Most Common Bad Faith Tactics By Colorado Insurance Companies

 Posted on June 05, 2026 in Personal Injury

When an insurance company refuses to pay a valid claim, drags out the process without cause, or pressures a policyholder into dropping a claim, that is considered acting in bad faith. This kind of conduct comes up regularly in car accidents and personal injury cases, as well as workers' compensation disputes. 

Colorado's own Division of Insurance tracks what happens when insurers get it wrong. In fiscal year 2024-25, the Division of Insurance recovered nearly $3.9 million for Coloradans specifically on auto insurance complaints, restoring money that had been improperly denied, underpaid, or delayed, according to the Colorado DOI Annual Complaint and Recoveries Report. 

In 2026, Colorado law gives policyholders concrete options when an insurer falls short. If you think your insurer is mishandling your claim, a Larimer County, CO bad faith insurance attorney can help you understand what you can do about it.

What Does Colorado Law Say About Bad Faith Insurance Conduct?

Colorado defines bad faith by statute. Under C.R.S. § 10-3-1115, an insurer may not unreasonably delay or deny payment of a covered claim. Under C.R.S. § 10-3-1116, a claimant whose benefits were wrongly delayed or denied can sue for twice the covered benefit and also recover reasonable attorney fees and court costs. That penalty gives insurers a financial reason to handle claims honestly. It also gives policyholders a concrete path to recover what they are owed when insurers do not.

How Do Colorado Insurers Deny Claims Without a Proper Investigation?

An insurer that skips a real investigation before denying a claim is on shaky legal ground. In a car accident case, the company should ask you for documentation and conduct its own review. That process protects both sides, guards against fraud, and makes sure any denial is based on actual facts. When an insurer denies a claim without taking those steps, it has not met the standard Colorado law requires. That shortcut can support a bad faith claim, especially when the insurer had enough information to approve the claim and chose not to look carefully.

How Unreasonable Delays by Colorado Insurance Companies Can Hurt Your Claim

Colorado law requires insurers to process claims in a reasonable amount of time. Some investigations take longer than expected, and that alone is not bad faith. The problem is when delays are used as a strategy. Insurers sometimes drag out a claim to wear a claimant down or push them to accept less than they are owed. If you have been waiting months without a clear explanation, or if the insurer keeps asking for documents it already received, talk to an attorney. Under C.R.S. § 10-3-1115, the standard is whether the delay was unreasonable given the circumstances of the claim.

Intimidation Tactics Colorado Insurance Companies Use Against Policyholders

Some insurers try to avoid paying by going after the claimant directly. This can mean accusing someone of fraud without any basis. It can also mean misrepresenting what the policy covers, or hinting that filing a claim will cause a rate increase or cancellation. This conduct can qualify as bad faith under Colorado law. An insurer's job is to investigate fairly and pay valid claims, not to talk policyholders out of using their rights. When a company crosses that line, the remedies under C.R.S. § 10-3-1116 may apply.

First-Party vs. Third-Party Bad Faith Claims in Colorado: What Is the Difference?

Whether a claim is first-party or third-party changes who the insurer owes a duty to. A first-party claim is filed against your own policy. An uninsured motorist claim after a hit-and-run is one example. In that case, the insurer's duty runs directly to you. The protections under C.R.S. § 10-3-1115 and § 10-3-1116 apply.

A third-party claim is filed against someone else's insurance. If another driver caused your accident, you would make a claim against that driver's carrier. The bad faith statutes are different in that situation because C.R.S. § 10-3-1115 excludes a person making a liability claim against someone else's insured. In many cases, the insurer's duty runs to its own insured, not directly to the injured person. An attorney can explain whether any bad faith claim exists or whether the case is mainly a personal injury claim.

Frequently Asked Questions About Bad Faith Insurance Claims in Colorado

Can a workers' compensation insurer act in bad faith?

The bad faith statutes under C.R.S. § 10-3-1115 and § 10-3-1116 specifically exclude workers' compensation insurance. That means the double-damages remedy available in personal injury and auto cases does not apply. However, the Colorado Division of Workers' Compensation has its own rules governing unreasonable claim denials and delays, and an attorney can evaluate whether the insurer's conduct in your case crossed those lines.

What should I do if I think my insurer is acting in bad faith?

Start by saving every piece of communication from your insurer, including letters, emails, and any written summaries you make of phone calls. Keep a record of what the insurer has asked for and what you have sent back. The longer a bad faith situation goes without legal attention, the more it can work against you, so bring what you have to an attorney early.

Does filing a bad faith claim mean going to court?

Many bad faith disputes are resolved before trial. Once an insurer knows a claimant has legal representation and understands the remedies available under Colorado law, the insurer often becomes more willing to negotiate.

Contact Larimer County, CO Bad Faith Insurance Attorneys for a Free Consultation

If you believe your insurance company has unreasonably delayed or denied your claim, the attorneys at Hoggatt Law Office, P.C. can review your situation and explain your options under Colorado law. Our attorneys handle bad faith litigation, personal injury, and workers' compensation cases. 

Lead attorney Darby Hoggatt is a member of the Colorado Trial Lawyers Association and the Workers' Compensation Education Association, reflecting the firm's commitment to staying current on the law and fighting for injured workers. We offer free consultations. Contact a Fort Collins, CO personal injury lawyer at Hoggatt Law Office, P.C. today or call 970-225-2190.

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