Colorado Court Extends Legal Filing Period for Insurance Disputes

Earlier this year, the Colorado Court of Appeals amended the timeframe within which injured motorists can file lawsuits against insurance carriers that fail to disclose policy details. A recent judicial panel ruled that injured parties have two years to initiate legal action, overriding the previous one-year limitation.

Contextually, this change stems from a 2019 legislation requiring auto insurers in Colorado to provide essential policy information within 30 days of a claimant’s request. This law aims to enhance transparency about available coverage post-accident, with a $100 daily fine imposed on insurers who fail to comply timely. Initially, a Court of Appeals panel in September 2023 applied a one-year statute of limitations for penalties related to these cases, but a subsequent panel deviated from this view.

Implications for Policyholders and Insurers

Judge Elizabeth L. Harris clarified that the $100 daily charge does not fit the traditional criteria for a state-imposed penalty. Harris distinguished the charges as not being state fines, given there was no formal finding of overpayment or delinquency to warrant such a penalty. Consequently, plaintiffs Joshua and Wendy Weatherill proceeded with their case against State Farm, which allegedly delayed over 18 months in disclosing a driver's excess insurance coverage requested in January 2021.

The recent court decision revives the Weatherills’ legal action regarding the delayed policy disclosure with higher coverage limits, mandated by the 2019 law. This ruling impacts the timing of insurance legal disputes and may trigger further examination by the Colorado Supreme Court due to conflicting appellate decisions. Industry stakeholders should note that this decision affirms an extended timeframe for policyholders to hold insurers accountable, potentially affecting compliance strategies and regulatory obligations.