New Colorado law regulating insurance companies for unreasonable delays and denials, effective August 6, 2008
The new law gives Colorado citizens the power to ensure that insurance companies pay claims in a reasonable and timely manner.
What is this new law? House Bill 08-1407. The purpose of the law is to stop unreasonable denials or delays by insurance companies. The law increases the penalties for insurance companies for their unreasonable behavior regarding claims.
“A first party claimant whose claim for payment of benefits has been unreasonably delayed or denied may initiate an action in district court to recover reasonable attorneys’ fees and court costs, and twice the covered benefit.”
Who benefits from the new law? Colorado citizens claiming insurance benefits from their own insurance company. Injured people in Colorado have been powerless to file important claims against insurance companies because attorney’s fees could consume so much of their settlement money. The new law gives Colorado citizens the power to ensure that insurance companies pay claims in a reasonable and timely manner by requiring unreasonable insurance companies to pay benefits owed, double damages, and fees. of lawyers.
For example, let’s say your claim has damages of $ 30,000 and the insurance company delayed or denied the claim for no reason. Under the new law, you could receive double the $ 30,000 plus attorneys’ fees (say $ 10,000). Therefore, the insurer would have to pay you $ 70,000 ($ 10,000 of which would pay your attorneys’ fees) for your violation of the new law.
“A person in the insurance business shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first party claimant.”
What type of provider can be sanctioned by this new law? The law applies to health insurers, disability insurers, auto insurers, and almost any other type of insurance. The law does not apply to workers’ compensation insurance, life insurance, and title insurance. However, if you believe that workers’ compensation, life insurance, and / or title insurance have unreasonably denied your claim, you cannot use this new law; however, you can use other laws to help you seek benefits.
When does the new law go into effect? The new law takes effect on August 6, 2008. However, the language of the law is unclear as to how that date develops in practice. It is unclear if the law applies only to claims after August 6, 2008 or if it applies to claims that have been ongoing for the past year or two.
If you want to see this invoice:
- go to the Colorado General Assembly website http://www.leg.state.co.us/
- Follow the “Bill Digest” link
- Go to invoice summaries for 2008
- The “Summary of bills – 2008” is categorized; follow the “Insurance” link
