How Do I Know If The Insurance Company Is Acting In Bad Faith?

Clients filing complaints in their insurance company.

When an insurance company is handling a claim, it is bound by contractual duties in its own policies, as well as by Colorado state laws. An insurance company must communicate with injured victims promptly, conduct a thorough investigation, pay claims promptly, and handle claims in good faith. An insurance company has a duty to its own policyholder to indemnify its insured from personal responsibility, and to defend its insured in litigation. An insurance company which does not comply with its own policy duties or state laws is acting in bad faith.

When I’m Dealing With The At-Fault Person’s Insurance?

Colorado’s Unfair Claims Practices Act (C.R.S. § 10-3-1104) lists several bad faith behaviors to watch out for, behaviors which are illegal and punishable by Colorado’s insurance commissioner. Some of these bad behaviors include:

  • Misrepresenting facts or policy provisions surrounding what coverages are available;
  • Failing to promptly communicate on claims;
  • Failing to use reasonable standards in investigation of claims;
  • Not attempting to settling when liability is reasonably clear;
  • Compelling suit them in order to obtain benefits, by making a very low offer;
  • Making payments without coverage explanations;
  • Unreasonably delaying the investigation or payment of claims by requiring duplicative information;
  • Failing to provide a reasonable explanation for the basis of a denial of a claim; or
  • Failing to promptly provide forms which need to be completed to present the claim.

Examples include:

  • Ignoring your letters, phone calls, and emails;
  • Denying liability for your damages without interviewing any on-scene witnesses or reviewing the police report;
  • Making you an offer of $500 when your medical bills are over $5,000.

When I’m Dealing With My Own Insurance Company?

Colorado law says that an insurance company owes its own insured a duty of good faith and fair dealing when an insured presents a claim for benefits. Insured persons pay premiums to have access to coverage benefits, and these benefits cannot be unreasonably delayed or denied by the insurance company. C.R.S. § 10-3-1115. In fact, an insurance company can be liable for penalty damages to its insured when it unreasonably delays or denies benefits. C.R.S. § 10-3-1116. Some of these bad behaviors include:

  • Failing to promptly respond to requests for benefits;
  • Failing to conduct a fair and accurate investigation;
  • Requiring an insured to disclose medical history unrelated to the claimed injuries;
  • Requiring an insured to complete redundant documentation before paying benefits;
  • Failing to request additional information needed to adjust the claim and pay benefits;
  • Failing to consider medical bills for related injuries without a reasonable basis;
  • Failing to consider lost income caused by related injuries without a reasonable basis;
  • Failing to consider permanent impairment or disfigurement without a reasonable basis;
  • Failing to consider pain and suffering without a reasonable basis; or
  • Failing to pay undisputed benefits.

Examples include:

  • Refusing to pay your medical bills because you have health insurance;
  • Waiting until you settle with the at-fault party’s insurance before even beginning an investigation into the incident;
  • Denying your claimed injuries as pre-existing without consulting a medical doctor for an examination or review.

Other Things To Know

Colorado law also recognizes that injured victims are not in the best frame of mind after an injury-causing event, and the law prohibits an insurance company from attempting to obtain a recorded statement from a victim in medical treatment, no sooner than 15 days after the collision. C.R.S. § 13-21-301. An insurance company cannot attempt to settle a case with a victim in medical treatment for at least 30 days after the collision. These rules are intended to protect victims from predatory behaviors and give insured victims some time to identify their symptoms, gather necessary medical information from treating providers, and document other economic and non-economic damages.

If you are experiencing any of these behaviors in dealing with an insurance company, please call us and request a free consultation.


Michael established The Sawaya Law Firm in 1977 and built it into one of the largest personal injury law firms in Colorado, with more than 20 lawyers and 80 staff members serving clients from five offices located in Denver, Greeley and Colorado Springs. Throughout its history, the firm has stayed true to its 12 Core Values, which emphasize excellence in advocacy and a commitment to providing outstanding client service. Michael studied sociology and economics as an undergraduate student at The Colorado College, and he earned his law degree from the Texas Tech University School of Law. In addition to being involved in several legal and community organizations, Michael enjoys playing music and cooking, and he has written a book on spiritual matters.