First Party Insurance Claim Statutes and Case Law



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All insurance bad faith claims should include analysis of the common law claim of ‘bad faith breach of insurance contract’ and ‘breach of the covenant of good faith and fair dealing.’  


C.R.S. § 10-3-1113 provides

(1)In any civil action for damages founded upon contract, or tort, or both against an insurance company, the trier of fact may be instructed that the insurer owes its insured the duty of good faith and fair dealing, which duty is breached if the insurer delays or denies payment without a reasonable basis for its delay or denial.

(3)Under a policy of first-party insurance, the determination of whether the insurer’s delay or denial was reasonable shall be based on whether the insurer knew that its delay or denial was unreasonable or whether the insurer recklessly disregarded the fact that its delay or denial was unreasonable.

(4) In determining whether an insurer’s delay or denial was reasonable, the jury may be instructed that willful conduct of the kind set forth in section 10-3-1104(1) (h) (I) to (1) (h) (XIV) is prohibited and may be considered if the delay or denial and the claimed injury, damage, or loss was caused by or contributed to by such prohibited conduct.


C.R.S. § 10-3-1115 provides

Notwithstanding section 10-3-1113(3), for the purposes of an action brought pursuant to this section and section 10-3-1116, an insurer’s delay or denial was unreasonable if the insurer delayed or denied authorizing payment of a covered benefit without a reasonable basis for that action.


C.R.S. § 10-3-1116

Insured may bring a claim to recover two times the amount of covered benefits that insurer unreasonably delayed or denied even though insurer paid a portion of those benefits and insured seeks the remainder in another claim. Rabin v. Fid. Nat’l Prop. & Cas. Ins. Co., 863 F. Supp. 2d 1107 (D. Colo. 2012).

This section and § 10-3-1115 impose on insurers a statutory standard of liability in addition to and different from that required to prove a claim for breach of the common law duty of good faith and fair dealing as expressed in § 10-3-1113. Kisselman v. Am. Family Mut. Ins. Co., 292 P.3d 964 (Colo. App. 2011).

Under this section, the measure of recovery for unreasonable delay or denial of benefits is the “covered benefit” the payment of which was unreasonably delayed or denied. There is no requirement under § 10-3-1115 that a claimant suffer and prove “damages” attributable to any unreasonable delay or denial. If an insurer unreasonably delayed payment of a covered benefit, the claimant is entitled under this section to an award of two times the covered benefit. Hansen v. Am. Family Mut. Ins. Co., 2013 COA 173, __ P.3d __.

Where an adversarial proceeding is filed and a genuine disagreement as to the amount of compensatory damages exists, the duty to negotiate is suspended, and there is no duty to advance payment of claims. Baker v. Allied Prop. & Cas. Ins. Co., 939 F. Supp. 2d 1091 (D. Colo. 2013)


C.R.S. § 13-80-102

The following civil actions, regardless of the theory upon which suit is brought, or against whom suit is brought, must be commenced within two years after the cause of action accrues, and not thereafter:

(a)       Tort actions, including but not limited to actions for negligence, …, and tortious breach of contract…All other actions of every kind for which no other period of limitation is provided;



C.R.S. § 13-80-103 [Insurers will argue this statute applies to 10-3-1116, which is debatable]

The following civil actions, regardless of the theory upon which suit is brought, or against whom suit is brought, shall be commenced within one year after the cause of action accrues, and not thereafter;

(d)      All actions for any penalty or forfeiture of any penal statutes;

Claim must sustain cause independent of tort action. Where plaintiff’s claim for exemplary damages was incapable of sustaining an independent cause of action but instead was dependent upon the underlying tort claim, plaintiff’s claim for punitive damages was not a suit or action for a penalty or forfeiture. Dorney v. Harris, 482 F. Supp. 323 (D. Colo. 1

Claim alleging violation of fiduciary duties not action for penalty or forfeiture. Plaintiff’s claim for relief alleging violation of fiduciary duties by the defendant, and seeking punitive damages for actions allegedly attended by circumstances of fraud, insult, and wanton and reckless disregard of the plaintiff’s rights was not an action for a penalty or forfeiture within the meaning of this section. Res. Exploration & Mining, Inc. v. Itel Corp., 492 F. Supp. 515 (D. Colo. 1980).

Punitive damages. Claims for punitive damages under § 13-21-102, being ancillary to an independent civil claim for actual damages, is not an action for the recovery of a penalty of a penal statute within the intendment of the limitation period of this section. Palmer v. A.H. Robins Co., Inc., 684 P.2d 187 (Colo. 1984).

While this section has been applied to statutes which contain both a substantive cause of action and a penalty provision for noncompliance, there is no indication that it is limited to such applications. Sherwood v. Graco, Inc., 427 F. Supp. 155 (D. Colo. 1977).

This section applies to a claim pursuant to § 1132(c) of the federal Employee Retirement Income Security Act of 1974, since the most analogous state law claim is a claim for civil penalties pursuant to a penal statute. Adams v. Cyprus Amax Mineral Co., 44 F. Supp. 2d 1126 (D. Colo. 1999).

The treble damages provision of § 38-12-103, being penal in nature, is governed by the one-year statute of limitations; however, the recovery of the actual security deposit and the award of attorney’s fees, being remedial in nature, are limited by the six-year statute of limitations. Carlson v. McCoy, 193 Colo. 391, 566 P.2d 1073 (1977).

For discussion of tort of “bad faith breach of insurance contract”, see Farmers Group, Inc. v. Trimble, 658 P.2d 1370 (Colo. App. 1982), aff’d, 691 P.2d 1138 (Colo. 1984).

In cases where a tortious breach of contract is part of the causes of action against an insurer, C.R.S.§ 13-80-102 provides for a two (2) year statute of limitations.  See Cork v. Sentry Ins., 194 P.3d 422 (Colo. App. 2008) (Plaintiff represented by Jim Avery).

For article, “CRS §§ 10-3-1115 and -1116: Providing Remedies to First-Party Claimants”, see 39 Colo. Law. 69 (July 2010). For article, “CRS § 10-3-1116, ERISA Preemption, and the Standard of Review”, see 39 Colo. Law. 75 (July 2010).  For article, “1988 Update on Colorado Tort Reform Legislation — Part II”, see 17 Colo. Law. 1949 (1988).