3 Colo. Code Regs. § 702-5-2-12-5

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

Section 3 CCR 702-5-2-12-5 - Rules

A. Installment Premium Payments.

1. Each insurer continuing private passenger motor vehicle insurance coverage shall offer, for persons who are required to purchase insurance under Part 6 of Title 10, Article 4, C.R.S., a quarterly premium payment plan. An insurer providing a plan for payments of premium on a basis that is more frequent than quarterly, need not also provide a quarterly payment plan.

2. Each insurer shall file rules, methods or procedures to provide an installment premium payment plan and payment by automatic electronic transfer in compliance with § 10-4-119, C.R.S.

3. An insurer's premium payment plan that is more frequent than quarterly may provide for payments of an advance deposit premium not greater than one month's premium.

4. Services and/or installment charges shall be based on actual expenses incurred by the insurer for billing process. Rate filings may be submitted, including a factor of increase supportive of short term billing procedures. (For example, annual premium x 26.5% = quarterly billing; or, annual premium x 9% = monthly billing.) Such charges may all be made on the first billing or distributed over each premium due date.

5. Any other payment mode, which is at least as beneficial as the quarterly payment plan referred to above, will be considered. Finance organizations, such as subsidiaries of the insurer, bank financing, or credit card services, are considered qualifying when written agreements between the insurer and the finance organization provide for installment plans to always be available to offer to the policyholders.

6. The installment premium due notice, except for monthly payments, shall be sent to the named insured and others known to the insurer as having moneys held in trust for the payment of automobile insurance premiums, at least twenty (20) calendar days prior to the actual due date. If the quarterly premium payment option is selected by an insured, each succeeding payment, after the initial premium due date, shall be at regular three-month intervals.

B. Rules Limiting Insurers' Action to Refuse to Write, Cancel, Nonrenew, Increase Premium, Surcharge, or Reduce Coverages.

1. Insurers shall not refuse to write, cancel, fail to renew, reclassify an insured under, rate a new applicant, reduce coverage under, or increase the premium for any complying policy based upon:

a. Not-at-fault accidents in accordance with § 10-4-628(1)(a), C.R.S.;

b. Claims paid under comprehensive coverage, unless the insurer can demonstrate that each loss was a result of an insured's negligent action.

c. Claims paid under medical payments or uninsured motorist coverage.

d. The previous producer no longer represents the company.

e. Blindness or specific physical disability, unless such classification is based upon expected risk of loss different from that of other individuals. Further, no insurer shall refuse to insure a vehicle solely because the vehicle is owned by a blind person.

f. Motor vehicle citations without convictions.

g. Existence of a physical impairment, unless the impairment is of a continuing nature, which has an adverse effect on the insured's ability to drive safely, and cannot be corrected by the use of medication or special equipment. In the event of a complaint by the insured, the insured shall have the burden of proving that the impairment does not have an adverse effect on the insured's ability to drive safely.

2. Insurers shall not increase premium, other than a general increase filed with the Commissioner of Insurance, cancel or fail to renew a complying policy based upon:

a. Payments made by insurers, without a good faith reasonable investigation to determine fault, unless the insured has admitted the reported accident was his or her fault and the evidence of admission of fault is provided. A reasonable fault investigation to support the insurer's intended action shall include, at a minimum, when available:

(1) Statements (oral, telephonic recordings or written) from all parties involved in the accident and all known eyewitnesses. A statement shall be deemed unavailable when the insured, other party in the accident or eyewitness refuses to give or sign the statement.

(2) Copies of all loss, accident, and police reports.

b. The use of a single accident resulting in payment of less than $1,000, unless the insurer has elected to file with the Division a rating plan such as a Safe Driver Plan, an Accident Surcharge Plan, etc., which includes statistical data justifying the use of a lesser threshold. The filing of such a rating plan shall not exempt the insurer from sending a notice of Increase in Premium required by this regulation for an at fault accident, moving violation conviction and/or adverse changes in credit information.

c. The use of an individual's driving and/or loss record, while a resident of the household, if a driver exclusion offer has been made and the driver is excluded from coverage in compliance with § 10-4-630, C.R.S.

d. Claims paid under towing and labor coverage.

3. Insurers shall not fail to renew a complying policy based upon:

a. The use of one (1) motor vehicle conviction resulting in less than eight (8) points assessed under the Colorado Motor Vehicle Point Assessment system or points assessed by another state.

b. The use of one (1) motor vehicle accident, whether or not payment is made, unless a motor vehicle conviction of eight (8) points or more, assessed under the Colorado motor vehicle point assessment system, or points assessed by another state, resulted from the accident.

As used in this subsection, a conviction, accident, or payment made for the same occurrence shall be considered as one incident.

4. During an investigation of a complaint, market conduct surveillance, or market conduct examination of an intended action under a complying policy the Division will apply the following standards:

a. If the insurer bases its action upon the fact that an insured has had an incident that resulted in payment under the policy and/or a motor vehicle conviction, the insurer may base its action on incidents that occurred during the thirty-six (36) month period immediately preceding the date of the intended action for that individual insured under the policy.

However, in case of nonrenewals, increase in premiums, or reduction in coverage, in order to take action upon incidents occurring during this thirty-six (36) month period, at least one (1) incident must have occurred during the fifteen (15) month period immediately preceding the next renewal date.

b. Surcharge or merit rating changes may be applied to a newly added driver if, at the time the driver is added, the insurer is aware of an incident subject to an increase in premium. If the surcharge or merit rating change is made on the policy renewal date, the insurer shall send the notice required by § 10-4-629(2), C.R.S.

c. An insurer may cancel a newly issued policy that has been in effect less than sixty (60) calendar days at the time notice of cancellation is sent by the insurer. Any such notice of cancellation may not be based on any of the prohibited reasons listed in §§ 10-4-626 through 10-4-629, C.R.S.

(1) Notice requirements for such cancellations are governed by policy termination provisions. The notice shall be mailed or delivered at least ten (10) calendar days prior to the cancellation effective date.

(2) Whenever the insurer chooses to cancel a policy, the earned premium shall be determined on a pro-rata basis, including cancellation for nonpayment of premium.

d. An insurer may not rescind (i.e., cancel retroactively) or void a policy of insurance affording the coverages required by §§ 10-4-609, 10-4-620, and 10-4-621, C.R.S., except in cases of fraud, as defined in § 10-1-128, C.R.S., or if the insurer does not receive appropriate premium payment (i.e. insufficient funds) for the policy at the time of application.

5. Notice of intended actions.

a. A notice to cancel, nonrenew, increase the premium or reduce coverage under a private passenger motor vehicle insurance policy shall state the actual reason for such action. The notice required by § 10-4-629(2), C.R.S. shall be distinct from any other information delivered to the insured, but may be sent with other insurance documents. The notice shall include a statement of reasons that are clear and specific so that a person of average intelligence can understand the reasons for the insurer's decision without making further inquiry.

(1) The insurer shall clearly describe or quote its underwriting rule, policy or guideline that is the basis for the intended action.

(2) If any one individual in the household has an incident that is subject to an insurer's adverse action a notice of intended action is required to be sent for any policy that would realize an adverse impact from the intended action. The use of a household rating plan does not exempt an insurer from the notice requirements.

(3) A simple recitation of dates and incidents, without specific detail, is not acceptable. With regard to an at-fault accident, the notice shall include the driver's name, date of loss, total amount of the claim payment and a description of the loss.

(4) The requirements of this Section 5.B.5.a. apply to all policies including policies in which there is only one driver in the household.

b. Insurers intending to cancel, nonrenew, increase premium or reduce coverage shall prominently display the insured's right to submit a complaint to the Division. The following information shall be prominently displayed on the notice form:

If you have concerns regarding this intended action, you have the right to file a complaint with the Colorado Division of Insurance. Complaints may be submitted through the mail or electronically. Please contact [your producer, (agent) or the company at (phone number)], for further information.

c. In accordance with § 10-4-630(1), C.R.S., the insurer shall, in lieu of cancellation, nonrenewal or increase in premium, offer to continue or renew the insurance but exclude from coverage the named insured or other person whose claim experience or driving record justifies the intended action. This Section 5.B.5.c. is not applicable to actions taken based on adverse credit information.

d. The fact that an insured has submitted a complaint shall not negate the insurer's obligation under §§ 10-4-629(2) and 10-4-630, C.R.S., to offer the insured the right to exclude a household member.

e. For the purposes of this Section 5.B.5., a notice of intended action is not required if the increase in premium is strictly the result of an insured's voluntary enrollment in a usage based insurance rating program.

f. If an increase in premium is the result of a combination of usage based insurance rating and any adverse activity that is otherwise subject to this regulation, a notice of intended action is required.

g. If an insurer provides evidence of financial responsibility pursuant to § 42-7-406, C.R.S. (also known as an "SR-22") and the policy cancels or expires, the insurer shall maintain evidence of notification of such cancellation to the Colorado Division of Motor Vehicles (also known as "SR-26") for a period of time required by Colorado Regulation 1-1-7.

3 CCR 702-5-2-12-5

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