Insurance Bad Faith in Utah: When Your Own Insurer Won't Pay Fairly
Short answer: In Utah, your own insurance company owes you an implied duty of good faith and fair dealing. At a minimum it must diligently investigate your claim, evaluate it fairly, and act promptly and reasonably in paying or rejecting it. Breaking that duty is a breach of the insurance contract, and the damages can go beyond the policy amount. But an insurer is allowed to dispute a claim that is fairly debatable, so a low offer by itself is usually not bad faith.
This page is about your own insurer
Bad faith questions come up most often after a crash in three kinds of claims you make against your own policy: personal injury protection (PIP), uninsured motorist (UM) coverage, and underinsured motorist (UIM) coverage. In each, you are the customer and the company is the party on the other side of the table. That is called a first-party claim.
A claim against the other driver's insurer is different. You have no contract with that company. Its good faith duty runs to its own driver, which is what makes a policy-limits demand meaningful. For a general walk-through of what to do after a denial letter, see what to do when an insurance claim is denied in Utah.
Where the duty comes from: Beck v. Farmers
The foundational Utah case is Beck v. Farmers Insurance Exchange, 701 P.2d 795 (Utah 1985). Wayne Beck was hurt in a hit-and-run and made an uninsured motorist claim with his own insurer. His lawyer sent a settlement offer with supporting information; the adjuster rejected it without explanation. The Utah Supreme Court held that Beck had stated a claim and reversed the summary judgment against him.
The court held that the duty of good faith is part of the insurance contract itself, and that it "contemplates, at the very least, that the insurer will diligently investigate the facts to enable it to determine whether a claim is valid, will fairly evaluate the claim, and will thereafter act promptly and reasonably in rejecting or settling the claim." It also held that "the refusal to bargain or settle, standing alone, may, under appropriate circumstances, be sufficient to prove a breach."
Three other points from Beck matter to anyone thinking about a claim:
- It is a contract claim, not a tort. The court declined to follow states that treat first-party bad faith as a tort.
- Damages can exceed the policy. Consequential damages that were reasonably foreseeable when the contract was made can be recovered, and the court said that "in unusual cases, damages for mental anguish might be provable."
- Ordinary stress is not compensable. The court said damages will not be available "for the mere disappointment, frustration, or anxiety normally experienced in the process of filing an insurance claim and negotiating a settlement with an insurer."
The "fairly debatable" defense
In Billings v. Union Bankers Insurance Co., 918 P.2d 461 (Utah 1996), the Utah Supreme Court confirmed that Beck established a fairly debatable defense. The court put it this way: "when an insured's claim is fairly debatable, the insurer is entitled to debate it and cannot be held to have breached the implied covenant if it chooses to do so." The overriding requirement is that insurers "act reasonably, as an objective matter, in dealing with their insureds."
This is the rule that defeats most bad faith claims built on a low offer. In 2026, the Utah Court of Appeals applied it in Newman v. LM General Insurance Co., 2026 UT App 94, holding that a UIM claim was fairly debatable as a matter of law even though the insurer's offer was far below the demand. We walk through that decision in Newman v. LM General: why a low UIM offer isn't always bad faith.
What is usually not bad faith
- An offer lower than you think is fair, when the value of pain and suffering is genuinely disputed.
- Asking for medical records, a missing bill, or the amount of another settlement.
- Taking a reasonable position on causation or a prior injury that the records support.
- Disagreeing with your lawyer's valuation while continuing to negotiate.
What can point toward bad faith
- No real investigation before a decision.
- A rejection with no explanation, or an explanation that does not match the policy or the records.
- Long stretches of silence after you send what was requested.
- Refusing to pay an amount the company itself does not dispute.
- Refusing to negotiate at all.
None of these is automatically bad faith. They are the kinds of facts that Beck and later cases look at, and they are why a written record of every request, response and date matters.
How it plays out in PIP, UM and UIM claims
PIP
Utah's PIP statute has its own enforcement tools. Benefits are overdue if not paid within 30 days after the insurer receives reasonable proof of the expense; overdue benefits bear interest at 1.5% per month; and if you have to sue to collect overdue benefits and win, the insurer must also pay a reasonable attorney fee (Utah Code 31A-22-309(5)).
UIM
A UIM claimant can choose binding arbitration or litigation. But an arbitrator may not decide coverage questions or "an allegation or claim asserting consequential damages or bad faith liability" (Utah Code 31A-22-305.3(8)(m)). A bad faith claim is brought separately. See underinsured motorist claims in Utah.
UM
Beck itself was an uninsured motorist case. The same duties apply when your insurer is standing in for a driver who had no insurance.
The unfair claims practices statute, and its limit
Utah Code 31A-26-303 lists unfair claim settlement practices, including, when done often enough to be a general business practice, "not attempting in good faith to effectuate a prompt, fair, and equitable settlement of claims in which liability is reasonably clear." The statute also says it "does not create any private cause of action" (31A-26-303(5)). It is enforced by the state, not by an individual suit under that section.
Filing a complaint with the Utah Insurance Department
The Utah Insurance Department's complaint page says its online complaint portal is the preferred and fastest way to file, and that a paper form can be sent by mail, fax or email but takes longer. The department forwards the complaint to the company for a response, reviews that response, and reports its findings; it says the process usually takes three to four weeks. Its phone numbers are 801-957-9200 and, in Utah, 1-800-439-3805. A complaint is not a lawsuit, and it does not stop any deadline.
Deadlines still apply
A suit on a first-party insurance policy generally must be filed within three years after the inception of the loss, with separate rules for UM and PIP claims (Utah Code 31A-21-313). Your injury claim against the at-fault driver has its own clock, usually four years (Utah Code 78B-2-307(4)). Negotiating with your insurer does not pause either one. See our statute of limitations guide.
Common questions
My insurer offered much less than my UIM demand. Is that bad faith?
Not by itself. If the value of your claim is fairly debatable and the insurer investigated, evaluated and responded reasonably, a low offer is usually a valuation dispute, resolved by arbitration or a lawsuit on the claim itself.
Can I recover more than my policy limits in a bad faith case?
Under Beck, foreseeable consequential damages beyond the policy can be recovered for breach of the duty of good faith. Whether any exist depends on the facts.
Should I stop talking to my insurer if I think it is acting in bad faith?
No. You generally still have a duty to cooperate under your policy. Keep communications in writing and keep copies. Once you sign with West Injury Law, the firm handles all communication with the insurers, including your own.
Does West Injury Law handle bad faith claims?
We handle the injury claims these disputes grow out of, including PIP, UM and UIM claims, and an attorney reviews every case at intake. We will tell you candidly if what you are describing looks like a valuation dispute rather than bad faith. See how we negotiate with insurance companies.
Talk to our legal team
If your own insurer has gone silent or will not explain its position, call (801) 921-5134 or send us your case. You pay nothing up front, and no attorney fees unless we win.
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