Justia Insurance Law Opinion Summaries

Two individuals were injured while riding in a rental car after the driver, who had rented the vehicle from a car rental company, purchased a supplemental insurance policy that included uninsured/underinsured motorist coverage. The policy was issued by a third-party insurer, with the car rental company listed as the named insured and the driver and passengers as additional insureds. After the accident, the third-party insurer’s claims administrator processed the injury claims, but the payments made were less than the medical expenses incurred by the passengers, leading them to file suit against the car rental company for breach of contract, bad faith, and violation of insurance statutes.The District Court for Arapahoe County determined that the car rental company was neither a statutory insurer under Colorado’s insurance code nor a common-law de facto insurer, and dismissed the plaintiffs’ claims. The court reasoned that legislative amendments following the Colorado Supreme Court’s decision in Passamano v. Travelers Indemnity Co. had distinguished car rental companies from insurers. It further found that, under Cary v. United of Omaha Life Insurance Co., the car rental company’s limited involvement in claim processing did not rise to the level needed for de facto insurer status, as it lacked primary responsibility for claims handling.The Colorado Court of Appeals reversed, finding that the car rental company could qualify as a statutory insurer and that factual disputes remained as to whether it acted as a de facto insurer under Cary. On review, the Supreme Court of Colorado held that, in light of legislative amendments, car rental companies offering supplemental insurance are not statutory insurers under Colorado law. The court also clarified that only entities whose primary business is claims handling and who have significant financial risk in claim outcomes may qualify as de facto insurers under Cary, which did not apply to the car rental company here. The Supreme Court reversed the judgment of the Court of Appeals and ordered reinstatement of the district court’s dismissal. View "Hertz Corp. v. Babayev" on Justia Law

In this case, the respondent was injured in a 2017 automobile accident and pursued benefits under three insurance policies: the tortfeasor’s liability policy, his own underinsured motorist (UIM) policy with State Farm, and an excess UIM policy with USAA held by his brother. Both insurers requested that he provide medical releases to apportion damages between the 2017 accident and a prior accident in 2014. The respondent either did not provide the requested releases or submitted deficient ones. With his claims unresolved and the statute of limitations approaching, he sued USAA and State Farm for breach of contract and bad-faith delay or denial of benefits.The trial court, the El Paso County District Court, granted summary judgment to the insurers. It found that providing a comprehensive medical release was a condition precedent to coverage under both policies, and the respondent’s failure to do so warranted summary judgment. The court also determined that the claim against USAA was improper because the respondent had not exhausted his primary State Farm policy. The Colorado Court of Appeals reversed, holding that section 10-3-1118’s procedural requirements for insurer “failure-to-cooperate” defenses applied to all policyholder duties, and that USAA’s exhaustion clause was unenforceable because it conditioned payment on exhausting the primary insurer’s limits.The Supreme Court of Colorado reviewed the case and held that section 10-3-1118 applies only to defenses based on a policy’s general cooperation clause, not all contractual duties or conditions precedent. The court reversed the appellate court’s contrary interpretation. The court further clarified that exhaustion clauses in excess UIM policies are enforceable only if they are triggered by the policyholder’s undisputed damages exceeding the underlying policy limits, not merely by payment from the primary insurer. The Supreme Court affirmed that USAA’s duty to investigate is triggered only once such undisputed damages are established, and otherwise, summary judgment was proper for the insurers. The case was remanded for further proceedings consistent with these holdings. View "United Servs. Auto. Ass'n v. Wenzell" on Justia Law

A public entity contracted with a general contractor to construct a major rail line project. The general contractor, in turn, subcontracted a significant portion of the work to a subcontractor. As the project progressed, it experienced numerous delays and disruptions, which the subcontractor claimed increased its costs. After completing its performance, the subcontractor, relying on expert analysis of its additional costs, filed a verified statement of claim under the Colorado Public Works Act, asserting it was owed additional millions for labor, materials, and other costs, including those stemming from delay and disruption.Following the filing, the general contractor substituted a surety bond for the retained project funds and the subcontractor initiated litigation in Denver District Court. After a bench trial, the trial court found in favor of the subcontractor, concluding that its verified statement of claim was not excessive and that there was a reasonable possibility the claimed amount was due. The court awarded the subcontractor damages for delay, disruption, and unpaid funds. The general contractor appealed, contending the claim was excessive and should result in forfeiture of all rights to the claimed amount. The Colorado Court of Appeals reversed in relevant part, holding that the verified statement of claim was excessive as a matter of law and that the subcontractor forfeited all rights to the amount claimed. This disposition left certain issues raised by the subcontractor on cross-appeal unaddressed.The Supreme Court of Colorado granted review and held that, under the Public Works Act, disputed or unliquidated amounts—including delay and disruption damages—may be included in a verified statement of claim if they represent the specified categories of costs and the claim is not excessive under the statute. The court also held that filing an excessive claim results only in forfeiture of statutory remedies under the Act, not all legal remedies. The Supreme Court reversed the Court of Appeals’ judgment and remanded for further proceedings. View "Ralph L. Wadsworth Constr. Co. v. Reg'l Rail Partners" on Justia Law

HIVE Construction, Inc. served as the general contractor for the construction of Masterpiece Kitchen, a restaurant. The contract required HIVE to follow specific architectural plans, including installing two layers of drywall on a wall separating the kitchen and dining area. Instead, HIVE installed one layer of drywall and one layer of combustible plywood without approval. A fire started within the wall, causing significant damage and forcing the restaurant to close. Mid-Century Insurance Company, as the property insurer and subrogee of Masterpiece Kitchen, paid for the damages and then sued HIVE for negligence, alleging willful and wanton conduct.The district court initially allowed Mid-Century to amend its complaint to include a breach of contract claim but later reversed this decision, requiring Mid-Century to proceed with the negligence claim. At trial, the jury found HIVE's conduct to be willful and wanton, awarding damages to Mid-Century. HIVE appealed, arguing that the economic loss rule barred the negligence claim. The Colorado Court of Appeals agreed, reversing the district court's decision and instructing a verdict in HIVE's favor.The Supreme Court of Colorado reviewed the case and concluded that the economic loss rule does not provide an exception for willful and wanton conduct. The court held that the rule barred Mid-Century's negligence claim because the duty HIVE allegedly breached was not independent of its contractual obligations. Consequently, the court affirmed the judgment of the Colorado Court of Appeals, upholding the application of the economic loss rule to bar the negligence claim. View "Mid-Century Ins. Co. v. HIVE Construction" on Justia Law

Marcus A. Fear was involved in a rear-end collision in 2018, resulting in injuries and medical treatment. He held an underinsured motorist (UIM) policy with GEICO and settled with the tortfeasor's insurer for $25,000. Fear sought additional compensation from GEICO, which offered $2,500 and later $4,004, but Fear did not accept these offers. He then sued GEICO for statutory bad faith under section 10-3-1115, alleging unreasonable delay in payment of his UIM claim.The case proceeded to a bench trial where experts disagreed on GEICO's handling of the claim. The district court found that $3,961 of Fear's non-economic damages were undisputed and ruled that GEICO violated section 10-3-1115. GEICO appealed, and the Colorado Court of Appeals reversed, concluding that non-economic damages are inherently subjective and that admitting GEICO's claim evaluation as evidence of undisputed benefits violated CRE 408.The Supreme Court of Colorado reviewed the case and agreed with the lower court that CRE 408 bars the admission of internal settlement evaluations to show undisputed benefits owed. However, it noted that such evaluations might be admissible for other purposes, such as establishing an insurer's good or bad faith. The court also concluded that non-economic damages could be undisputed or not subject to reasonable dispute in some cases, contrary to the appellate court's ruling that they are always reasonably disputable.Ultimately, the Supreme Court affirmed the appellate court's judgment, finding that Fear did not provide admissible evidence to show that any portion of his non-economic damages was undisputed or not subject to reasonable dispute. View "Fear v. GEICO Cas. Co." on Justia Law

Kevin Klabon, a technician for CMI Legacy, LLC, was injured in a car accident while driving a company van. The accident was caused by Rodrigo Canchola-Rodriguez, an underinsured driver. Klabon received workers' compensation benefits from CMI's carrier, Pinnacol Assurance, and settled with Canchola-Rodriguez's insurer for $25,000. He then sought additional underinsured motorist (UIM) benefits from CMI's commercial auto insurer, Travelers Property Casualty Company of America, which valued his claim at $78,766 but paid only $45,766.68.Klabon sued Travelers in state court for unreasonable denial and delay of UIM benefits, alleging bad faith and breach of contract. Travelers removed the case to federal court and moved for summary judgment, arguing that Klabon's receipt of workers' compensation benefits barred his UIM claim under Colorado's Workers' Compensation Act (WCA). The United States Magistrate Judge certified the question to the Colorado Supreme Court, given conflicting precedents and significant public policy implications.The Colorado Supreme Court concluded that an employee injured by a third-party tortfeasor and who receives workers' compensation benefits is not barred from suing their employer's UIM insurer. The court held that the WCA's exclusivity provisions immunize only employers and their workers' compensation carriers, not separate UIM insurers. The court also determined that a suit to recover UIM benefits does not constitute a suit against the employer or co-employee and thus is not barred by the WCA. The court answered the certified question in the negative, allowing Klabon to pursue his claim against Travelers. View "Klabon v. Travelers Property Casualty Company of America" on Justia Law

The Supreme Court of the State of Colorado reviewed a case involving an insurance dispute over uninsured/underinsured motorist ("UM/UIM") benefits in a specialty antique/classic-car policy. The plaintiff, Beverly Hughes, was injured while driving a vehicle owned by her employer. Hughes was insured by two automobile insurance policies: one standard policy issued by Travelers Insurance covering her regular-use vehicles and a specialty policy issued by Essentia Insurance Company covering her antique/classic cars. She sought to recover underinsured motorist benefits from both policies.The court held that a specialty antique/classic-car policy that requires an insured to have a regular-use vehicle and to insure it through a standard policy that provides UM/UIM coverage may properly limit its own UM/UIM coverage to the use of any antique/classic car covered under the specialty policy. The court reasoned that an adjunctive antique/classic-car policy, which excludes UM/UIM benefits with respect to situations involving a regular-use vehicle but works in tandem with a standard regular-use-vehicle policy that provides UM/UIM coverage, satisfies both the language of section 10-4-609, C.R.S. (2023), and the public policy goals underpinning the statute. Thus, the court concluded that the regular-use-vehicle exclusion in the UM/UIM provision of Essentia's specialty policy is valid and enforceable under Colorado law. As a result, the court reversed the judgment of the court of appeals and reinstated the district court’s summary judgment in favor of Essentia. View "Essentia Insurance Company, v. Hughes" on Justia Law

The Supreme Court of the State of Colorado has ruled that the notice-prejudice rule applies to occurrence-based, first-party homeowners’ property insurance policies. This rule allows insurance companies to deny coverage based on late notice of a claim only if they can prove they were prejudiced by the delay. The court reached this conclusion after exploring the differences between occurrence policies and claims-made policies, asserting that applying the rule to the former was consistent with precedent. The court's decision was based on three policy considerations: the adhesive nature of insurance contracts, the public policy of compensating victims, and the unfairness of granting the insurer a windfall due to a technicality. This case involved two homeowners, Karyn Gregory and Lisa and Sylvan Runkel, who had filed claims for hail damage to their homes. The insurance companies denied their claims on the grounds that they were filed too late. The court reversed the judgments of the lower courts and remanded the cases for further proceedings, with instructions to allow the insurers an opportunity to establish prejudice from the late notice. View "Gregory v. Safeco Insurance Company of America" on Justia Law

Petitioner Lisa French went to respondents Centura Health Corporation and Catholic Health Initiatives Colorado d/b/a St. Anthony North Health Campus (collectively, “Centura”) for surgery. Upon reviewing French’s insurance information prior to surgery, Centura advised her that she would personally be responsible for $1,336.90 of the amounts to be billed. After the surgery, however, Centura determined that it had misread French’s insurance card and that she was, in fact, an out-of-network patient. Centura then billed French $229,112.13 and ultimately sued her to collect. The Colorado Supreme Court granted certiorari to review: (1) whether here, Centura’s database used by listing rates for specific medical services and supplies, was incorporated by reference into hospital services agreements (“HSAs”) that French had signed; and (2) if so, whether the price term in the HSAs was sufficiently unambiguous to render the HSAs enforceable. The Court concluded that because French neither had knowledge of nor assented to the chargemaster, which was not referenced in the HSA or disclosed to her, the chargemaster was not incorporated by reference into the HSA. Accordingly, the HSA left its price term open, and therefore, the jury appropriately determined that term. The Court reverse the judgment of the division below, and did not decide whether the price that French was to pay was unambiguous, even if the HSA incorporated the chargemaster. View "French v. Centura Health" on Justia Law

The federal district court for the District of Colorado certified a question of law to the Colorado Supreme Court. In July 2020, Alexis Skillett was involved in a car accident. At the time of the accident, Allstate Fire and Casualty Insurance Company (“Allstate”) insured Skillett under a policy that included underinsured motorist coverage. Skillett settled with the at-fault driver and his insurer and also filed a claim with Allstate for underinsured motorist benefits. Allstate assigned one of its employees, Collin Draine, to handle Skillett’s claim. Draine concluded Skillett was not entitled to underinsured motorist benefits. Skillett filed suit in Denver District Court, naming both Allstate and Draine as defendants. Her claims against Allstate included breach of contract, statutory bad faith, and common law bad faith. As to Draine, she alleged that he had personally violated section 10-3-1116, which creates a cause of action for insureds whose insurance benefits have been unreasonably delayed or denied. The certified question asked the Supreme Court whether an employee of an insurance company who adjusts an insured’s claim in the course of employment could, for that reason, be liable personally for statutory bad faith under Colorado Revised Statutes Sections 10-3-1115 and -1116. Given the plain statutory language, the Supreme Court answered that question in the negative: "An action for unreasonably delayed or denied insurance benefits under Colorado law may be brought against an insurer, not against an individual adjuster acting solely as an employee of the insurer." View "Skillet v. Allstate" on Justia Law