In Colorado, Daily Statutory “Damages” against Insurer are a “Statutory Penalty” Subject to One-Year Statute of Limitations

Since 2020, Colorado has required insurers issuing “a commercial automobile or personal automobile policy of insurance for delivery in this state shall provide to the insured party a copy of the complete policy of insurance, including any endorsements.” C.R.S § 10-3-1117(1). The mandatory disclosures must include the name of the insurer; the name of each insured party as appears on the declarations page; liability limits; and a copy of the policy. Id. at (2)(a)(I-IV).

If an insurer fails to make these disclosures, the cost could become significant. C.R.S § 10-3-1117(3) provides for “damages” of $100 per day, beginning on the 31st day after receipt of the written request by the registered agent. In addition to these “damages,” the insurer could be held liable for attorneys’ fees and costs incurred in enforcing compliance.

While the statute describes the $100 per diem as “damages,” the Colorado Court of Appeals has recently held that it is a “statutory penalty,” such that C.R.S § 10-3-1117 is subject to Colorado’s one-year statute of limitations. In Reynolds v. Great Northern Ins. Co., 2023COA77, 539 P.3d 930 (Colo App. 2023), Great Northern’s registered agent received the necessary written notice, but the carrier did not comply until more than a year later. The claimant sought a penalty of $100 per day from the 31st day after receipt of the request. Great Northern moved to dismiss based on a one-year statute of limitations for claims seeking penalties.

Reynolds held that C.R.S § 10-3-1117 imposes a “statutory penalty,” and is subject to the one-year statute of limitations. Reynolds further held that the claim for failure to provide the required disclosures accrued one year after the 31st day of the request. The Court rejected the argument that the claim should accrue on the date of compliance because “that day may never occur.” Because the claimant asserted her enforcement claim for penalties more than a year after it accrued, it was time-barred.

The Court also held that a cause of action for the penalty imposed by section 3 of the statute accrues on the thirty-first day after an insurer receives a potential claimant’s written request for an insured’s policy information. Accordingly, the Court rejected the claimant’s application of the continuing violation doctrine to claims for penalties under section 10-3-1117. Claimant argued each day of an insurer’s noncompliance was a new violation with a separate date of accrual. However, the Court of Appeals noted application of the continuing violation doctrine in Colorado is limited to discrimination cases in Colorado and rejected the argument.

Key notes for carriers and requests under C.R.S. § 10-3-1117:

The statute applies only to auto policies;

The request for policy disclosure must be in writing and served on the carrier’s registered agent;

Carriers must disclose umbrella or excess policies, if applicable, that may be relevant to the claim; and,

The claimant and/or counsel may not disclose to any other party the policy information provided under the statute.