In April 2026, the Colorado Supreme Court clarified C.R.S. § 10-3-1118 did not abrogate the common law distinction between general failure-to-cooperate defenses and defenses based on specific policy conditions precedent. In USAA v. Wenzell, the Court held (6-1) that only defenses based on an insured’s general common law duty to cooperate, rather than on conditions precedent specifically enumerated in the policy, must comply with C.R.S. § 10-3-1118, known colloquially as the “failure to cooperate” statute.
Insurers handling claims under Colorado law need not take the onerous steps required by C.R.S. § 10-3-1118 to enforce specifically enumerated policy conditions precedent (like providing a proof of loss, submitting to an independent medical examination, or executing a records authorization). The insurer also need not show prejudice. Yet to assert a general failure to cooperate defense in Colorado, an insurer must both strictly comply with the C.R.S. § 10-3-1118 framework and prove the insured’s failure to cooperate prejudiced it.
While Wenzell’s first holding touches the hot button issue, insurers writing excess UM/UIM coverage in Colorado should take particular care to avoid running afoul of the Court’s second holding: excess UM/UIM insurers must evaluate claims without waiting for exhaustion of primary UM/UIM coverage payments.
Background
Anthony Wenzell underwent an anterior cervical discectomy and fusion surgery after a 2014 motor vehicle accident that caused significant, long-term spinal injuries and persistent pain. Wenzell was progressing well post-surgery when he was involved in a rear-end accident in 2017 that he claimed aggravated his pain and spinal injuries. Wenzell filed claims under the tortfeasor’s liability policy, his own policy with State Farm, and his brother’s policy with USAA.
Both the State Farm and USAA policies provided certain conditions precedent to coverage for a person making a claim for UIM/UM benefits, which included providing written authorization for the carrier to obtain medical bills, medical records, and any other information deemed necessary to substantiate the claim. State Farm asked Wenzell to release his medical records so it could apportion his damages between the 2014 and 2017 accidents. Between September 2019 and July 2021, State Farm requested a list of medical providers and medical records release authorizations from Wenzell five times. USAA also requested medical records, provider lists, and medical release authorizations three times between October 2017 and May 2021. In response to State Farm, Wenzell provided demand letters, provider information, and medical records releases different from those State Farm requested. Wenzell also provided a demand letter and medical records to USAA.
Prior to trial, both carriers filed motions for summary judgment arguing that Wenzell’s failure to provide a comprehensive medical release authorization violated a condition precedent to coverage and that no issue of material fact existed regarding Wenzell’s failure to do so. As an excess insurer, USAA argued that Wenzell’s failure to meet a condition precedent under the State Farm policy carried over to a failure to meet a condition precedent in the excess policy and that it did not have an obligation to pay any covered benefits because the State Farm policy had not yet been exhausted. The trial court agreed and granted summary judgment. Wenzell appealed.
In 2024, the Colorado Court of Appeals overturned the trial court’s ruling concluding that, C.R.S. § 10-3-1118 operated to collapse all general failure to cooperate and condition precedent defenses into strict compliance with the language of the statute.
Under C.R.S. § 10-3-1118, to assert a failure to cooperate defense in Colorado, (1) carriers must have first submitted a written request for information to the insured (or insured’s agent) by certified mail or by electronic means (with the insured’s consent); (2) the information requested must have been unavailable to the carrier without the insured’s assistance; (3) the written request must have provided the insured 60 days to respond; (4) the written request must have been for information a reasonable person would determine the insurer needed to adjust the claim filed by the insured or to prevent fraud; and (5) the carrier must have given the insured an opportunity to cure, which includes the furnishing of written notice of the alleged failure to cooperate within 60 days of the alleged failure and allowing the insured 60 days after receipt of the written notice to cure the alleged failure to cooperate. C.R.S. § 10-3-1118.
Colorado Supreme Court Ruling
In its 2026 holding, the Colorado Supreme Court reasoned the legislature did not clearly demonstrate an intent to throw out common law standards for condition precedent defenses when it codified procedural requirements for insurers to assert failure to cooperate defenses. The Court stressed that policyholders are on notice of their policies’ enumerated conditions precedent requiring them to engage in specific conduct like providing medical records for a bodily injury claim, but that a policyholder’s generic duty to cooperate could include a range of unspecified conduct that the policyholder may not realize the carrier expected them to perform.
Writing for the majority, Justice Hood nevertheless made clear insurers should not adopt unreasonable conditions precedent: “Our holding today should not be understood as an invitation to insurers to try to circumvent section 1118 by establishing novel or unduly onerous conditions precedent. Today’s opinion leaves open the possibility that an insurer could still be subject to a statutory bad-faith claim if it uses conditions precedent in bad faith.”
Last, writing on the separate issue before it, the Court held that an excess UM/UIM insurer has an independent duty to evaluate claims without regard to exhaustion of primary UIM coverage.
Conclusion
Under Wenzell, the Colorado Supreme Court made clear that insurers handling claims under Colorado law need not worry about the onerous steps required by C.R.S. § 10-3-1118 to enforce specifically enumerated policy conditions precedent. But insurers should still exercise caution in relying on such specific conditions precedent in denying claims. Uncertainty remains as to what constitutes substantial compliance of a condition precedent, and as to whether a failure to satisfy a condition precedent operates as a complete bar to benefits entitlement or only to those benefits directly related to that condition precedent. Insurers should exercise caution in relying on limited technical failures to satisfy conditions precedent or on unmet conditions precedent that did not reasonably relate to the benefits being sought. Insurers should also avoid adopting unduly burdensome or esoteric conditions precedent, or conditions precedent that contradict Colorado state public policy.
Of course, under Colorado law, insurers relying on the general duty to cooperate—whether cooperation is defined in the policy or not—must still both strictly comply with the C.R.S. § 10-3-1118 framework and have been prejudiced by the insured’s failure to cooperate before being entitled to assert a failure-to-cooperate defense. And the state legislature could always amend C.R.S. § 10-3-1118 or enact new legislation that changes the current landscape. To stay informed about the latest Colorado insurance law developments, contact one of our attorneys.
