United States: Colorado Revised Law Section 10-3-1118
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(May 2021) – In the 2020 legislative session, the Colorado General Assembly passed Bill 20-1290. The resulting law, section 10-3-1118 of the revised Colorado law, came into effect on September 14, 2020. The new law applies to litigation occurring on or after September 14, 2020, but likely applies to the processing of complaints occurring before that date.
Article 10-3-1118 establishes specific requirements that an insurer must meet in order to assert a lack of defense cooperation in a dispute.
1. Written request for information
The insurer must request information from the insured in writing and give them 60 days to respond. The written request must be sent by certified mail or electronically if the insured has consented to receive electronic documents from the insurer.
2. Nature of the information requested
The insurer’s written request must relate to information that is not available to the insurer without the assistance of the insured and that a “reasonable person would determine that the insurer needs to adjust the claim filed by insured or to prevent fraud ”.
3. Written notice of non-cooperation and possibility of recovery
Within 60 days of the insured’s failure to cooperate, the insurer must provide written notice to the insured describing “precisely” the insured’s lack of cooperation. The notice must give the insured 60 days to heal.
Article 10-3-1118 applies to disputes “concerning an insurance policy providing for benefits or primary coverage …” The term “primary benefits or coverage” is not defined by the law. However, similar legislative language found in Sections 10-3-1115 and 10-3-1116 has been interpreted to include benefits owed directly to an insured under liability policies (such as a duty to defend under liability policies). a commercial civil liability policy).
Article 10-3-1118 limits the scope of a defense for failure to cooperate to “the part of the claim that has suffered material and substantial damage to the extent that the insurer could not assess or pay this part of the claim “. Thus, a lack of cooperation does not necessarily constitute a complete defense in the event of a dispute.
Recognizing that the 60-day notice period and the 60-day opportunity for the insured to remedy may cause delays, article 10-3-1118 specifically provides that an insurer is not liable for bad faith resulting from delays caused by compliance with the legal notice and treatment periods.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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