Crs Section 10-3-1115 and -1116: Providing Remedies to First-party Claimants
| Publication year | 2010 |
| Pages | 69 |
2010, July, Pg. 69. CRS section 10-3-1115 and -1116: Providing Remedies to First-Party Claimants
July 2010
Vol. 39, No. 7 [Page 69]
Tort and Insurance Law articles provide information concerning current tort law issues and insurance issues addressed by practitioners representing either plaintiffs or defendants in tort cases. They also address issues of insurance coverage, regulation, and bad faith.
Coordinating Editor
William P. Godsman of the Law Office of William Godsman, Denver-(303) 455-6900, wgodsman@qwestoffice.net
About the Author
Erin Robson Kristofco is of counsel at Horowitz & Burnett, P.C.-(303) 996-8609, ekristofco@hblegal.net. She dedicates much of her practice to insurance litigation, including bad faith and plaintiff and defense coverage work under various types of insurance policies.
This article discusses CRS §§ 10-3-1115 and -1116, which provide remedies-including two times the covered benefit, court costs, and attorney fees-to certain first-party insurance claimants when their insurer has unreasonably delayed or denied payment of benefits.
Before August 2008, insureds in Colorado wrongfully denied insurance benefits largely relied on lawsuits alleging claims for breach of contract, breach of the covenant of good faith and fair dealing (the common law tort of bad faith), and requests for exemplary damages as a means of redress against their insurance companies. In August 2008, Colorado House Bill 08-1407 became effective. The new statutes are codified at CRS §§ 10-3-1115 and -1116 and provide remedies to certain first-party insurance claimants, including recovery of two times the covered benefit, attorney fees, and court costs.
The statutes are noteworthy to insurance companies because, for the first time in Colorado, insurers may be liable for twice the covered amount and their insured's attorney fees, even without the insured showing willful and wanton actions as required for punitive damages. The statutes are noteworthy for insureds who, faced with the possibility of breaking even in many cases-that is, spending $50,000 on attorney fees in litigation only to recover $50,000 in insurance proceeds on the original covered claim-may have decided to forego litigation. Now, suits against insurers for unreasonable denial of covered benefits make more economic sense, because insureds may recover double the claim amount owed and recoup costs and attorney fees incurred in the process.
This article provides a general overview of the statutes. It discusses their applicability and how claims under the statutes differ from common law bad faith claims. It also summarizes relevant case law. The Article "CRS §§ 10-3-1116, ERISA Preemption, and the Standard of Review," which appears on page 75 of this issue, provides a detailed discussion of the preemption of state law causes of action under the Employee Retirement Income Security Act of 1974 (ERISA).
Applicability of the Statutes
The statutes apply only to certain types of first-party insurance claims. Some types of insurance are excluded by the statutes.
First-Party Claims
CRS § 10-3-1115 defines a "first-party claimant" as:
an individual, corporation, association, partnership, or other entity claiming an entitlement to benefits owed directly to or on behalf of an insured under an insurance policy. A first-party claimant includes a public entity that has paid a claim for benefits due to an insurer's unreasonable delay or denial of the claim.(fn1)
A first-party claimant is an insured seeking coverage under his or her own policy. A first-party claimant does not include: "[a] nonparticipating provider performing services[] or [a] person asserting a claim against an insured under a liability policy."(fn2)
Types of Insurance
The statues exclude several specific types of insurance. The statutes do not apply to workers' compensation insurance.(fn3) The statutes also do not apply to title insurance claims.(fn4) CRS § 10-3-1115 states the statutes do not apply to life insurance;(fn5) however, § 1116(3) specifically refers to life insurance as a type of insurance subject to de novo review by a court, as well as a jury trial, where a claim has...
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