[{"data":1,"prerenderedAt":351},["ShallowReactive",2],{"root:\u002Fcan-claims-handlers-be-held-liable-for-claim-denials":3,"og-page:can-claims-handlers-be-held-liable-for-claim-denials":328,"read-next:\u002Fcan-claims-handlers-be-held-liable-for-claim-denials":338},{"id":4,"title":5,"author":6,"body":7,"date":325,"description":326,"extension":327,"factChecked":328,"legacyUrl":329,"meta":330,"metaTitle":331,"navigation":328,"path":332,"seo":333,"stem":334,"topic":335,"updated":336,"__hash__":337},"articles\u002Fcan-claims-handlers-be-held-liable-for-claim-denials.md","Can Claims Handlers Be Held Liable for Claim Denials? (2026 Guide)",null,{"type":8,"value":9,"toc":302},"minimark",[10,14,17,20,25,28,31,34,37,41,44,47,50,103,106,110,113,116,119,123,128,131,134,141,144,148,151,154,157,161,164,173,177,180,183,187,190,193,197,200,203,247,260,264,268,271,275,278,282,285,289,292,296,299],[11,12,13],"p",{},"Claims disputes are common, and when they escalate, one question surfaces quickly: can the individual claims handler be held personally liable, not just the insurance company?",[11,15,16],{},"The answer is not straightforward. Court rulings vary significantly by state, and recent decisions have extended personal liability exposure in ways that directly affect how claims professionals operate.",[11,18,19],{},"This article describes the current legal landscape: the court rulings that define individual adjuster liability, and what constitutes bad faith in claims handling. It is a description of how courts have ruled, not legal advice, and nothing here is a substitute for counsel admitted in the jurisdictions where you adjust claims.",[21,22,24],"h2",{"id":23},"why-claims-handling-generates-so-many-complaints","Why claims handling generates so many complaints",[11,26,27],{},"The majority of complaints lodged against insurance companies involve the claims process.",[11,29,30],{},"Data from the National Association of Insurance Commissioners (NAIC) shows that approximately 68% of insurance complaints relate to claims handling. The two most frequent grievances are unsatisfactory settlement offers and claim delays, both of which fall squarely within a claims handler's sphere of influence.",[11,32,33],{},"This is not surprising. The claims process is where the insurance contract becomes real for the policyholder. A policy is abstract until a loss occurs. At that moment, the competence, fairness, and timeliness of the handling determines whether the policyholder feels protected or betrayed.",[11,35,36],{},"When policyholders feel betrayed, whether because of a denial they see as unjust, a payout they consider inadequate, or delays that left them financially exposed, lawsuits follow. Increasingly, those lawsuits name not just the insurer, but the individual who handled the claim.",[21,38,40],{"id":39},"what-is-bad-faith-in-insurance-claims","What is bad faith in insurance claims?",[11,42,43],{},"Every insurance policy contains an implied covenant of good faith and fair dealing. This obligation applies regardless of the policy type: auto, property, workers' compensation, or liability. When an insurer, or in some states an individual claims professional, violates this covenant, bad faith liability can arise.",[11,45,46],{},"Bad faith is not simply a disagreement about the value of a claim, nor is it the result of an honest mistake in judgment. Courts have generally held that bad faith requires something more deliberate. Under established case law, bad faith involves conduct that is arbitrary, reckless, or an intentional disregard of the interests of the policyholder.",[11,48,49],{},"Actions that commonly give rise to bad faith claims include:",[51,52,53,61,67,73,79,85,91,97],"ul",{},[54,55,56,60],"li",{},[57,58,59],"strong",{},"Unreasonably denying a valid claim"," without a legitimate factual or legal basis",[54,62,63,66],{},[57,64,65],{},"Unreasonably delaying payment"," to a claimant whose loss is clearly covered",[54,68,69,72],{},[57,70,71],{},"Misrepresenting policy language"," to justify a denial or reduced settlement",[54,74,75,78],{},[57,76,77],{},"Failing to conduct a proper investigation"," before making a coverage decision",[54,80,81,84],{},[57,82,83],{},"Requesting excessive or unnecessary documentation"," as a strategy to delay or discourage claimants",[54,86,87,90],{},[57,88,89],{},"Making lowball settlement offers"," without a reasonable basis in the facts or the policy",[54,92,93,96],{},[57,94,95],{},"Failing to communicate clearly"," about coverage decisions, including not explaining the basis for a denial",[54,98,99,102],{},[57,100,101],{},"Failing to document the claim file adequately."," In claims handling, if it is not in the file, it did not happen.",[11,104,105],{},"Honest errors of judgment, good-faith denials of debatable claims, and reasonable interpretive differences do not constitute bad faith. The standard requires that the insurer or handler acted without a reasonable basis, and, depending on the jurisdiction, that they knew or should have known they lacked a reasonable basis.",[21,107,109],{"id":108},"can-a-claims-handler-be-held-personally-liable","Can a claims handler be held personally liable?",[11,111,112],{},"The short answer: it depends on the state.",[11,114,115],{},"In most claims disputes, the insurer is the named defendant. The company, not the individual adjuster, is the party to the insurance contract, and it is the company that authorizes or denies payments. This structure has historically provided individual claims handlers with significant insulation from personal liability.",[11,117,118],{},"That insulation is not absolute. A growing number of states have interpreted bad faith statutes or common law duties in ways that extend personal liability to individual claims professionals. The cases below illustrate the divergence in how courts have approached this question.",[21,120,122],{"id":121},"key-court-rulings-by-state","Key court rulings by state",[124,125,127],"h3",{"id":126},"colorado","Colorado",[11,129,130],{},"Colorado is the most frequently cited state on this issue, partly because its legislature enacted unusually broad bad faith statutes in 2008 (CRS §§ 10-3-1115 and 10-3-1116) that prohibit \"a person engaged in the business of insurance\" from unreasonably delaying or denying payment of a claim.",[11,132,133],{},"The phrase \"person engaged in the business of insurance\" left open the question of whether individual adjusters, not just insurers, could be sued personally under the statute. Courts split on the answer, with some federal district courts ruling that individual adjusters could be named in bad faith claims under the statute.",[11,135,136,137,140],{},"The Colorado Supreme Court settled the question in ",[57,138,139],{},"Skillett v. Allstate Fire and Casualty Insurance Co."," (March 2022), ruling unanimously that the statutory bad faith provisions do not create personal liability for individual claims handlers. The court reasoned that \"because the insurer, not any individual employee, authorizes payment, this language indicates that an action for unreasonable delay or denial of insurance benefits is triggered by a decision of the insurer, not the adjuster.\"",[11,142,143],{},"For Colorado-based adjusters, this ruling provides meaningful protection from statutory bad faith claims. It does not foreclose common law tort claims or claims under other statutes, and it applies only in Colorado.",[124,145,147],{"id":146},"california","California",[11,149,150],{},"California courts have taken a broader view of individual adjuster liability. In a case decided by a California appellate court, a homeowner was permitted to pursue a negligent misrepresentation claim against an individual claims professional, not just the insurer.",[11,152,153],{},"The claims handler in that case was accused of improperly altering the loss scene before photographing it, misrepresenting coverage by telling the homeowner that cleanup costs were not covered, and submitting a false report. The court allowed the case against the individual to proceed, finding that the claims handler's conduct was sufficiently independent and harmful to give rise to personal liability.",[11,155,156],{},"This ruling reflects California's general willingness to permit claims against individuals when their conduct involves affirmative misrepresentation or fraudulent action, going beyond negligent judgment calls.",[124,158,160],{"id":159},"texas","Texas",[11,162,163],{},"Texas has also seen cases where individual claims handlers faced personal liability exposure. In a 2015 federal court decision, the court found sufficient evidence to support a claim directly against an individual claims handler under the Texas Insurance Code. Among the conduct alleged: the handler refused to respond to the policyholder's repeated inquiries about claim status and payment.",[11,165,166,167,172],{},"Texas Insurance Code provisions governing unfair claims settlement practices apply broadly to persons in the business of insurance, and Texas courts have shown a willingness to let individual adjuster claims proceed past the pleading stage. For ",[168,169,171],"a",{"href":170},"\u002Findependent-adjuster-claims-software\u002F","independent adjusting firms"," operating in Texas, this is a significant factor in how adjusters document and communicate throughout the claims process.",[124,174,176],{"id":175},"washington","Washington",[11,178,179],{},"Washington's Court of Appeals has ruled that good faith obligations under Washington law apply to individual claims professionals, not just the insurer. This ruling has two practical consequences: it allows policyholders to name individual adjusters in lawsuits, and it may allow claimants to keep cases in state court rather than federal court, where insurers sometimes prefer to litigate.",[11,181,182],{},"For adjusters handling claims in Washington, this ruling places personal conduct under direct legal scrutiny. Every communication, every delay, every documentation decision can be examined as potential evidence in a personal bad faith action.",[124,184,186],{"id":185},"new-york","New York",[11,188,189],{},"New York courts have reinforced bad faith principles at the insurer level, with recent decisions making clear that \"wait and see\" claims handling tactics, delaying a coverage evaluation in hopes that facts might eventually support a denial, can expose an insurer to consequential damages beyond policy limits.",[11,191,192],{},"A 2024 decision from New York's Appellate Division confirmed that an insurer's duty to investigate and evaluate claims promptly is active and ongoing. Withholding the results of a coverage investigation to pressure an insured, or issuing generic reservations of rights without identifying known coverage issues, can support bad faith liability. While New York's framework has primarily developed at the insurer level, the conduct at issue always traces back to individual claims handlers making specific decisions.",[21,194,196],{"id":195},"the-good-faith-standards-courts-apply","The good faith standards courts apply",[11,198,199],{},"Regardless of jurisdiction, there is a well-established set of good faith practices that claims professionals are expected to follow. Departures from these practices, especially when documented in the claim file, are the kind of evidence plaintiffs' attorneys use to build bad faith cases.",[11,201,202],{},"As courts and state insurance codes describe the duty, a claims handler is expected to:",[51,204,205,211,217,223,229,235,241],{},[54,206,207,210],{},[57,208,209],{},"Base claim decisions on facts",", not speculation, biased information, or insufficient data. Denials and partial settlements are expected to rest on a documented factual and policy-based foundation.",[54,212,213,216],{},[57,214,215],{},"Not misrepresent policy provisions."," Insurance policies are contracts of adhesion, and courts interpret ambiguous policy language in favor of the insured. Misrepresenting coverage to avoid payment is a direct path to bad faith liability.",[54,218,219,222],{},[57,220,221],{},"Provide a clear, reasonable explanation for any denial or reduced settlement."," Policyholders are expected to be able to understand the basis for a decision well enough to evaluate whether to challenge it.",[54,224,225,228],{},[57,226,227],{},"Document the claim file completely."," A thorough, timestamped record of claim activity, every contact, every decision, every document reviewed, is what a file is judged on. Incomplete files create gaps that are filled by opposing counsel's narrative.",[54,230,231,234],{},[57,232,233],{},"Respond promptly to policyholder inquiries."," Failure to respond to reasonable requests for status updates has been cited in multiple bad faith cases, including the 2015 Texas federal case above.",[54,236,237,240],{},[57,238,239],{},"Investigate thoroughly and promptly."," A claim cannot be fairly evaluated without adequate investigation. Rushing to denial to close a file, and delaying investigation without cause, both create exposure.",[54,242,243,246],{},[57,244,245],{},"Avoid serial requests for duplicative information."," Courts, including in New York's 2024 decision, have made clear that requesting unnecessary or redundant documentation as a delay tactic is a bad faith indicator.",[11,248,249,250,254,255,259],{},"These standards apply to the operation as much as to the individual. ",[168,251,253],{"href":252},"\u002Fcarrier-claims-management-software\u002F","Carriers"," and ",[168,256,258],{"href":257},"\u002Ftpa-claims-management-software\u002F","TPAs"," are held to them through their handlers, which is why the same conduct shows up in complaints against companies and in suits naming people.",[21,261,263],{"id":262},"frequently-asked-questions","Frequently asked questions",[124,265,267],{"id":266},"can-an-insurance-adjuster-be-personally-sued-for-bad-faith","Can an insurance adjuster be personally sued for bad faith?",[11,269,270],{},"Yes, in some states. Colorado's Supreme Court ruled in 2022 that individual adjusters cannot be held personally liable under Colorado's statutory bad faith provisions. Courts in California, Texas, and Washington have allowed personal liability claims against individual claims handlers in circumstances involving misrepresentation, failure to respond to policyholder inquiries, or violations of state insurance codes. The legal landscape varies significantly by jurisdiction.",[124,272,274],{"id":273},"what-is-the-difference-between-bad-faith-and-a-good-faith-dispute","What is the difference between bad faith and a good-faith dispute?",[11,276,277],{},"A good-faith dispute involves a legitimate disagreement about coverage, claim value, or the facts of a loss, situations where reasonable claims professionals could reach different conclusions. Bad faith requires more: conduct that is arbitrary, reckless, or deliberately indifferent to the policyholder's interests. Simple mistakes or honest differences of opinion do not constitute bad faith, even if the policyholder is dissatisfied with the outcome.",[124,279,281],{"id":280},"what-actions-most-commonly-lead-to-bad-faith-findings-against-claims-handlers","What actions most commonly lead to bad faith findings against claims handlers?",[11,283,284],{},"Courts have most frequently found bad faith where a claims handler refused to respond to policyholder inquiries about claim status, misrepresented policy language to justify a denial, failed to conduct an adequate investigation before denying a claim, submitted false or altered evidence, or systematically delayed payment without justification. Documentation failures, claim files that do not reflect the basis for key decisions, are frequently cited as evidence supporting bad faith allegations.",[124,286,288],{"id":287},"does-a-claims-adjuster-need-to-be-licensed-to-handle-claims","Does a claims adjuster need to be licensed to handle claims?",[11,290,291],{},"Most states require claims adjusters to hold a valid license for the states in which they handle claims. Handling claims without proper licensure can independently create personal liability exposure and regulatory sanctions, separate from any bad faith allegations.",[21,293,295],{"id":294},"bottom-line","Bottom line",[11,297,298],{},"The question of whether claims handlers can be held personally liable for claim denials does not have a single national answer. It depends on the state, the statute, and the specific conduct at issue. Colorado's Supreme Court provided meaningful relief for adjusters in that state, but courts elsewhere have shown a clear willingness to allow personal liability claims to proceed.",[11,300,301],{},"Bad faith law is highly state-specific. The statutes and common law standards in Colorado, California, Texas, Washington, New York, and every other state where claims are adjusted may differ materially, and they move. Anyone weighing their own exposure should read the current law of the jurisdictions they work in with counsel who practices there.",{"title":303,"searchDepth":304,"depth":304,"links":305},"",2,[306,307,308,309,317,318,324],{"id":23,"depth":304,"text":24},{"id":39,"depth":304,"text":40},{"id":108,"depth":304,"text":109},{"id":121,"depth":304,"text":122,"children":310},[311,313,314,315,316],{"id":126,"depth":312,"text":127},3,{"id":146,"depth":312,"text":147},{"id":159,"depth":312,"text":160},{"id":175,"depth":312,"text":176},{"id":185,"depth":312,"text":186},{"id":195,"depth":304,"text":196},{"id":262,"depth":304,"text":263,"children":319},[320,321,322,323],{"id":266,"depth":312,"text":267},{"id":273,"depth":312,"text":274},{"id":280,"depth":312,"text":281},{"id":287,"depth":312,"text":288},{"id":294,"depth":304,"text":295},"2022-04-12","Whether an adjuster can be sued personally for a denial depends on the state. What bad faith means, and how five state courts have ruled on it.","md",true,"https:\u002F\u002Fvcasoftware.com\u002Fcan-claims-handlers-be-held-liable-for-claim-denials\u002F",{},"Can Claims Handlers Be Held Liable?","\u002Fcan-claims-handlers-be-held-liable-for-claim-denials",{"title":5,"description":326},"can-claims-handlers-be-held-liable-for-claim-denials","Oversight","2026-06-24","ZcHZ822_yLVI5EDAPsLQWoP41QD1vXIpWr9mxp8svDc",[339,343,347],{"path":340,"title":341,"date":342},"\u002Fclaims-leakage\u002F","Claims Leakage in Insurance: Causes and Prevention","2026-07-09",{"path":344,"title":345,"date":346},"\u002Fcompliance-in-insurance\u002F","What Is Compliance in Insurance? A Guide","2026-06-18",{"path":348,"title":349,"date":350},"\u002Finsurance-content-management-system\u002F","The Insurance Content Stack","2025-09-04",1792214669966]