3 Colo. Code Regs. § 702-5-1-23-5

Current through Register Vol. 47, No. 24, December 25, 2024

Section 3 CCR 702-5-1-23-5 - Rules

A. Requirements for Payment of Contents Coverage

1. Within five (5) days from the insurer's timely determination of a valid total loss claim, of an owner-occupied residence, the insurer must offer the policyholder a minimum of thirty (30) percent of the limits of the contents coverage indicated on the declaration page of the policy without requiring the policyholder to submit a written inventory of the contents.

a. If the total loss of the owner-occupied residence is reported as a result of a wildfire disaster declared by the Governor, the insurer must offer the policyholder a minimum of sixty-five (65) percent of the limits of contents coverage without requiring the policyholder to submit an inventory.

b. The policyholder and the insurer may mutually agree to more than the minimum amount required without requiring a contents inventory.

2. Acceptance of the applicable amount of payment under Section 5.A.1 does not change the benefits available under other sections of the insurance policy.

3. A policyholder may accept the applicable amount of payment under Section 5.A.1 and submit a written inventory to collect additional monies available under the policy contract up to the policy's contents coverage limit.

B. Standards for Policyholder Inventories and Insurer Processing

1. A policyholder may receive up to the full policy limit of contents coverage by submission of a written inventory. Insurers must facilitate the process of preparing, compiling, and processing of such an inventory with information provided by the policyholder to maximize a policyholder's recovery without unreasonable substantiation requirements, barriers, or delays.

2. The insurer must consider an inventory or other documentation provided by the policyholder, including but not limited to videos, pictures or other records of items which were prepared or taken prior to the loss.

3. Insurers must simplify the process for the completion of an inventory by:

a. Offering a spreadsheet template or electronic form for itemization of losses which can be readily completed by the policyholder. Insurers may use certain forms to document inventory but must accept any reasonable form of documenting a loss provided by the policyholder that includes information about the items lost. The information that can be required by the insurer to be provided by the policyholder is limited to:

i. Description of item

ii. Year or estimated date of acquisition

iii. Brand and model, if available, and

iv. The item's condition on the date of loss. e.g., excellent, very good, good, poor.

b. Insurers must provide a checklist as a reference on a room-by-room basis of items commonly found in a room or household to facilitate the preparation of the inventory. Insurers must disclose that a policyholder can supplement the list provided with additional items which were in the owner-occupied residence at the time of loss.

c. Insurers must permit consolidation of like items, e.g., 20 men's t-shirts; or 50 hardcover books, as opposed to requiring each to be identified separately. For items that may otherwise be consolidated but have unique attributes or properties which would affect their valuation, e.g., scientific or technical books, antique or first edition volumes, such items may be individually listed.

d. Subject to policy sub-limits for items such as collectibles, insurers must consider alternative sources for calculating valuation. For one-of-a-kind items, the insurer may request additional documentation or substantiation not required of general household items.

e. Consumables, such as perishable and non-perishable food, cleaning supplies, and toiletries, must be paid at the cost to replace a similar item. Insurers are encouraged to offer a reasonable methodology to estimate the value of consumables lost without requiring itemization, e.g., average of 6 months grocery bills.

f. A reasonableness standard must be utilized to permit replacement with a substantially similar or comparable item if the item cannot be usefully replaced by an identical item, [e.g. a size 1T child's outfit, may be replaced by a 2T outfit].

4. An insurer must have a documented process for a policyholder to add additional items to the inventory. An insurer must retain all of the policyholder's submissions. If the insurer makes any change to the submitted inventory, it must provide a copy to the policyholder with identification and rationale supporting the specific changes made. Insurers must provide a simple, step by step, instruction as to how to compare the changes with the original submitted line item to permit the policyholder to dispute and track payments back to the specific items.

5. A policyholder's substantiation of inventory and good faith estimates of the information contained in Section 5.B.3 must be accepted unless the insurer has reasonable suspicion articulated to the policyholder to question their validity. The insurer must consider additional information to support the valuation of an item or items [e.g., mastectomy bras are not valued at the same amount as a usual brassiere.]

6. The insurer must request additional information about an item on the inventory within 30 days of its submission or the item is accepted as presented. The insurer must provide the policyholder with the ability to provide additional or supplemental information if the insurer questions the inclusion or listing of an item or items, or the information about the item or items. An insurer may require the policyholder to identify additional or supplemental information from information previously submitted. The insurer must consider the policyholder's additional or supplemental information within 30 days after its submission to the insurer.

7. The insurer must disclose its methodology for determining the depreciated value of the items on the inventory. This disclosure must be in sufficient detail to enable a reasonable person to determine whether preparation of an inventory would permit recovery of additional sums.

a. The depreciation method may not rely solely on a blanket calculation across the entire inventory and must take into account the age and condition of each item on the inventory to determine its depreciated value.

b. Each depreciated item must be clearly marked on the inventory list with the amount of depreciation.

c. Insurers must provide policyholders with a meaningful opportunity to challenge the depreciation amount for any item or items. Presentation by the policyholder of information which would affect the depreciation of an item must be considered in good faith by the insurer.

d. Any dispute between an insurer and policyholder regarding the amount of applied depreciation the burden is on the insurer to prove the applied depreciation.

8. The insurer must maintain and utilize a documented process for a policyholder to appeal or challenge the insurer's valuation or determination of applied depreciation. The documented process must include a description of the process and what information the insurer used in its valuation or determination, and must follow the timeline outlined below:

a. Upon a receipt of a policyholder's challenge to a valuation or applied depreciation, the insurer must have the challenge reviewed by a claims supervisor who has not been otherwise involved in the particular claim.

b. The insurer must issue a written decision in regard to all matters challenged by the policyholder within 30 days of the date the challenge is submitted.

c. For any dispute in which all or part of the challenge is determined in the policyholder's favor, payment of the resolved item or items must be issued within 30 days of the determination.

9. Pursuant to Section 10-3-1110(2), C.R.S., interest shall begin to accrue on the 61st day after receipt of the inventory for any unpaid covered and undisputed items.

10. In order to further simplify the inventory process, at no cost to the policyholder, insurers must offer, subject to the rules above, at least one of the following:

a. Utilize an interview process in which the company develops an inventory by asking the policyholder questions on a room-by-room basis and provides the completed inventory for the policyholder to modify and approve;

b. Provide a list of available vendors to assist the policyholder in compiling and organizing a written inventory with acceptable documentation and substantiation;

c. Provide a mechanism to assist policyholders in establishing an expected value for the inventory; or

d. Pay a minimum of 75% of contents coverage without requiring an inventory.

3 CCR 702-5-1-23-5

46 CR 17, September 10, 2023, effective 9/30/2023