Colorado Insurance Law & Regulations

Practice flashcards covering Colorado insurance regulations, producer responsibilities, claims practices, and fraud based on a study transcript of study questions.

Colorado Resident Producer

A person who solicits, negotiates, effects, procures, delivers, renews, continues, or binds an insurance policy for risks in Colorado, including a person who solicits or negotiates membership enrollments in a health care plan.

Unfair Discrimination

Refusing to insure solely because another insurer has refused to issue a policy, or treating individuals of the same class and hazard differently for underwriting purposes, such as inquiring about sexual orientation.

Immediately threatened area

The condition under which an insurer may refuse to issue a fire policy for property in a federally designated disaster area prone to wildfire.

Colorado Auto Insurance Plan

A plan that distributes applicants who are entitled to but unable to obtain mandatory auto insurance through ordinary markets among all auto insurers transacting business in Colorado.

Commissioner Hearing

The first action the Commissioner must take upon receiving information that a license holder has violated state law to determine guilt and potential license revocation or suspension.

Auto Policy Cancellation Exceptions

Reasons an insurer cannot cancel an auto policy after it has been in force for $60$ days, such as an accident for which the covered driver is not at fault.

Hazard Insurance Limit

A lender may not require a borrower to provide coverage on real property in an amount exceeding the replacement value of the improvements on the property.

Fiduciary Capacity (Combined Bank Account)

A producer is permitted to maintain only one combined bank account for all insurers represented by the producer.

Insurance Anti-Fraud Plan

A plan required by every licensed insurer to prevent, detect, and investigate fraud, educate employees, and report fraud to law enforcement.

Colorado Insurance Commissioner

The head of the Division of Insurance who is appointed by the governor and confirmed by the state Senate.

Emergency Cease and Desist Order

An order that must be delivered by the Commissioner via certified or registered mail with return receipt.

Medical Payments Proof of Rejection

The requirement that an insurer must maintain written proof that a named insured rejected medical payments coverage for at least $3$ years after the date of rejection.

Unfair Claims Practices

An improper practice such as compelling insureds to sue by offering substantially less than what a lawsuit would award.

Producer Licensure Age Requirement

An individual applying for an insurance license must be at least $18$ years of age.

Certificate of Authority Renewal

An authorization for an insurance company to do business that must be renewed annually.

Controlled Business

The act of procuring insurance on the life or property of the producer's self, spouse, or employer; punishable by license nonrenewal.

Coercion

An example of an unfair trade practice where a lender requires a borrower to buy insurance from them as a condition for receiving a loan.

Colorado UM/UIM Limits

The minimum limits of liability for uninsured/underinsured motorist coverage, which are $25/50$, meaning $25,000$ per person and $50,000$ per accident for bodily injury.

Annual Financial Statement Deadline

All insurance companies doing business in Colorado must file this document with the Commissioner by March 1st of each year.

Material Misrepresentation or Change in Risk

The only cases, caused by the insured, where an insurer is permitted to increase premiums or decrease coverage during a policy period if the premium was prepaid.

Replacement Cost Valuation

A loss settlement method that pays the cost to replace property with property of like kind and quality at today's costs without a deduction for depreciation.

Standard Policy Effective Time

Most insurance policies typically begin and end at $12:01\,a.m.$ on the dates listed on the Declarations page.

General Damages

Awards for losses that cannot be calculated objectively, such as pain, suffering, mental anguish, and disfigurement.

Homeowners Liability Under 'Other Insurance'

Section II coverages are considered excess insurance over any other collectible insurance unless the other insurance is specifically written as excess.

Personal Umbrella Liability Exclusions

Commonly excludes damage to property in the insured's care, custody, or control, while typically providing bodily injury, property damage, and personal injury liability.

Yacht Policy Navigational Limits

A provision describing the specific territory or area where the insured watercraft is allowed to operate for coverage to apply.

Subrogation

The right of an insurance company to recover payment from a negligent third party after the insurer has paid a loss to the insured.

Indemnity

The principle that the insured should be restored to the same financial condition as before the loss and should not profit from an insurance transaction.

Continuing Education (CE) Requirements

A Colorado producer must complete $24$ credit hours every renewal period, including at least $3$ hours in ethics and $18$ hours in their licensed line of business.

Contributory Negligence

A defense that prevents a claimant from recovering damages if they were negligent to any extent.

Duty to Defend Exhaustion

The rule that an insurer's obligation to provide a defense ends when the policy limits have been exhausted by judgments or settlements.

Tort

Any wrongful act, intentional or unintentional, other than criminal acts and contract breaches, that constitutes the basis of a claim by a third party.

Special Damages

Compensation awarded to an injured party for actual, known, and tangible expenses such as medical bills, loss of earnings, and repair costs.

Coinsurance Condition

A property policy requirement, usually $80\%$, that the insured maintain insurance equal to a specified percentage of the building's replacement cost.

Direct Loss

Physical damage to property, including damage from the proximate cause, such as water damage resulting from firefighters extinguishing a house fire.

Homeowners Cancellation Notice

An insurer must give at least $30$ days' notice for cancellation with reason, or $10$ days' notice if the cancellation is for nonpayment of premium.

Market Value

The price a willing buyer would pay under fair market conditions to a willing seller.

Aggregate Limit

The maximum amount an insurer will pay for all losses occurring within a specific policy period.

Combined Single Limit

A policy liability limit that can be applied to either bodily injury or property damage, or a combination of both, in any one occurrence.