An often-confusing issue in first party bad faith law is: at what point must my insurance company pay me for my claim? Under the holding put forward in the Colorado Court of Appeals case, Fisher v. State Farm, we have an answer. The insurance company must pay for your undisputed damages because an undisputed damage is a covered benefit under Colorado law. Although Fisher addressed first party benefits owed because of a car accident this case applies to insurance benefits owed to insureds as result of property losses.
In the Fisher case the court analyzed when an insurance company owed its insured first party uninsured motorist bodily injury benefits. Say for instance you are in a car accident and the irresponsible at-fault driver has no insurance. As luck would have it, you have uninsured motorist coverage in Colorado. Because of the car accident, you are injured. You are taken by ambulance since you suffered injuries to your neck and back. You then follow-up with your primary care physician who refers you to a physical therapist. Ultimately you have an emergency room bill, an ambulance bill, a bill from your primary care physician, and a physical therapy bill resulting from this car accident. Your insurance company pays the emergency room bill, ambulance bill, primary care doctor bill, but disputes the physical therapy bill. As the insurance company disputes the undisputed bill it also fails to pay the ambulance bill, emergency room bill, and primary care physician bill.
This is where Fisher v. State Farm helps you. In that case the court stated the following:
“an insurer’s delay or denial was unreasonable if the insurer delayed or denied authorizing payment of a covered benefit without a reasonable basis for that action.” The plain language of the statute thus establishes that “[s]ections 10–3–1115 and –1116 deal with the denial, or delay in the payment of, a covered benefit, not the denial or delay of the payment of an entire insurance claim.
Fisher v. State Farm Mut. Auto. Ins. Co.,___P.3d __, 2015 WL 2198515, 2015 COA 57, ¶ 29 (May 7, 2015) (quoting C.R.S. 10-3-1115(2)).
In short, Colorado law established a cause of action for “unreasonable delay and denial” under C.R.S. §§ 10-3-1115 and 10-3-1116. The covered benefit is the undisputed portion of the insurance claim. In our hypothetical scenario, the covered benefit is the ambulance bill, emergency room bill, and primary care physician bill because they were undisputed. This is because the insurance company and you agree that you are owed at least that. The entire insurance claim would be the ambulance bill, emergency room bill, primary care physician bill, and physical therapy bill.
When putting C.R.S. 10-3-1115/6 and the Fisher case together, an insured is entitled to that covered benefit and if the insurance company fails to pay that undisputed benefit, the insurance company is liable for bad faith!
For example, if your insurance company refuses to pay your ambulance, emergency room, and primary care physician bill they are liable for unreasonable delay and denial. This is the case even if you are in the process of negotiating or litigating how much they owe for your physical therapy bill.
Needless to say Fisher v. State Farm is an equitable holding that attorneys use to make sure their client’s damages are paid in a timely manner. Anyone who has been through a property claim knows that it takes far longer than one would expect. The take away here is that even if you and your insurer are disputing some of your property claim, your insurer must pay you for the items of damage to your home or building that they agree is damaged and owed. At least through this remedy, attorneys can get you compensated for your property loss quicker and you may start repairing and replacing the damaged portions of your home or commercial building.