Summary
The Colorado Supreme Court held that an insurer's late but adequate notice of a premium increase or coverage decrease automatically extends the existing commercial insurance policy for 45 days at a prorated premium. A full-term renewal under Colorado's insurance notice statute applies only when the insurer fails to provide adequate notice before the existing policy expires. The court reversed the court of appeals and remanded for entry of judgment in favor of Granite State Insurance Company.
Topics
Practice areas
Questions Presented
- Whether Colorado's insurance notice statute requires full-term renewal of a prior commercial property policy when the insurer provides late but adequate notice of a decrease in coverage before the existing policy expires.
- Whether the 2002 policy governed Ken Caryl's loss after the statutory forty-five-day extension of the 2001 policy expired.
Holdings
- Under section 10-4-110.5(1), late notice of an increased premium or decreased coverage, when provided before expiration of the existing policy, automatically extends the existing policy for forty-five days at a prorated premium but does not trigger full-term renewal. The term "requirements" in the statute's third sentence refers to the notice requirements in the first sentence, not compliance with the second sentence's automatic-extension remedy.
- The 2002 policy governed Ken Caryl's March 19, 2003 loss because the loss occurred more than forty-five days after expiration of the 2001 policy.
Key quotations
“Under the plain language of the statute, we construe the first sentence as establishing the statute's notice requirements and the second and third sentences as providing distinct remedies to the insured if the insurer fails to comply with the notice requirements set forth in the statute's first sentence.” (183 P.3d at 564)
“Having adequately notified Ken Caryl of the decrease in coverage before the expiration of the 01 Policy, Granite State did not trigger the full-term renewal remedy provided for in the third sentence of the notice statute.” (183 P.3d at 568)
Factual background
Ken Caryl purchased commercial property insurance from Granite State, including a 2001 policy providing blanket coverage and a 2002 policy providing scheduled coverage by individual building. Granite State notified Ken Caryl of the decrease in coverage thirty-three days before the existing policy expired and provided the renewal quotation five days before expiration. The roof of Ken Caryl's riding arena collapsed on March 19, 2003, after the forty-five-day statutory extension had expired, and Granite State paid only the amount available under the 2002 policy.
Procedural history
Ken Caryl sued after Granite State limited coverage for a roof-collapse loss under the renewed policy. The trial court granted Granite State summary judgment, concluding that late notice triggered only a forty-five-day extension and not a full-term renewal. The court of appeals reversed, holding that failure to provide timely notice and failure to inform Ken Caryl of the extension required full-term renewal. The Colorado Supreme Court reversed the court of appeals and remanded for entry of judgment in favor of Granite State.
Remand instructions
Reverse the court of appeals' judgment and remand to that court for return to the trial court for entry of judgment in favor of Granite State.