Insurers may move for summary judgment on a statutory bad faith claim by arguing that C.R.S. 10-3-115 does not provide guidance for determining how or when UIM benefits are deemed to be “owed.” The argument is ridiculous. The relatively new cause of action created by the statutes does not presuppose a prior adjudication of benefits owed.
In Kisselman, 2011 WL 6091708, the court found that it was “the view of the General Assembly” that a statutory cause of action, in addition to the common law bad faith tort, “was necessary to curb perceived abuses in the insurance industry.” According to C.R.S. § 10-3-1115: “for the purposes of an action brought pursuant to this section and section 10-3-1116, 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.”
Significantly, the Kisselman court anticipated the ridiculous “benefits owed” argument:
section 10–3–1115(1)(a) provides that a “person engaged in the business of insurance shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party claimant.” (Emphasis added.)
The clear import of this language shows that the General Assembly intended to prohibit conduct by insurers in their handling of claims for benefits owed to their insureds. Therefore, . . . insurers are statutorily prohibited from engaging in certain conduct—namely, acts of unreasonable delay or denial of payment of benefits, as defined in the statute—stemming from a claim for benefits. It follows that an insurer breaches this duty if it engages in post-effective date acts of unreasonable delay or denial regardless of when an insured originally made a claim for benefits under his or her insurance policy.
Kisselman, 2011 WL 6091708 (underscoring added). The court reiterated the relevant trigger: the issue is “whether any such conduct unreasonably delayed or denied payment of a claim for benefits owed” (underscoring added).
That is, the triggering event under the bad faith statutes is a claim for benefits made by the policy-holder to his or her insurer.