By SPJ Adjusting Services | Insurance Appraisals
Understanding Colorado Insurance Bad Faith Deadlines: What Homeowners Must Know Before Time Runs Out
Why Time Limits Matter in Colorado Insurance Claims
When an insurance company drags its feet, denies benefits, or simply refuses to fairly handle a claim made by a property owner in Colorado, the situation can be overwhelming. At SPJ Adjusting, we often hear from policyholders who waited too long to act-simply because they didn’t realize Colorado law sets strict filing deadlines that can completely bar a claim.
Colorado Insurance Bad: Colorado’s insurance laws are one of a kind, but whereas Texas utilizes an independent framework in dealing with bad-faith actions, Colorado adds even more complexity through multiple statutes, different timelines, and evolving court interpretations that make it important for homeowners, business owners, and HOAs in Colorado to understand precisely when the clock starts ticking.
In this guide, we break down Colorado’s statutes of limitations for:
Common law “bad faith” insurance actions
Statutory claims for unreasonable delay or denial of benefits
What triggers the start of each deadline
Why Appraisal, Umpire Services, and Expert Claim Support Can Still Help Even Before Legal Action
Overview of Colorado Insurance Bad Faith Landscape
Insurance companies must deal fairly with their policyholders period. When they do not, Colorado law provides two main paths to recovery:
Common Law Bad Faith (Tortious Breach of Contract)
Statutory Claims Under C.R.S. §§ 10-3-1115 and 10-3-1116
Each route has a different legal regime and perhaps a different timeline. It is critical to know which of the deadlines applies.
Common Law Bad Faith in Colorado – The Two-Year Window
Colorado does not afford policyholders unlimited time in which to pursue a bad-faith action. Under C.R.S. § 13-80-102, most tort claims including common law bad faith must be filed within two years.
When does the two-year deadline begin?
The answer lies in C.R.S. § 13-80-108(1), which says the countdown begins when:
You knew or reasonably should have known of the injury,
and
You knew or should have known the cause of that injury.
This is sometimes known as the “discovery rule.”
Example:
If your insurance company denies payment for hail damage on June 1, 2025, for an event occurring in Colorado Springs, and you learn of the denial on that date, the two-year deadline likely starts on that date.
But it can get complicated.
The “injury” isn’t necessarily the property damage. It could be:
The improper claim handling
A late payment
A refusal to investigate properly
An unreasonable coverage determination
That is where many homeowners inadvertently lose their rights: by mistakenly assuming the deadline begins to run when the storm struck. The injury actually involves the insurer’s actions, not the weather.
Statutory Unreasonable Delay/Denial Claims – Colorado’s Still-Evolving Deadline
Colorado has one of the strongest statutory protections in the country through:
C.R.S. § 10-3-1115 — prohibiting unfair delay/denial
C.R.S. § 10-3-1116 – allowing double damages plus attorney’s fees
But here’s the challenge:
The statute of limitations for such claims is still not definitively established by Colorado’s courts.
What We Know
In 2018, the Colorado Supreme Court held that these claims are not “penalties” within the meaning of § 13-80-103(1)(d). They therefore do not need to be brought within the strict one-year deadline for penal actions.
Legal scholars and the lower courts have inclined towards a two-year statute of limitations in treating unreasonable delay/denial claims akin to common law bad faith.
What this means for you.
Until the Supreme Court gives explicit direction, the safest assumption is that
You have two years from the time you knew, or should have known, the insurer acted unreasonably.
If you think your insurer is delaying your fire, hail, water, or wind claim in Colorado, do not wait. Every email, every slow response, and every adjustment can affect your timeline.
How These Deadlines Impact Real Colorado Claims
Colorado’s weather is well-recognized for causing property damage. That typically means a rash of claims for insurers and can lead to:
Slow inspections
Repeated requests for more documentation
Lowball offers
Claims that appear to “stall out”
Denials without proper explanation
Scenario: Hail Damage in Denver
One of our clients in Colorado faced a bad hailstorm in Denver. The roof was totaled, no doubt. However, though the insurance company acknowledged damage, it took them 14 months to respond to supplemental estimates long enough for the roof to further deteriorate.
By the time they reached out to SPJ Adjusting, their two-year window was almost gone.
Only because they contacted us when they did were they able to preserve:
Their right to an appraisal
Their right to pursue bad faith damages
Their right to challenge unreasonable delays
If they had waited a few more months, their legal claims would have expired along with thousands of dollars in coverage.
Texas Expertise Applied to Colorado Claims
Even though SPJ Adjusting is headquartered in Texas, we serve clients nationwide including Colorado. In fact, our Texas-based experience benefits Colorado policyholders because:
Texas has some of the most restrictive claim-handling laws in the country
Our team understands multi-state insurance standards.
We routinely handle large loss claims in catastrophic weather zones.
We specialize in insurance appraisal and umpire services, areas where many Colorado policyholders are underserved.
When a Colorado homeowner or business brings us into the claim early, we can:
Document delays
Identify unfair settlement tactics
Protect timelines
Push the claim toward resolution.
Trigger the appraisal process, if necessary.
Appraisal & Umpire Services – A Critical Tool Before Legal Action
It is important that Colorado Insurance Bad policyholders understand their appraisal rights before filing any lawsuit or considering bad faith action.
What is Appraisal?
A contractual process for resolving disputes when there are disagreements on the amount of loss.
If your insurer undervalues:
Roofing
Exterior finishes
Water damage
Fire damage
Business interruption
You can pursue appraisal without going to court.
SPJ Adjusting Offers:
Certified Appraisers
Experienced Umpires
Expert roof and property damage assessment
Support in high-conflict claim environments
Unlike litigation, appraisal can settle a dispute in weeks, not years.
Why Colorado Homeowners Must Act Early
Waiting is the #1 reason that policyholders lose leverage in Colorado Insurance Bad disputes.
By that time you realize your insurer is acting in bad faith, you might be nearing the statute of limitations.
Early signs your timeline may already be running:
The insurer refuses to provide clear explanations
Requests for documentation are endless.
Adjusters are often rotated to different assignments.
The insurer “revisits” a denial months later
You received an unreasonably low offer
Payments are constantly “under review”
Once unreasonable behavior is noticed, for instance, the legal clock may already be counting down.
How SPJ Adjusting Helps Colorado Policyholders Protect Their Rights
SPJ Adjusting supports policyholders throughout Colorado with:
Appraisal representation
Umpire services
Roof and hail claim specialists
Large-loss management
Estimate reviews
Delay analysis and claim timeline reconstruction
Expert advice before lawyers have to be involved
Ours is to keep you ahead of deadlines-and prior to the insurer’s tricks up their sleeve.
Key Takeaways for Colorado Homeowners, HOAs & Businesses
Common law bad faith: two-year statute of limitations likely applies
Unreasonable delay/denial (§§ 10-3-1115/1116): Generally treated as two-year deadlines
the clock begins to run when you knew or should have known of the injury AND the insurer’s wrongful conduct
Appraisal may help before a lawsuit is needed
Act early, delaying risks losing your right to recover damages.
If your insurer is dragging its feet, you have to assume that your statute of limitations may already be running.
CALL TO ACTION
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