You did everything right. You paid the premiums for years, filed the claim, and sent every record they asked for. Now the adjuster stops returning calls, your file sits “under review,” and the bills keep arriving.
Insurers get it wrong often enough that the state keeps score. The Colorado Division of Insurance recovered $17.6 million for Coloradans in a single fiscal year, nearly all of it from complaints about denials, delays, and underpayments.
That behavior is bad faith insurance, and Colorado law gives you unusual leverage against it. The first question most policyholders ask is how long a bad-faith lawsuit takes, and the answer shapes every decision that follows.
In this post:
- What counts as bad faith insurance under Colorado law
- The tactics insurers use to delay and underpay valid claims
- What damages you recover in a bad faith insurance lawsuit
- How long does a bad faith lawsuit take, from filing to resolution
- Why adjuster notes and the claim file prove your case
What Is Bad Faith Insurance?
Bad faith insurance is what happens when an insurance company treats your claim as a cost to minimize rather than a promise to keep. It covers any unreasonable denial, delay, or underpayment of valid claims, and Colorado treats it as a legal wrong with real consequences.
The distinction that matters is reasonableness. An insurer that denies a claim after a proper investigation and a defensible reading of the policy is doing its job, even when you disagree with the outcome. An insurer that denies without a reasonable basis has committed bad faith.
The Duty of Good Faith and Fair Dealing
Every insurance policy carries an implied covenant of good faith and fair dealing. That duty is not optional language buried in the contract. It obligates the insurance company to weigh your interests against its own financial interests when handling your claim.
That duty is why bad faith exists as its own claim. When an insurer violates the covenant by putting profits ahead of the benefits owed, you have a separate legal claim, distinct from the underlying policy dispute.
Common Bad Faith Tactics Insurance Companies Use
Bad-faith tactics follow a pattern because they work. An insurance company knows that pressure and time push injured people to accept less, so its playbook is built around both.
Delaying Payment on a Valid Claim
Delaying payment is the most common tactic and the hardest to prove. The insurer requests the same documents twice, claims an investigation is ongoing without explanation, or simply stops responding while your bills pile up.
Unreasonable delays are a strategy, not an accident. Every month the insurer holds your money is a month you grow more desperate, and desperate claimants accept numbers they would otherwise reject.
Lowball Offers and Claim Denials
Undervaluation is the quieter version of a denial. Just 58% of total loss customers said the insurer’s valuation fully met their expectations, which tells you how routinely these numbers come in low.
Claim denials round out the playbook. A claim wrongfully denied on a technicality, a policy term misrepresented, or a file closed without proper investigation all signal that the insurance company never seriously weighed what it owed.
Colorado’s Bad Faith Insurance Laws
Colorado gives policyholders two separate paths to sue an insurer, which is stronger than what most states offer. One is a statute with a built-in penalty; the other is a common-law claim that reaches the insurer’s conduct itself.
Statutory Bad Faith and Attorney’s Fees
Colorado’s statute (C.R.S. ยง 10-3-1116) targets the unreasonable delay or denial of benefits owed under a policy. When an insurance company fails that standard, you recover two times the covered benefit plus your attorney’s fees and costs.
That structure changes the math for both sides. You do not have to prove the insurer acted maliciously, only that it lacked a reasonable basis. The attorney’s fees award means that pursuing the claim does not consume your recovery.
Common Law Bad Faith and Punitive Damages
The common law claim runs alongside the statute and reaches further. It requires proof the insurer acted unreasonably and knew it, which is a higher bar, but it opens the door to damages the statute does not cover.
Punitive damages live here. When an insurer’s conduct rises to the level of egregious behavior, Colorado allows a punitive award intended to punish the company rather than compensate you, and that exposure is often what moves a stubborn carrier.
How to Prove a Bad Faith Claim
A bad faith claim turns on the insurer’s decision-making, not just the outcome. You have to show that the insurance company lacked a reasonable basis for what it did, and that the proof lies within the company’s own files.
Evidence That Wins a Bad Faith Case
The claim file is at the center of a bad-faith case. Adjuster notes reveal what the insurer actually knew and when, and a file showing no thorough investigation before a denial makes the point for you.
Policy language matters just as much. When an insurer’s stated reason contradicts its own policy terms, or expert testimony establishes what a reasonable carrier would have paid, the gap between conduct and obligation becomes visible.
Damages Recoverable in a Bad Faith Insurance Lawsuit
A bad faith insurance lawsuit reaches further than the original claim. The policy benefits are only the starting point, because the law treats the insurer’s misconduct as its own injury with its own price tag.
| Damage Type | What It Covers |
| Policy benefits owed | The original claim the insurance company should have paid |
| Statutory penalty | Two times the covered benefit for unreasonable delay or denial |
| Attorney’s fees and costs | Awarded by statute, so pursuing the claim does not eat your recovery |
| Compensatory damages | Financial harm the delay caused, from medical bills to damaged credit |
| Emotional distress | The stress of fighting your own insurance company |
| Punitive damages | Available where the insurer’s conduct was especially egregious |
The statutory penalty is what gives these claims teeth. Doubling the covered benefit and adding attorney’s fees mean that an insurer that gambles on delaying payment risks paying far more than the policy limits it tried to protect against.
How Long Does a Bad Faith Lawsuit Take?
Most policyholders want a number. Ask how long does a bad faith lawsuit take, and the honest answer is one to three years from filing to resolution. Numerous factors move that range, and many cases resolve well before trial once the insurer sees what discovery turned up.
Filing Suit and the Discovery Phase
Filing suit starts a clock that the insurer no longer controls. The early months cover pleadings and the insurer’s response, which is often the first time the company treats your claim as a real risk rather than a file to manage.
The discovery phase is where these cases are won. Your lawyer subpoenas the claim file, deposes the adjuster, and forces the company to explain its reasoning under oath, and that pressure is what drives most settlements.
What Makes a Case Take Longer
A few things stretch the timeline. How long does a bad faith lawsuit take when a carrier fights every request? Months longer, and a summary judgment motion or a complex claim with disputed medical evidence adds more on top.
Other cases move faster than expected. When the adjuster notes plainly show an unreasonable denial, insurers tend to settle rather than let a jury hear it, which is why strong early evidence shortens everything.
What to Do If You Suspect Bad Faith
Suspecting bad faith and proving it are different things, and the gap between them is documentation. Every step below builds the record your claim depends on, and each one costs the insurance company a defense it would otherwise use.
Steps to Protect Your Claim
- Document every contact. Log the date, the representative’s name, and what was said, since shifting explanations are evidence.
- Demand a written denial. Insurers must justify claim denials in writing, and a vague or contradictory letter exposes the weakness.
- Put requests in writing. Email creates a timestamped record that a phone call never does.
- Gather your file. Collect the policy, medical bills, prior communications, and proof of everything you submitted.
- Contact experienced legal counsel. A lawyer knows what the claim file should contain and how to force its production.
Do not let settlement negotiations drag while you wait for fairness to arrive on its own. Knowing how to avoid becoming a victim of bad-faith insurance means recognizing when talking has stopped working and that legal action is the only lever left.
Frequently Asked Questions About Bad Faith Insurance
1. What Is Bad Faith Insurance?
Bad faith insurance is an insurer unreasonably denying, delaying, or underpaying valid claims it owes. Every policy carries an implied duty of good faith, so breaching it creates a legal claim in its own right. The test is whether the insurance company had a reasonable basis for its actions.
2. How Long Does a Bad Faith Lawsuit Take?
Most run one to three years from filing to resolution. The discovery phase drives the timeline, since that is when the claim file and adjuster testimony surface. Many cases resolve early once the insurer sees what those records show.
3. What Damages Are Recoverable in a Bad Faith Insurance Claim?
You recover the policy benefits owed plus twice the covered benefit under Colorado’s statute. Attorney’s fees, compensatory damages, and emotional distress are all on the table. Punitive damages apply where the insurer’s conduct was especially egregious.
4. How Do I Prove an Insurance Company Acted in Bad Faith?
You show the insurance company lacked a reasonable basis for its decision. The proof lives in the claim file, the adjuster notes, and any gap between the stated denial reason and the policy language. A missing or rushed investigation is strong evidence on its own.
5. What Are Common Examples of Bad Faith Insurance Practices?
Delaying payment without explanation, denying a claim on a technicality, and lowball offers well below value. Failing to investigate properly and misrepresenting policy terms count too. Each one signals the insurer never seriously weighed what it owed.
6. Should I Hire an Insurance Bad Faith Law Expert?
For a serious claim, yes. Insurance bad faith is a specialized area, and these cases turn on records only a lawyer knows how to extract. Colorado’s fee-shifting statute also means the insurer may cover your attorney’s fees.
Why a Bad Faith Insurance Lawyer Changes the Outcome
An insurance company handles thousands of these disputes a year, and you are handling your first one while the bills stack up. A bad faith insurance lawyer closes that gap, and the statute’s fee-shifting means the carrier faces a fight it no longer wins by waiting.
Here is where the right lawyer makes the difference:
- Forces the claim file open, pulling the adjuster notes and internal reasoning the insurer never expected anyone to read.
- Prices the real exposure, adding the statutory penalty, attorney’s fees, and punitive damages to what the insurance company thought it owed.
- Takes over settlement negotiations, so delay stops being a viable tactic.
- Files suit when talking fails, since legal action is often the only thing that moves a carrier off its number.
That shift changes who is under pressure. Once an insurer faces twice the covered benefit plus fees, the cheap denial it banked on becomes the expensive mistake, and valid claims start getting paid.
Do Not Let an Insurer Wait You Out
Bad faith insurance turns a bad situation into a financial one. When a carrier delays payment or denies valid claims without a reasonable basis, the harm compounds while the file sits open. Colorado law answers that with real leverage, including twice the covered benefit and your fees.
At Manning Herington Law, our bad-faith insurance attorneys pry open the claim file, expose the reasoning behind the denial, and quantify the insurer’s full exposure. We take legal action when a carrier refuses to move, and we pursue punitive damages where warranted.
Contact us today for a free consultation. Whether your claim was denied, stalled, or lowballed, our team fights to recover what your policy already promised you.
