3 Colo. Code Regs. § 702-5-1-14-4

Current through Register Vol. 47, No. 7, April 10, 2024

Section 3 CCR 702-5-1-14-4 - Rules

A. Timely Decisions and Payment of Benefits

1. Penalties

a. All insurers authorized to write property and casualty insurance policies in Colorado, shall make a decision on claims and/or pay benefits due under the policy within sixty (60) days after receipt of a valid and complete claim unless there is a reasonable dispute between the parties concerning such claim, and provided the insured has complied with the terms and conditions of the policy of insurance.

b. If an insurer fails to make a decision and/or pay benefits due under the policy within sixty (60) days after a valid and complete claim has been received, and there is not a reasonable dispute between the parties, and the insured has complied with the terms and conditions of the policy of insurance, the Commissioner of Insurance may impose the following penalties to be paid by the insurer to the insured:

(1) If the claim is $100.00 or less, the penalty shall not be more than $20.00;

(2) If the claim is more than $100.00, the penalty shall be 8 percent annual interest on the amount of benefits due, computed from the latest of the time a valid and complete claim is received, the reasonable dispute was resolved, or the insured complied with the terms and conditions of the policy, until the time the benefits due are paid by the insurer.

c. In addition to such penalties payable to the claimant, the Commissioner of

Insurance, after notice and hearing, may assess a civil penalty against any insurer of $100.00 per day for each day benefit payments are delayed more than sixty (60) days after a valid and complete filing of the claim unless there is a reasonable dispute between the parties concerning such claim.

2. Conditions

a. A valid and complete claim is deemed received by the insurer when:

(1) All information and documents necessary to prove the insured's claim have been received by the insurer;

(2) A reasonable investigation of the information submitted has been completed by the insurer, in compliance with § 10-3-1104, C.R.S.;

(3) The terms and conditions of the policy have been complied with by the insured;

(4) Coverage under the policy for the insured has been established for the claim submitted;

(5) There are no indicators on the claim requiring additional investigation before a decision can be made; and/or

(6) All repairs have been satisfactorily completed and the insured has given authorization to pay; and/or

(7) Negotiations or appraisals to determine the value of the claim have been completed; and/or

(8) Any litigation on the claim has been finally and fully adjudicated.

b. A reasonable dispute may include, but is not limited to:

(1) Information necessary to make a decision on the claim has not been submitted or obtained;

(2) Conflicting information is submitted or obtained and additional investigation is necessary;

(3) The insured is not in compliance with the terms and conditions of the policy;

(4) Coverage under the policy for the loss claimed has not been determined;

(5) Indicators are present in the application or submission of the claim and additional investigation is necessary;

(6) Litigation is commenced on the claim; or

(7) Negotiations or appraisals are in process to determine the value of a claim.

3. A good faith offer by the insurer to the insured within sixty (60) days after the receipt of a valid and complete claim satisfies the requirements under this regulation.

4. If claims for benefits are processed by a third party administrator or other entity acting on behalf of the insurer, or if the insured is represented by a third party, the failure of the third party to comply with the terms of the policy or this regulation, shall be the failure of the insurer or insured respectively.

5. In all actions initiated under this regulation, the insured shall have the burden of proving to the Commissioner of Insurance that he/she submitted a valid and complete claim to the insurer.

6. The insurer shall have the burden of proving to the Commissioner of Insurance that a reasonable dispute existed.

7. If it is determined that benefits are due to the insured, the insurer must issue a payment to the insured within sixty (60) days of a valid and complete claim being received, if all the conditions in the definition herein are met.

8. In the event of a significant catastrophe resulting in multiple claims, an insurer may notify the Commissioner of Insurance of the nature and extent of the catastrophe and request a deviation or exemption from this regulation.

B. Reasonable Investigation

1. The Commissioner of Insurance recognizes that the scope of an investigation can be determined, in part, to be reasonable based on the terms and conditions of the policy and the facts and circumstances of each claim. It may include, but is not limited to:

a. Reports from police or other law or fire enforcement authorities;

b. Scene investigations;

c. Photographs, videotaped evidence;

d. Surveillance information;

e. Statements or reports from the insureds, claimants, other parties, witnesses, or anyone who may have knowledge of elements of the claim;

f. Repair estimates;

g. Reports from relevant experts;

h. Credit reports and financial information;

i. Information on prior, concurrent or subsequent claims; or

j. Other relevant information.

2. Documentation that a reasonable investigation has been conducted shall be maintained in the claim file. Such documentation may include, but is not limited to:

a. Adjuster's log notes;

b. Copies of written communications;

c. Written reports used in the investigation of a claim;

d. Status reports;

e. Evidence of payments; or

f. Other relevant information.

3. When an investigation is incomplete or is otherwise continued and the insurer has not paid the claim within the time required under section 4.A.1. above, the insurer shall immediately notify the insured or the insured's representative, if applicable, of the reason(s) the claim has not been paid. Additionally, if the claim is not paid within the time requirement under section 4.A.1., above, the insurer shall, every thirty (30) days thereafter, send to the insured or the insured's representative a letter setting forth the reason(s) additional time is needed for investigation. This requirement is not intended to alter any terms of the contract between the insurer and insured regarding their respective rights, duties, and obligations and the law involving such matters.

4. If the claim has not been paid because an investigation is underway, the insurer shall document in the claim file the actions being taken to investigate the claim and the efforts being made to promptly conclude the investigation.

5. The claim file documentation required by this regulation will be reviewed by the Division of Insurance during an investigation of a complaint or during a market conduct examination to determine if the requirements of § 10-3-1104(1)(h), C.R.S. and this regulation have been met.

3 CCR 702-5-1-14-4

38 CR 17, September 10, 2015, effective 10/1/2015

38 CR 18, September 25, 2015, effective 10/15/2015

39 CR 01, January 10, 2016, effective 2/1/2016

39 CR 05, March 10, 2016, effective 4/1/2016

41 CR 01, January 10, 2018, effective 2/14/2018

40 CR 21, November 10, 2017, effective 4/1/2018

41 CR 19, October 10, 2018, effective 11/1/2018

42 CR 18, September 25, 2019, effective 1/1/2020

42 CR 23, December 10, 2019, effective 1/1/2020

44 CR 13, July 10, 2021, effective 6/3/2021

44 CR 08, April 25, 2021, effective 8/1/2021

45 CR 03, February 10, 2022, effective 3/2/2022

45 CR 22, November 25, 2022, effective 12/15/2022

46 CR 11, June 10, 2023, effective 4/27/2023