage sold in Colorado.
A coverage dispute isn’t automatically bad faith. Insurers are allowed to be wrong; they’re not allowed to be unreasonable. The line between the two lives in the claim file. That’s exactly where we start.
How it happens
Four ways insurers cross the line.
Most bad-faith cases are a pattern of small, deliberate choices in how a claim got handled. The pattern shows up in the same four places, over and over.
1
Lowball offers
The contractor’s estimate says $180,000. The check says $61,000. An offer the insurer knows sits below the covered loss is a bet that you’ll take the money before you talk to a lawyer.
2
Unreasonable delay
Colorado’s claim-handling regulations expect insurers to investigate and decide promptly. In month six, “still under review” isn’t diligence. Delay earns the insurer interest on your money, and it’s the tactic we see most.
3
Misused exclusions
Every policy has exclusions. Bad faith is stretching one to cover a loss it was never written for (calling hail damage “wear and tear,” say), then citing it in a denial letter and hoping you won’t read the policy.
4
Ignored evidence
An adjuster has to weigh the evidence that supports your claim, not just what defeats it. Cherry-picking the engineer’s report, skipping the inspection, losing your contractor’s estimate. An investigation built to reach “no” is not an investigation.
Recognize one of these in your own file? That’s usually where a bad-faith case begins.
Plain answers
How do I prove an insurance bad faith claim?
The burden of proof is on you, the policyholder, and the standard is unreasonableness: what would a careful insurer have done with the same claim? Is it hard to win? Harder than the billboards make it sound, and far more winnable than insurers want you to believe. For one reason: the proof usually sits in their own file.
First, we get the claim file: adjuster notes, internal valuations, reserve figures, and the date stamped on every decision. Second, we measure the insurer’s handling against industry claim-handling standards and Colorado’s own insurance regulations, the same standards insurers use to train their adjusters. Third, we build the timeline. Bad faith is often a story about dates: when the insurer knew what it knew, and how long it sat on it. Timelines are hard to argue with in front of a jury.
Fourth, when the case calls for it, we bring expert testimony on claim-handling standards. Nelson has done this work from both chairs: he tries bad-faith cases for policyholders, and other attorneys retain him as an insurance expert witness to explain those same standards to juries. When the person building your case is the one other lawyers call to prove theirs, the file rarely stays ambiguous.
What damages can I recover for bad faith?
Start with the statute. When a court finds an insurer denied or delayed benefits without a reasonable basis, Colorado law doubles the covered benefit and hands you your attorney fees and court costs, on top of the breach-of-contract claim for the benefit itself. In plain English: a wrongfully denied $200,000 claim doesn’t stay a $200,000 problem for the insurer. It grows every month they hold the money, and the fees land on their side of the ledger.
The common-law claim reaches further: the financial harm the denial caused, and the toll that doesn’t show up on an invoice — the medical bill that went to collections, the year your family lived out of a rental. Where the conduct is willful and wanton, Colorado law allows punitive damages on top.
One more thing worth knowing: the statute reaches partial payments too. If the insurer paid something but unreasonably withheld the rest, the two-times penalty applies to the portion it wrongfully held back. A lowball payment is a smaller violation of the same statute.
So how much is a bad-faith claim worth? It depends on the covered benefit, the conduct, and the harm, which is why insurers settle strong bad-faith cases before trial. Our $22 million policyholder verdict is what happens when they don’t.
Bring us the denial letter. The delay is what costs you.
Bring the denial letter, the policy, and the adjuster’s emails — twenty minutes tells us whether the insurer crossed the line.
Results
What unreasonable costs an insurer.
Three more from our insurance practice. Each one started as a claim an insurer thought it could shortchange.
$2.3M
settlement · refusal to defend
The insurer denied a home builder any defense at all, citing an exclusion. Summary judgment said the carrier owed coverage. The case settled for millions.
$900K
settlement · UM/UIM benefits
Before we got involved, the carrier’s offer to our client was zero dollars. The same carrier then paid $900,000 to settle.
$620K
jury judgment · water damage
A store owner’s claim was worth about $120,000. After a two-week trial, the judgment against the insurer came in at more than five times that.
Every case is different; past results don’t guarantee future outcomes.
Deadlines
How long do I have to file a bad faith claim in Colorado?
Less time than you’d think, and the clock starts earlier than it feels like it should. The breach-of-contract claim under your policy generally gives you three years to sue. The tort of bad faith generally runs two years. And some policies try to shorten the contract deadline further in the fine print, which is one more reason to have a lawyer read yours.
There’s a flip side, too: your own obligations under the policy. Prompt notice, proof-of-loss forms, examinations under oath. Miss one, and the insurer will argue you forfeited coverage before the bad-faith question ever gets asked. Keep every deadline the policy gives you, even while the insurer ignores its own.
When the clock started is its own fight. Sometimes it’s the denial letter. Sometimes it’s the underpayment. Sometimes it’s a date buried in the “still reviewing” months. Insurers know this, and a quiet stall that runs out your deadline is itself a tactic we’ve seen more than once.
Don’t self-diagnose a deadline from a web page, including this one. If your claim went sideways in the last two years, have a lawyer read the file now.
Deadlines end good cases. Don’t let one end yours.
Where your claim stands
Every bad-faith case starts as one of these.
Denied, delayed, underpaid, or a settlement refusal that put someone else’s judgment on your shoulders. The tactics differ, and so do the moves. Start with the page that matches your claim.
Claim denied
The denial letter isn’t the last word — it’s evidence. What it has to say, what it actually means, and the deadlines it starts.
Denied claims →
Claim delayed
When “under review” becomes unreasonable delay under Colorado law, and how to build the timeline that proves it.
Delayed claims →
Claim underpaid
A payment can be bad faith too. What the full value of your loss looks like on paper, and how lowball offers get exposed.
Underpaid claims →
Third-party bad faith
An insurer that refuses a reasonable settlement can end up owning the judgment beyond its policy limits.
Excess judgments →
The honest answer
Do I need a lawyer for an insurance bad faith claim?
You can appeal a denial yourself, and for small claims that’s sometimes the right call. But a bad-faith case is a lawsuit against a company with a legal department, built on a claim file the insurer will not hand you voluntarily; it gets produced in litigation. Proving unreasonableness means knowing what a reasonable insurer looks like from the inside.
Besides this, the economics run your way. We take bad-faith cases on contingency, and the fee-shifting rule puts your attorney fees on the insurer when it loses. Insurers know both of those things. Watch how the conversation changes the day a lawyer’s name appears in the file.
Here’s what the first month looks like when you hire us. We send the insurer a preservation letter and demand the complete claim file. We put your losses on paper: the estimates, the invoices, the dates. And we take over every call, every email, every “quick question” from the adjuster, so nothing you say gets used to shrink your claim. You rebuild, recover, or run your business. We handle the insurer.
Your lawyer
Nelson Waneka
Nelson has tried insurance bad-faith cases across Colorado since 2010 — in front of Garfield County juries, at the Colorado Court of Appeals, and in the negotiation rooms where most claims actually resolve. Best Lawyers has named him “Lawyer of the Year” for Insurance Law twice. Insurers recognize his name on the pleadings. That matters more than it should. And he’s spent his whole career on one side of the table: the policyholder’s.
Best Lawyers “Lawyer of the Year,” Insurance Law (2×) · Chambers USA ranked · Colorado Super Lawyers Top 100
Based in Glenwood Springs. Serving the Western Slope: Aspen · Vail · Grand Junction · Montrose · Basalt — mountain-town claims handled by a mountain-town firm, not a Denver satellite.
From our clients
“Nelson … was the only person we trusted to get us through our issues with our insurance company. He carefully guided us through what we should expect from the insurer, and laid out a plan that was attainable.”
Google review · Timothy O’Shea
Bad faith has a price. We make them pay it.
No fee unless we recover