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The nuts and bolts of insurance bad faith claims in Colorado

Regardless of the type of insurance acquired, an individual generally expects that his or her insurance provider will live up to its obligations when he or she experiences misfortune and files a valid insurance claim.

Sadly, however, insurance companies do not always hold up their end of the bargain. In fact, it is not uncommon for insurance providers to delay payment or completely deny claims. Fortunately, those wrongfully victimized by such practices in Colorado may have several remedies available to them. For instance, not only can an insured seek recourse by alleging a breach of contract but he or she may also be able to pursue damages through an insurance bad faith claim.

Bad faith insurance law in Colorado

In every insurance contract, there exists an implied duty on the part of the insurance provider to deal in good faith with the insured - otherwise known as the duty of good faith and fair dealing. Indeed, due to the "special nature" of the relationship between an insurer and an insured, a breach of this particular duty gives rise to a separate tort action under Colorado law, which is commonly referred to as the tort of bad faith. Consequently, bad faith may be alleged when an insurer wrongfully denies or delays payment of a rightful claim.

Essentially, when an individual files a common-law bad faith claim against his or her insurance provider in Colorado, he or she typically must be able to prove both of the following factors:

  • The insurance provider's actions in denying or delaying payment were unreasonable under the circumstances
  • The insurance provider either had knowledge of, or reckless disregard for, the fact that its actions were unreasonable

However, in addition to the above-referenced common-law bad faith claim, it is important to mention that a statutory right of action may also exist for certain individuals in Colorado. Specifically, Colorado's "bad faith statute" states that an insurance provider may not "unreasonably delay or deny payment of a claim for benefits owed to [...] any first-party claimant." Interestingly, courts have held that the burden of proving a statutory bad faith claim in Colorado is less onerous than the proof required for a common-law claim.

However, determining the viability of either a common-law or statutory bad faith claim can be a complex matter, which is why it is always best to seek the counsel of an experienced attorney if you believe your insurance provider is wrongfully denying or delaying payment of your insurance claim. A skilled attorney can help review your circumstances and fully explain your options.

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The Law Office of Samuel G. Livingston, P.C.
25188 Genesee Trail Road,
Suite 140,

Golden, CO 80401

Phone: 720-443-5876
Fax: 720-904-0471
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