Insurance Bad Faith in Utah: What It Is and How to Fight It

Introduction

Most Utahns pay for insurance in good faith, expecting that their insurer will step in and help during a crisis. Whether it's a car accident, a slip-and-fall, or a hit-and-run involving an uninsured driver, insurance coverage is meant to ease financial burdens—not add to them. Unfortunately, some insurance companies act in their own interest rather than their policyholders', denying valid claims or dragging their feet unnecessarily. This is known as insurance bad faith.

In plain terms, bad faith occurs when an insurance company unreasonably refuses or delays payment of a legitimate claim, violating the legal duty of good faith and fair dealing owed to the policyholder. While many insurers in Utah operate ethically and honor claims as expected, it's not uncommon for accident victims to face obstacles and unfair tactics. Thankfully, Utah law gives individuals the right to take legal action if they are treated unfairly by their insurance carrier.

This article explains what constitutes insurance bad faith under Utah law, the difference between first- and third-party bad faith, the legal remedies available, and what steps you should take if you suspect you're being mistreated by your insurer.

Examples of Bad Faith Tactics

Bad faith can take many forms. Here are common examples personal injury claimants may encounter in Utah:

• Denying a clearly valid claim without explanation or justification. For example, an insurer refuses to pay PIP or med-pay benefits for a car crash even though all paperwork was submitted and injuries are well documented.

• Offering an unreasonably low settlement and refusing to negotiate fairly, even when liability is clear.

• Delaying investigation or paperwork indefinitely to avoid making a payout.

• Ignoring evidence that supports the claimant’s position, such as police reports, medical records, or witness statements.

• Failing to communicate in a timely or clear manner, such as not returning calls or failing to confirm what documents are needed.

• Denying Uninsured Motorist (UM) or Underinsured Motorist (UIM) coverage even when the at-fault driver is clearly uninsured or underinsured.

• Blaming the victim without factual basis, such as claiming pre-existing injuries or misconduct that have no evidence.

  
  

Utah law specifically prohibits unfair claims practices. Insurance companies cannot deny a claim when liability is reasonably clear or delay without justification. If an insurer engages in these tactics, they may be violating Utah’s insurance regulations and exposing themselves to a bad faith lawsuit.

First-Party vs. Third-Party Bad Faith

Understanding the type of insurance bad faith you're facing can help you pursue the appropriate legal remedy. There are two main types:

1. First-Party Bad Faith

   
   

This occurs when your own insurance company mistreats you in handling your claim. Examples include:

• Denying PIP, med-pay, or UM/UIM benefits

• Dragging out a disability claim

• Misrepresenting coverage

First-party bad faith is common in personal injury cases, especially when you're filing a claim with your own insurer after an accident.

2. Third-Party Bad Faith

   
   

This applies when your insurance company is defending you in a claim made by someone else (i.e., you're the defendant), but your insurer fails to protect you properly. For example:

• Refusing to settle a claim within your policy limits, exposing you to a personal judgment

• Failing to provide legal defense when required

  
  

While third-party bad faith is less common for injury victims, it can arise if your insurer's failure to settle or defend leads to further liability.

Both types can form the basis of a bad faith lawsuit, but first-party bad faith is the more relevant category for personal injury victims seeking payment from their own carrier.

Utah Law on Bad Faith

Utah recognizes a cause of action for insurance bad faith. Courts in the state have consistently held that insurers owe a duty of good faith and fair dealing to their policyholders. When an insurer breaches that duty by acting unreasonably, it opens itself up to civil liability.

According to Utah case law (e.g., Beck v. Farmers Insurance Exchange, 701 P.2d 795), an insurer who unreasonably denies or delays benefits can be held responsible not only for the amount originally owed under the policy but also for consequential damages.

These damages may include:

• Additional medical costs or interest accrued due to delay

• Lost income caused by waiting for funds

• Emotional distress or mental anguish

• Attorney fees incurred in pursuing the claim

  
  

While Utah courts allow for compensatory damages, punitive damages are limited. Generally, punitive damages may not be awarded for a simple breach of an insurance contract. Instead, there must be evidence of fraud, malice, or willful misconduct.

Also worth noting: Utah Code and administrative rules list various unfair claim settlement practices, which can help demonstrate that the insurer failed to act in good faith.

What to Do if You Suspect Bad Faith

If you're concerned that your insurance company may be acting in bad faith, here are steps you should take:

1. Keep meticulous records. Document all interactions with the insurer. Include:

   • Dates and times of calls

   • Names of representatives spoken to

   • Copies of emails, letters, or texts

   • Policy documents

   • Medical records and bills

     
     

2. Ask for written explanations. If your claim is denied or delayed, request a written explanation from your insurer. They are required to explain the reason for the denial.

   
   

3. Read your policy carefully. Understand your coverage limits, exclusions, and responsibilities. Sometimes insurers rely on vague or confusing language—don’t let that be a barrier.

   
   

4. File a formal complaint. If the insurance company won’t cooperate, file a complaint with the Utah Insurance Department. They regulate insurance conduct and can open an investigation.

   
   

5. Consult a personal injury attorney. If you're getting nowhere with your insurer, a qualified attorney can review your case and determine whether bad faith occurred. Attorneys know how to pressure insurance companies and, if necessary, can file a lawsuit to recover what you’re owed.

   
   

Sometimes, just involving an attorney is enough to get the insurance company to take your claim seriously.

Legal Remedies and Timeline

Insurance bad faith lawsuits are separate from your original claim for benefits. In Utah, you may be entitled to compensation for:

• The value of the original claim

• Additional economic losses caused by the denial or delay

• Emotional distress or anxiety

• Attorney fees and court costs

  
  

In some cases, if the insurer acted maliciously or fraudulently, punitive damages may also be available—though they are harder to obtain.

Statute of Limitations:

• Utah generally allows 4 years to file a bad faith lawsuit based on breach of written contract.

  
  

• If the claim is based on tort (e.g. emotional distress), different limitations may apply. Speak to an attorney to confirm the exact deadline.

  
  

Helpful Guidelines: Utah law also outlines specific "unfair claim settlement practices" in state regulations. These include:

• Failing to acknowledge communications

• Not promptly investigating claims

• Refusing to pay claims without conducting a reasonable investigation

• Failing to affirm or deny coverage within a reasonable time

• Offering less than the amount due under the policy

  
  

Demonstrating one or more of these actions can support a case for bad faith.

Conclusion

You don’t have to accept insurance stonewalling, lowballing, or unexplained delays. Utah law protects policyholders from being mistreated by their insurance providers. If you believe your insurer is acting in bad faith, you may have the right to recover not only what you're owed under the policy but also compensation for the financial and emotional toll their behavior caused.

At The Legal Beagle, we fight for accident victims across Utah who have been wrongfully denied insurance benefits. Whether you’re struggling with a delayed PIP payment, denied UM coverage, or a lowball offer that doesn’t come close to covering your injuries, we can help.

Contact us today for a free consultation and let us evaluate your case. Insurance companies have lawyers looking out for them—you deserve an advocate looking out for you.