Article on "a win for policyholders"

Discussion in 'Water Damage/Fire Restoration' started by aspenedelen, Jan 9, 2014.

  1. aspenedelen

    aspenedelen FatCat Player

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    Colorado's Court of Appeals Interpretes Damages for an Insurer's Unreasonable Delay to Properly Compensate a Policyholder
    On December 19, 2013, the Colorado Court of Appeals issued their opinion in the case Hansen v. American Family Insurance Company. Thus case is cited as 2013 WL 6673066. In this case, American Family Mutual Insurance Company appealed the unreasonable delay or denial of a covered benefit judgment award of damages to one of its policyholders, Jennifer Hansen. In this case, Ms. Hansen settled her breach of contract claim against American Family Mutual Insurance Company for the full amount of the benefits owed ($75,000.00) six weeks prior to the trial. At trial, the jury found that as to Ms. Hansen’s common law claim (bad faith), the jury found that the insurance company did not “unreasonably deny payment of [the claimant's] insurance claim,” or “know its denial of such claim was unreasonable,” or “recklessly disregard the fact that its position was unreasonable”; and, although the claimant had incurred damages, the insurance company's denial of the claim was not a cause of those damages. As to Ms. Hansen’s statutory claims (C.R.S. 10-3-1115 and 10-3-1116), the jury found that (1) Ms. Hansen incurred damages; (2) the insurance company denied and/or delayed payment without a reasonable basis for its action; and (3) the insurance company's unreasonable conduct was a cause of the claimant's damages and losses. In addition, the jury found that the UIM benefit for which payment was delayed or denied without reasonable basis was $0. The trial court entered judgment on the jury's verdict in favor of Ms. Hansen on her statutory (C.R.S. 10-3-1116) claim, awarded her attorney fees and costs, but did not enter a monetary award. Ms. Hansen filed a motion to amend the judgment and requested that the court award a statutory penalty of two times the covered benefit, or $150,000, under section 10–13–1116(1), in addition to attorney fees and costs. The trial court granted the Ms. Hansen’s motion. In response to Ms. Hansen’s motion, American Family filed a motion to amend the judgment, arguing that the court had incorrectly calculated the statutory penalty. The trial court conducted a hearing on the insurance company's motion, denied it, and issued a final judgment in favor of the claimant for $199,683.28 in attorney fees and costs, and a $150,000 penalty under section 10–3–1116.
    American Family appealed the trial court’s ruling stating that there could not have been an unreasonable delay of denial as the policy of insurance was ambiguous that due to the fact that Ms. Hansen’s claim for coverage was fairly debatable. The court of appeals found that although the coverage may be fairly debatable, the insurer must still exercise reasonable care and good faith in defending a claim. The fact that American Family characterized Ms. Hansen’s claim for contractual benefits was “fairly debatable” was not enough to establish that American Family’s actions were reasonable as a matter of law.

    American Family also appealed the trial court’s awarding of two times the covered benefit ($75,000.00) as the jury found that the amount of damages for the payment that was unreasonably delayed or denied was $0.00. The Court of Appeals looked to the plain meaning of Colorado Revised Statute Sections 10-3-1115 and 10-3-1116 and noted that in Colorado Revised Statute 10-3-1115, a first party claimant whose claim for benefits has been unreasonably delayed or denied may bring an action in a district court to recover reasonable attorney fees, court costs and two times the covered benefit. As the covered benefit was $75,000.00, the court doubled the covered benefit as the penalty pursuant to Colorado Revised Statute Section 10-3-1116 as this statute does not state double the amount of damages ($0.00 jury award), but states that the amount of the covered benefit ($75,000.00) should be doubled.

    This case is a great step for policyholders as it does not allow insurance companies to delay or denial payment of benefits although the insurance company may believe that a policyholder’s claim’s value is fairly debatable and instructs the trial court that the amount of benefits owed and which payment was delayed should be doubled.
     
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  2. Johnny Bravo

    Johnny Bravo Syndicated FatCat Entreprenuer

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    John Sheridan
    Anthony, How in the world do you have the time to find this kind of stuff out, all while you're driving across the country. attending seminars, running a successful business, posting on Fat Cat, answering all my stupid questions, and making babies? That's all I want to know.
     
  3. aspenedelen

    aspenedelen FatCat Player

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    Johnny, here right South of Nashville in a Embassy Suites and I have to take a few minutes out of my morning to help ppl garner more knowledge
     
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