Ten years ago, the Colorado General Assembly passed a couple of laws designed to provide Coloradoans with additional leverage in disputes with their insurance companies. § 10-3-1115 and 1116, C.R.S. authorize insureds to bring legal claims against their insurance companies for unreasonably delaying or denying the payment of benefits. These statutes also authorize the courts to award attorney’s fees, reasonable fees and court costs, and two times the covered benefit. In most civil cases, attorney’s fees are not recoverable, and insurance companies are rarely forced to pay more than the limits of the policies that they issue. Because a successful 1115 and 1116 claim can compel an insurer to pay far more than it is used to paying, these laws are powerful tools in the hands of consumers whose insurance companies are not treating them fairly.
This week, the Colorado Supreme Court issued a trio of decisions that will further strengthen the potential benefits of these statutes for Colorado consumers. In Am. Family Mut. Ins. Co. v. Barriga, 2018 CO 42, the Court considered how to calculate the award in cases where an insurance company unreasonably delays but eventually pays the insured a fair settlement. As one might expect, this scenario occurs all the time; insurance companies are notorious for delaying, delaying, and delaying some more before finally paying the fair value of a claim. In Barriga, the Court held that consumers can recover damages in the amount that was unreasonably delayed, times two (or two times the covered benefit). The insurance company cannot claim a reduction in damages for the amount that it eventually pays. So, say your claim is worth $10,000, but the insurance company unfairly delays payment for two years before finally paying your claim. Under the law, if you can prove that your claim was unreasonably delayed, you can recover an additional $10,000 for the amount that was unfairly delayed, times two (two times the covered benefit). Essentially, the law allows you to ultimately recover $30,000 on a $10,000 claim – $10,000 that your insurance company decided to pay you after unreasonably delaying, plus $10,000 for the unreasonable delay, times two. And that does not include court costs and attorney’s fees. Faced with this possible scenario, it makes far more sense for the insurer to simply pay the claim, and pay it quickly, rather than wait and risk getting hit with a big judgment. Colorado consumers can expect to benefit accordingly.
Two additional decisions will also help consumers. In Guarantee Trust Life Ins. Co. v. Estate of Casper, 2018 CO 43, the Court confirmed that attorney’s fees are a recoverable element of a successful claim. Finally, in Rooftop Restoration, Inc. v. Am. Family Mut. Ins. Co., 2018 CO 44, the Court concluded that claims under the 1115 and 1116 are not subject to a restrictive statute of limitations that would have required consumers to file lawsuits within one year of the unreasonable delay or denial of benefits. The Rooftop decision will make it much more difficult for insurers to avoid responsibility by simply dragging out the claims process, then getting claims under 1115 and 1116 dismissed after consumers wait too long to take the case to court.
Taken together, these decisions by the Colorado Supreme Court will go a long way to help consumers in their fights against their insurance companies. In all cases, it helps to have a knowledgeable, experienced advocate in your corner. If you are in a fight with your insurance company, call Just Law today for a free consultation.