August 20, 2018

Colorado Supreme Court: Insurers Have Duty Not to Unreasonably Withhold or Delay Payments, Even Where Other Parts of Claim in Dispute

The Colorado Supreme Court issued its opinion in State Farm Mutual Automobile Insurance Co. v. Fisher on Monday, May 21, 2018.

Insurance—Underinsured Motorist Benefits—Unreasonable Delay/Denial of Payment.

The supreme court held that under C.R.S. § 10-3-1115 insurers have a duty not to unreasonably delay or deny payment of covered benefits, even though other components of an insured’s claim may still be reasonably in dispute. Here, an insurer issued multiple underinsured motorist insurance policies that covered a driver who was injured by an underinsured motorist. Though the insurer agreed that its policies covered the driver’s medical expenses, it refused to pay them because the insurer disputed other amounts (including lost wages) that the driver sought under the policies. A jury found that the insurer violated C.R.S. § 10-3-1115, which provides that an insurer “shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party [insured] claimant.” Because the court of appeals properly upheld the driver’s jury award, the court affirmed its judgment.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Written Rejection of Enhanced UM/UIM Coverage Not Required

The Colorado Court of Appeals issued its opinion in Airth v. Zurich American Insurance Co. on Thursday, January 25, 2018.

Motor Vehicle Insurance—Uninsured/Underinsured—Summary Judgment.

Airth was seriously injured in an accident while operating a semi truck owned by his employer, Sole Transport LLC, d/b/a Solar Transport Company (Solar). He was struck by a negligent, uninsured driver. Solar had uninsured/underinsured motorist (UM/UIM) insurance coverage of $50,000 for its employees through a policy issued by Zurich American Insurance Co. Airth brought a claim for declaratory relief, seeking to reform Solar’s policy to provide UM/UIM coverage of $1 million. He alleged he was entitled to the higher amount because Zurich had failed, as required by C.R.S. § 10-4-609, to (1) offer Solar UM/UIM coverage in an amount equal to its bodily injury liability coverage ($1 million), and (2) produce a written rejection by Solar of such an offer. On cross-motions for summary judgment, the district court entered judgment for Zurich ruling, as a matter of law, that (1) Zurich’s documents adequately offered Solar UM/UIM coverage in an amount equal to the bodily injury liability limits of the policy, and (2) there is no requirement that the rejection of UM/UIM limits in an amount equal to liability limits be in writing.

On appeal, Airth contended that both of the district court’s rulings were incorrect and the court therefore erred in granting Zurich’s summary judgment motion and denying Airth’s cross-motion. C.R.S. § 10-4-609(1)(a) prohibits an insurer from issuing an automobile liability policy unless a minimum amount of UM/UIM coverage is included in the policy, except where the named insured rejects UM/UIM coverage in writing. C.R.S. § 10-4-609(2) requires an insurer, before a policy is issued or renewed, to offer the insured the right to obtain UM/UIM coverage in an amount equal to the insured’s bodily injury liability limits. The facts here were undisputed. Before renewing Solar’s policy, Zurich sent a package of documents pertaining to Solar’s rights related to UM/UIM coverage and Solar’s counsel affirmed that he had read all the documents. This included an opportunity to reject UM/UIM coverage or to select a higher than minimum level of UM/UIM coverage. Airth argued that none of this constituted an “offer” of the ability to obtain higher UM/UIM coverage, because the documents did not contain a premium quote or a way to estimate the premium for purchasing UM/UIM coverage commensurate with a bodily injury liability limit of $1 million. The Colorado Court of Appeals agreed that this would be the case if it were applying the meaning of the term “offer” as used in contract law. But the Colorado Supreme Court has attributed a different meaning to “offer” as it is used in C.R.S. § 10-4-609; the dispositive question is whether, under the totality of the circumstances, the insured was adequately informed that higher UM/UIM coverage was available. Here, that standard was met by the documents Zurich provided to Solar.

Airth also argued that Zurich was not entitled to summary judgment because there was no evidence that anyone from Solar read or understood the document. This argument overlooks that attestation of Solar’s counsel.

Airth further argued that reversal is required because the documents were signed and dated a month after the policy went into effect. The operative question is whether the insurer gave the insured the opportunity to purchase statutorily-compliant coverage before the insured needed it. The record reflects that Solar had received and responded to the notification and offer before the accident that injured Airth.

Airth also contended that the district court erred in determining that the statute only requires a written rejection with respect to the minimum UM/UIM coverage available and not to the additional coverage available. The court agreed with the district court’s conclusion that a written rejection is required only if the insured declines the minimum amount of UM/UIM coverage, which was not the case here.

The judgment was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Tractor is Motor Vehicle for Underinsured Motorist Coverage Purposes

The Colorado Court of Appeals issued its opinion in Smith v. State Farm Mutual Automobile Insurance Co. on Thursday, January 12, 2017.

Insurance—Covered Motor Vehicle—Underinsured Motorist Provision—Farm Tractor.

Bunker was driving a farm tractor when he collided with Smith’s truck. The hay spears attached to the tractor pierced the truck and impaled Smith, leaving him severely injured. Bunker pleaded guilty to careless driving, and Smith settled his claim against Bunker for Bunker’s liability policy limits. Because this settlement did not fully compensate Smith for his injuries, he filed a claim for underinsured motorist benefits (UIM) with State Farm Mutual Automobile Insurance Co. (State Farm). State Farm denied coverage on the basis that a farm tractor is not a motor vehicle. Smith sued and the district court dismissed the complaint, finding that the tractor was not a covered motor vehicle for purposes of the UIM coverage policy.

On appeal, Smith contended that his policy’s property damage coverage section definition of “uninsured motor vehicle” is included in the UIM coverage provision. The Colorado Court of Appeals declined to extend the “uninsured motor vehicle” definition found only in the property damage coverage provision beyond that provision.

Smith next contended that the plain and ordinary meaning of “motor vehicle” includes the tractor. The court determined that the plain and ordinary meaning is an automotive vehicle not operated on rails and one with rubber tires for use on highways. Applying this definition, the court found that the tractor had wheels and its own motor, was not operated on rails, and was designed for use on streets and highways. Therefore, it was a covered motor vehicle under Smith’s UIM coverage provision.

The judgment was reversed and the case was remanded.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Terms of Settlement Offer were Valid and Enforceable When Accepted

The Colorado Court of Appeals issued its opinion in Kovac v. Farmers Insurance Exchange on Thursday, January 12, 2017.

Personal Injury—Underinsured Motorist—Statute of Limitations—Summary Judgment.

Kovac was seriously injured in a car accident with Filipelli. It was undisputed that Filipelli was at fault. Kovac’s medical expenses exceeded $1.4 million. Filipelli was covered by Shelter Insurance Company (Shelter) with a liability limit of $100,000. Kovac was insured under two different automobile policies with Farmers Insurance Exchange (Farmers).

Kovac settled with Shelter for its policy limits. Later, Farmers offered to settle Kovac’s remaining claims for $80,000, but the parties could not reach a settlement. Kovac sued Farmers on April 3, 2015 for recovery of UIM benefits, tortious bad faith breach of contract, and unreasonable delay and denial of insurance benefits. Farmers moved for summary judgment on the grounds that the Shelter settlement check was tendered to Kovac’s attorney on April 2, 2013 and the statute of limitations therefore ran on April 2, 2015. The district court agreed and dismissed the suit.

On appeal, Kovac argued that although her attorney received the check and settlement offer on April 2, it was not accepted until April 5 when the release was signed and the check endorsed. Therefore, the statute of limitations ran on April 5, 2015 and her complaint was timely filed on April 3, 2015. C.R.S. § 13-80-107.5(b) provides that the statute of limitations runs two years from the date when the insured “received payment of the settlement” on the underlying bodily injury claim. The court of appeals determined that Kovac released her claims against Filipelli on April 5, 2013.  Therefore the statute of limitations had not run when she filed her complaint against Farmers.

The summary judgment was reversed and the case was remanded.

Summary provided courtesy of The Colorado Lawyer.