Information surrounding a new bill has surfaced and it could spell change for contractors and to a lesser extent, policyholders in Colorado. Unfortunately, the change may cause quite a bit of damage for contractors involved in litigation with insurance companies.

An interesting new bill has popped up on around Colorado and is known as “bill 17-204”. You can read a bit more about it here.

The bill’s summary is as follows:

Current law allows a third party, “on behalf of” the insured, to claim double damages and attorney fees from a property and casualty insurer for an unreasonable delay or denial of benefits. The bill eliminates the “on behalf of” language so that only the named insured may claim double damages and attorney fees from a property and casualty insurer. The bill also requires an insured to provide notice to the property and casualty insurer of the insured’s intent to file for double damages and
attorney fees under the law.

While the details of this bill are fairly simple, there is an underlining issue here that can affect contractors who are in the process of suing an insurance company.The bill effectively makes it so a contractor can not sue an insurance company by denying them the status of first party claimant.

The precedent for this goes back to a legal case in Colorado entitled “KYLE LARSON ENTERPRISES INC v. ALLSTATE INSURANCE COMPANY“. In this case, the contractor was hired by Allstate to repair several roofs. While the contractor was repairing, they discovered the need for additional repairs on the roofs, and followed through with these additional repairs.

Subsequently, the contractor invoiced Allstate and they were compensated for the original repairs, however they were denied compensation for the additional repairs. The contractor attempted to file suit as a first party and ended up dragging the suit to the supreme court, which in turn, set the precedent. (If you’d like to know more, contact Kyle Larson at 720-309-7191 or kyle@myroofingexpert.com).

If bill 17-204 were allowed to pass, the prior precedent would become void.

What do you think of bill 17-204?