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Insurance bad faith · Utah

When a Utah insurer refuses a claim it should have paid

Utah went its own way in 1985. In Beck v. Farmers the Supreme Court refused to turn first-party bad faith into a tort, so a claim against your own insurer is a breach of contract claim — which means no punitive damages, however badly the company behaved. The compensation is real, though: Utah lets you recover consequential losses well beyond the policy limit, damages for mental anguish in the right case, and the actual contingency fee you pay your lawyer.

Last reviewed August 2026 · Bad faith is contract, not tort — no punitive damages

At a glance

Legal framework

Contract, almost entirely. Beck v. Farmers Insurance Exchange (1985) holds that in a first-party claim the insurer and the insured are contracting parties and not fiduciaries, so a breach of the implied covenant of good faith and fair dealing “can give rise only to a cause of action in contract, not one in tort”. Third-party claims are the exception: Ammerman v. Farmers Insurance Exchange (1967) still allows a tort action where the insurer mishandles the defence or settlement of a claim brought against you. The statutory layer — Utah Code § 31A-26-301 et seq. and the claim-handling rule R590-190 made under it — sits alongside, but is enforced by the regulator.

Can you sue directly?

Split. On the contract theory, yes — you sue the insurer directly under Beck, and Billings v. Union Bankers (1996) confirms a jury can decide it. On the statute, no. Utah Code § 31A-26-303(5) says it in a single line: “This section does not create any private cause of action.” The list of unfair claim settlement practices belongs to the Utah Insurance Department. It is still worth quoting in your papers as the state’s own description of what a reasonable insurer does.

Deadline

3 years from the inception of the loss — not from the denial. Utah Code § 31A-21-313(1)(a) requires an action on a first-party policy within three years after the loss began, which on a fire or a long illness can be well before the insurer ever says no. Motor claims run longer: 4 years for uninsured motorist cover (§ 31A-22-305(11)), 4 years for personal injury protection (§ 31A-22-307(7)), and 4 years for underinsured motorist cover, measured from the date of the settlement cheque for the last liability payment (§ 31A-22-305.3(5)). The period is tolled while an appraisal or arbitration under the policy is running (§ 31A-21-313(5)). The general six-year written-contract statute, § 78B-2-309, no longer rescues a late first-party insurance case.

Before you file

Yes. Utah Code § 31A-21-313(4) bars an action to compel payment under the policy until the earliest of 60 days after proof of loss is furnished, the insurer waiving proof of loss, or the insurer denying full payment. So a denial opens the door at once — the wait only bites when the insurer is simply sitting on the claim, and even then you can go early if a verified complaint alleges prejudice from the delay that is something other than the delay itself. Beyond that: no notice letter, no cure period, no certificate of merit, and no need to complain to the Insurance Department first.

What you can recover

Damages available in Utah

The policy benefits the insurer should have paid, with interest on anything overdue
Consequential losses beyond the policy limit. Beck expressly disavowed the idea that the limit caps liability — anything “reasonably within the contemplation of, or reasonably foreseeable by, the parties at the time the contract was made” counts, including a home or a business lost because the money never arrived
Mental anguish, but only in unusual cases, and never for the ordinary frustration of arguing with an insurer. Billings let a $1.8m verdict stand largely on this footing
Your attorney fees — at the contingency rate you actually agreed. In Billings the Supreme Court vacated a trial judge’s “reasonable” fee of $110,651 and sent it back to be recalculated at the one-third (forty percent on appeal) contingency the insured had really signed
No punitive damages on the contract claim. You would need a separate tort — fraud, or intentional infliction of emotional distress — proved by clear and convincing evidence under § 78B-8-201, and Utah then takes half of everything above the first $50,000

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Insurance dispute attorneys — Utah

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How to find one yourself, free

Utah State Bar — Get Legal Help (Licensed Lawyer and the Modest Means Lawyer Referral Program) — 801-531-9077

Utah runs no traditional telephone referral desk. The Bar’s route to a lawyer is Licensed Lawyer, a free online directory of Utah lawyers in good standing which is a trademark of the Utah State Bar, plus a Modest Means programme for reduced rates if you qualify on income. The number above is the Bar’s main switchboard, not a referral line. Utah operates no certified-specialist programme, in insurance law or in anything else. No Utah lawyer can be verified by the state as a bad-faith specialist, so judge them on reported cases and on whether they have actually taken an insurer to trial.

Before you sue

How often does your insurer actually pay?

Worth checking before you spend money on a lawyer. Two different measures exist, and they are not interchangeable — one is a real payment record, the other is a complaint count.

Health cover — real denial rates

Published, per insurer

Health insurers selling on the federal marketplace must report how many claims they received and how many they refused. The figures are public and free to inspect.

20%

Average denied, 2023

1%–54%

Range across 175 insurers

The spread is the point. Two insurers selling comparable cover in the same state can refuse wildly different shares of what they are billed for. Look your own up before you assume your refusal was routine.

Search the CMS Transparency in Coverage files — by insurer and by state

Source: CMS Transparency in Coverage public use files, plan year 2023 experience. Self-reported by insurers and not audited. Covers federal-marketplace plans only — not employer cover, and not state-run marketplaces. Post-service claims only.

Home, auto & property

No payout rate is published

There is no free public figure showing what share of home or auto claims any named insurer pays. Insurers do report it to regulators, but in most states that filing is confidential. Any table you see online quoting payout percentages for property insurers is either a paid commercial product or an estimate.

What is public is the complaint index — how many confirmed complaints a company generates against its share of the market. 1.00 is average. 3.00 means three times the complaints its size would predict.

NAIC company complaint lookup — every state, search by company
Utah Insurance Department — Utah’s own complaint route

Complaint indexes are published by state insurance departments and compiled by the NAIC. Figures move with both the company’s complaints and the wider market’s.

These two numbers are not the same thing. A denial rate is the share of claims an insurer refused. A complaint index is how often customers complained relative to the company’s size. A low complaint index does not mean an insurer pays well, and a high one does not prove it refuses claims — it can reflect the kind of cover it sells or the customers it attracts. Neither figure says anything about whether your claim should have been paid.

The clock

What the insurer is required to do, and by when

Utah Admin Code R590-190 sets the timetable for property, casualty and title claims. The insurer must acknowledge a notice of loss within 15 days, give a substantive response to a request within 15 days, and supply claim forms, instructions and reasonable assistance within 15 days. Within 30 days of a complete proof of loss it must finish investigating and tell you whether the claim is accepted or denied; if it needs longer it must give reasons inside that same 30 days, then write again every 45 days. Payment is due within 30 days of written proof of a covered loss and its amount, and overdue money carries interest at the legal rate — 10% a year under § 15-1-1(2). A denial must name the specific provision, condition or exclusion relied on. And if you have no lawyer or public adjuster, the insurer must tell you when your limitation period expires, at least 60 days before it runs out.

The thing most people miss

Utah makes the insurer pay your lawyer — at the rate you actually agreed, not what a judge thinks is reasonable. The state has no fee-shifting insurance statute at all, so the fee arrives instead as consequential damages: Billings v. Union Bankers held that every insurer knows an insured chasing a denied claim will hand over a third or more of the recovery, which makes the contingency fee foreseeable and so recoverable in full. In the state with the weakest theory of bad faith, that is the sharpest tool on the table.

Unsettled: Two genuinely open points. First, no Utah appellate decision squarely settles whether the three-year clock in § 31A-21-313(1) swallows the bad-faith claim itself or only the claim for the unpaid benefits; the argument that a breach of the implied covenant is an ordinary written-contract action carrying six years under § 78B-2-309 has never been resolved. Work to three years and do not test it. Second, Billings confines the broad Beck damages to breach of the implied covenant — an insurer that denied your claim wrongly but reasonably owes only the benefits, not the consequential losses. Under the “fairly debatable” defence an insurer entitled to debate a claim has not breached the covenant at all, though Jones v. Farmers (2012) made clear that is usually a question for the jury rather than a reason to throw the case out on summary judgment.

Free first step

Complain to the regulator before you spend anything

A complaint to the Utah Insurance Department costs nothing, creates a written record, and sometimes moves a stalled claim on its own. It is not a substitute for legal advice and it does not pause any deadline — but there is rarely a reason not to do it first.

Utah Insurance Department — file a complaint
Consumer helpline: 801-957-9200

Where this comes from

Sources

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This page is information, not legal advice. Insurance law differs by state and changes often. Nothing here creates a lawyer–client relationship, and no page can tell you whether your own claim is worth pursuing. If a deadline may be close, speak to a lawyer licensed in your state now rather than later — several of the deadlines described here start running on the date of the loss, not the date your claim was refused.

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