Colorado Personal Injury Lawyers – New Colorado Insurance Law Penalizes Unreasonable Delay and Denial
New Colorado law regulating insurance companies for unreasonable delays and denials, effective August 6, 2008
The new law gives Coloradans the power to make sure insurance companies pay claims in a reasonable and timely manner.
What is this new law? House Bill 08-1407. The purpose of the law is to put an end to unreasonable denials or delays by insurance companies. The law increases the penalties for insurance companies for their unreasonable conduct regarding claims.
“A first-party claimant whose claim for payment of benefits has been unreasonably delayed or denied may bring an action in district court to recover reasonable attorneys’ fees and court costs, and twice the covered benefit.”
Who benefits from the new law? Colorado citizens claiming insurance benefits from their own insurance company. Injured people in Colorado have been powerless to file large lawsuits against insurance companies because attorney fees could eat up much of the settlement money. The new law gives Coloradans the power to make sure insurance companies pay claims in a reasonable and timely manner by requiring unreasonable insurance companies to pay benefits due, double damages, and attorneys’ fees. .
For example, let’s say your claim has damages of $30,000 and the insurance company delayed or denied the claim for no reason. Under the new law, you could receive double the $30,000 plus attorneys’ fees (say $10,000). Therefore, the insurer would have to pay her $70,000 ($10,000 of which would pay her attorney’s fees) for her violation of the new law.
“A person engaged in the business of insurance shall not unreasonably delay or deny payment of a claim for benefits due to or on behalf of any first party claimant.”
What type of provider can be penalized by this new law? The law applies to health insurers, disability insurers, auto insurers, and just about any other type of insurance. The law does not apply to workers’ compensation insurance, life insurance, and title insurance. If you believe that workers’ compensation, life insurance, and/or title insurance have denied your claim for no reason, you cannot use this new law; however, you can use other laws to help you seek benefits.
When does the new law take effect? The new law will take effect on August 6, 2008. However, the language of the law is unclear as to how that date is met in practice. It is unclear whether the law applies only to claims after August 6, 2008, or whether it applies to claims that have been ongoing for the last one or two years.
If you want to see this bill:
- go to the Colorado General Assembly website http://www.leg.state.co.us/
- Follow the “Bill Digest” link
- Go to 2008 invoice summaries
- The “Digest of Bills – 2008” is categorized; follow the “Secure” link