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Colorado Supreme Court Issues a Win for Insureds

June 7, 2018

The Colorado Supreme Court has effectively affirmed a two-year statute of limitations established as part of the state’s Insurance Bad Faith law.

bad faith statute
CCIG’s Matt Genova.

It did so in a case that pitted a roofing contractor hired by Castle Rock homeowners against their insurance company, ruling that the homeowners’ 2013 hail-damage claim was not subject to a shorter, one-year statute of limitations that applies in civil cases.

The high court’s ruling now paves the way for the contractor to move ahead with its lawsuit over the insurance company’s alleged underpayment on the claim.

The laws associated with a claim against an insurance company for bad faith action can be complicated. Suffice it to say that an insurer has a responsibility to handle claims in a timely, honest manner. Failure to do so could leave it liable in a civil lawsuit.

Here’s the background on the case:

After the homeowners filed their claim in the summer of 2013, their insurer estimated that the cost to repair the hail damage was less than their policy’s $1,000 deductible. The homeowners disagreed and subsequently assigned their claim to their contractor.

The next spring, the contractor sent the insurer an estimate indicating that the cost to repair the hail damage was approximately $70,000.

The insurer responded by re-inspecting the home and increased its estimate of the covered damage to approximately $4,000. It then sent the homeowners a payment for approximately $3,000 —$4,000 less their $1,000 deductible — on May 30, 2014.

More than one year later, on Sept. 11, 2015, the contractor filed a complaint in federal court against the insurer asserting two claims for relief: (1) breach of contract; and (2) unreasonable delay or denial of insurance benefits under the state’s insurance prompt payment laws.

The insurer responded by asserting the claim was not allowed under the state’s one-year statute of limitations.

The Supreme Court disagreed, concluding instead that the state legislature never intended for the statute of limitations in civil cases to apply in insurance bad faith cases.

Moving forward, courts are expected to continue to apply a two-year statute of limitations for claims asserted under the Bad Faith Statute.

The bottom line is that the ruling is a positive one for insureds because it allows them more time to negotiate with insurers before they have to decide whether to file suit.

That is not to say, however, that you should put off attending to claims that are delayed or denied. If you believe your insurance company has acted unreasonably, let us know. As an independent insurance brokerage, we’re here to help you resolve claims in a fair, equitable and timely manner.

Matt Genova is the Personal Lines manager at CCIG. Reach him at or 720-330-7936.

CCIG is a Denver-area insurance brokerage with the full-service capabilities of a national brokerage. We do more than make sure you have the right policy. We also help you manage your long-term cost of insurance with our risk and claims management expertise and a commitment to service excellence.

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Also read: Insurance Companies Change Their Hail Policies

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