Colorado Insurance Bad Faith Demand Letter

COLORADO INSURANCE BAD FAITH DEMAND LETTER

STATUTORY DEMAND PURSUANT TO C.R.S. §§ 10-3-1115 AND 10-3-1116

PRIVILEGED AND CONFIDENTIAL
SETTLEMENT COMMUNICATION PURSUANT TO C.R.E. 408

DOCUMENT INFORMATION

ADDRESSEE INFORMATION

SENDER/CLAIMANT INFORMATION

CLAIM IDENTIFICATION

I. INTRODUCTION AND STATUTORY NOTICE

This letter constitutes a formal demand to [INSURANCE COMPANY] ("Insurer") on behalf of [INSURED/CLAIMANT NAME] ("Insured") for payment of benefits owed under the above-referenced policy.

STATUTORY NOTICE: Under C.R.S. § 10-3-1116, if Insurer's delay or denial is found to be unreasonable, Insured may recover:

1. TWO TIMES (2x) the covered benefit; PLUS
2. Reasonable attorney's fees and court costs

This statutory remedy is in addition to common law bad faith damages.

II. SUMMARY OF DEMAND

TOTAL AMOUNT DEMANDED: $[________________________________]

RESPONSE DEADLINE: [__/__/____] (30 days from receipt)

III. FACTUAL BACKGROUND

A. The Insurance Policy

Policy No. [________________________________] was issued on [__/__/____], providing [________________________________] coverage with limits of $[________________________________].

B. The Loss Event

On [__/__/____], Insured suffered a covered loss:

[________________________________]
[________________________________]
[________________________________]

C. Notice and Cooperation

☐ Notice provided on [__/__/____]
☐ Proof of Loss submitted on [__/__/____]
☐ Full cooperation with all requests
☐ Documentation provided
☐ Inspection permitted on [__/__/____]

IV. CLAIM HISTORY

V. COVERAGE ANALYSIS

A. Applicable Provisions

Insuring Agreement: [________________________________]

B. Conditions Satisfied

☐ Notice ☐ Proof of loss ☐ Cooperation ☐ Documentation

C. Exclusion Analysis

Exclusion Cited: [________________________________]

Not Applicable Because: [________________________________]

D. Conclusion

The loss is covered. Insurer's denial/delay is unreasonable.

VI. IDENTIFICATION OF UNREASONABLE CONDUCT

A. Statutory Standard (C.R.S. § 10-3-1115)

An insurer's delay or denial is unreasonable if it was made without a reasonable basis.

Insurer's conduct is unreasonable because:

☐ Denied/delayed without investigation

• Conduct: [________________________________]

☐ Denied/delayed despite clear coverage

• Conduct: [________________________________]

☐ Misrepresented policy provisions

• Conduct: [________________________________]

☐ Relied on biased experts

• Conduct: [________________________________]

☐ Ignored evidence supporting coverage

• Conduct: [________________________________]

☐ Offered substantially less than owed

• Conduct: [________________________________]

B. Common Law Bad Faith

Under Traveler's Ins. Co. v. Savio, 706 P.2d 1258 (Colo. 1985), an insurer breaches the duty of good faith when it unreasonably denies or delays payment.

VII. LEGAL FRAMEWORK – COLORADO BAD FAITH LAW

A. C.R.S. § 10-3-1115 – Unreasonable Delay or Denial

Defines when an insurer's conduct is unreasonable: when there is no reasonable basis for the delay or denial.

B. C.R.S. § 10-3-1116 – Two-Times-Covered-Benefit Remedy

Provides that a first-party claimant may recover:

• Two times the covered benefit
• Reasonable attorney's fees and court costs

Note: This results in effectively 3x recovery (original benefit + 2x statutory damages).

C. "Fairly Debatable" Standard

The "fairly debatable" standard applies to common law bad faith, NOT statutory claims under C.R.S. § 10-3-1116. American Family Mut. Ins. Co. v. Barriga, 2018 CO 42.

D. Key Colorado Case Law

1. Traveler's Ins. Co. v. Savio, 706 P.2d 1258 (Colo. 1985) – Common law bad faith recognized.

2. Goodson v. American Standard Ins. Co., 89 P.3d 409 (Colo. 2004) – Elements of bad faith claim.

3. American Family Mut. Ins. Co. v. Barriga, 2018 CO 42 – 2x damages on entire covered benefit.

4. Skillett v. Allstate Fire & Cas. Ins. Co., 2022 CO 15 – Only insurer (not individual adjuster) liable.

5. Dale v. Guaranty Nat'l Ins. Co., 948 P.2d 545 (Colo. 1997) – Insurer must investigate fairly.

VIII. DAMAGES

A. Contract Damages

B. Statutory Two-Times-Covered-Benefit Recovery (C.R.S. § 10-3-1116)

Total Potential Recovery: Contract damages + 2x covered benefit = effectively 3x

C. Consequential Damages

D. Attorney's Fees

Under C.R.S. § 10-3-1116, reasonable attorney's fees are recoverable.

E. Summary

IX. SETTLEMENT DEMAND

Insured demands payment of $[________________________________] within THIRTY (30) DAYS.

Payment Instructions

1. Made payable to: [________________________________]
2. Delivered to: [________________________________]
3. Received by: [__/__/____]

Consequences of Non-Payment

If not paid:

1. Insured will file suit in [________________________________] County District Court

2. Insured will seek:
   - Contract damages
   - Two times the covered benefit under C.R.S. § 10-3-1116
   - Attorney's fees and costs
   - Common law bad faith damages
   - Pre- and post-judgment interest

X. PRESERVATION OF EVIDENCE

LITIGATION HOLD NOTICE

Preserve all documents and ESI including:
☐ Claim file ☐ Communications ☐ Adjuster notes ☐ Expert reports ☐ Reserves ☐ Training materials

XI. DIVISION OF INSURANCE COMPLAINT

Insured reserves the right to file a complaint with:

Colorado Division of Insurance
1560 Broadway, Suite 1300
Denver, CO 80202
(303) 894-7499

XII. CONCLUSION

If the statutory conditions are proven, § 10-3-1116(1) permits two times the covered benefit, reasonable attorney fees, and court costs. This demand provides an opportunity to resolve before litigation.

SIGNATURE

Insured:

Signature: _______________________________________________

Print Name: [________________________________]

Date: [__/__/____]

Attorney:

Signature: _______________________________________________

Print Name: [________________________________]

Colorado Reg. No.: [________________________________]

Date: [__/__/____]

EXHIBITS

☐ Exhibit A: Insurance Policy
☐ Exhibit B: Proof of Loss
☐ Exhibit C: Photographs
☐ Exhibit D: Estimates
☐ Exhibit E: Correspondence
☐ Exhibit F: Denial Letter

All rights under Colorado law are expressly reserved.