By: Joseph Okon, Associate, Sutton | Booker | P.C.
On July 2, 2020, Governor Polis signed into law Colorado House Bill 20-1290. The Act concerns the ability of an insurer to use a failure-to-cooperate defense in an action in which an insured has made a claim for insurance coverage and applies to all litigation that occurs on or after September 14, 2020.
Now, to plead or prove a failure-to-cooperate defense in any action concerning first-party insurance benefits, the following conditions must be met:
1. The carrier has submitted a written request for information the carrier seeks to the insured or the insured’s representative by certified mail, or by electronic means if consented to by the insured or the insured’s representative;
2. The information if not available to the insurer without the assistance of the insured;
3. The written request provides the insured 60 days to respond;
4. The written request is for information a reasonable person would determine the insurer needs to adjust the claim filed by the insured or to prevent fraud; and
5. The carrier has given the insured an opportunity to cure, which must:
a. Include the furnishing of written notice to the insured of the alleged failure to cooperate, describing with particularity the alleged failure, within 60 days of the alleged failure; and
b. Allow the insured 60 days after receipt of the written notice to cure the alleged failure to cooperate.
This Act also states the failure-to-cooperate defense acts as a defense to the portion of the claim materially and substantially prejudiced to the extent of the insurer could not evaluate or pay that portion of the claim. The Act further states the existence of a duty to cooperate in a policy does not relieve an insurer of its duty to investigate or to comply with C.R.S. § 10-3-1104, and that any language in a first-party insurance policy that conflicts with the Act’s language is void as against public Policy.
Lastly, the Act states an insurer is not liable for a claims of bad-faith breach of contract under common law or under §§ 10-3-1115 and 10-3-1116 because the insurer solely provides the insured with the required amount of time to respond to the insured’s written request, and the required amount of time cure the alleged failure to cooperate.