By: Attorney Melissa Winthers

Your own insurance company has a legal obligation to treat you fairly. In 2008, the Colorado General Assembly enacted new statutes
prohibiting first party insurers, with certain exceptions, from unreasonably delaying or denying payment of benefits. Under the statutes, a person whose insurance company has unreasonably delayed or denied benefits can recover attorney’s fees, court costs, and two times the covered benefit. This is a major shift from the standard rule that regardless of which party wins a lawsuit, each party has to pay his/her own attorney’s fees. It is also a major shift from the standard rule merely allowing the prevailing party compensatory damages—damages to make up for his/her losses. While punitive damages have always existed in Colorado to punish willful or reckless conduct, these new statutes punish insurance companies’ unreasonable conduct without requiring a showing of reckless or willful behavior. Thus, the statutes have some sharp teeth in ensuring reasonable behavior by insurance companies toward their own insureds.

The following is an example of how this would work: you are hit in a car crash by a person without insurance. Therefore, you have an uninsured motorist “UM” claim with your own insurance company. Your medical bills from the crash are $50,000. You have $50,000 of UM coverage, but your UM insurer only offers you $35,000. Your insurer has unreasonably denied you the coverage you bought and are entitled to. You sue your insurance company and recover $50,000 in payment of your UM claim. On top of the $50,000 award, you are entitled to payment of your attorney’s fees, payment of your court costs, pre-judgment interest, and an extra $100,000 (two times the covered benefit) as a penalty. In the end, your recovery could be well in excess of $250,000 all because your insurer failed to timely pay you the $15,000 it should have paid up front.

These statutes however have several exceptions. The exceptions include worker’s compensation claims, title insurance claims, life insurance claims and insurance policies governed by the federal law known as ERISA—the Employee Retirement Income Security Act. In sum, these first party insurance statutes require a standard of reasonable conduct by insurance companies toward their insureds, and a failure to do so results in significant financial repercussions for the insurers. Should you have any questions concerning this, feel free to contact me.

Melissa Winthers is a Denver personal injury attorney at Fleishman & Shapiro P.C. She represents people who have been injured in collisions and can be reached at 303-861-1000 or