C.R.S. § 10-3-1118 (the Statute) is a fairly new statute governing an insurer’s right to assert an insured’s failure-to-cooperate as a defense to certain claims made against it. The statute was enacted in 2020 and sets out prerequisites for an insurer’s use of a failure-to-cooperate defense. To plead a failure-to-cooperate defense, the following stipulations must be met: 

(a) The insurer has submitted a written request to the insured or the insured’s representative for the information the insurer seeks via:

(I) Electronic means if the insured or the insured’s representative has consented to receive electronic documents from the insurer

(II) Certified mail

(b) The information is not available to the insurer without the assistance of the insured

(c) The written request provides the insured 60 days to respond

(d) The written request is for information a reasonable person would determine the insurer needs to adjust the claim filed by the insured or to prevent fraud

(e) The insurer gives the insured an opportunity to cure, which must:

(I) Include the furnishing of written notice to the insured of the alleged failure to cooperate, describing with particularity the alleged failure, within 60 days after the alleged failure 

(II) Allow the insured 60 days after receipt of the written notice to cure the alleged failure to cooperate

Compliance with the Statute permits an insurer to argue the insured’s failure-to-cooperate as a defense to the portion of the claim that the insurer was unable to evaluate as a result. The Statute also provides insurers protection from common law bad faith claims and C.R.S. § 10-3-1115/1116 unreasonable delay/denial claims.

The Statute, however, does not define the term “cooperation” or detail whether it governs conditions precedent in uninsured/underinsured motorist (UM/UIM) policies. Consequently, a dispute arose in United Servs. Auto. Ass’n & State Farm Mut. Auto. Ins. Co. v. Wenzell, 2026 CO 25¹, over whether the Statute barred the insurer from asserting a failure-to-cooperate defense where the insured failed to provide his medical records, which was a condition precedent to coverage. 

Wenzell was involved in an auto accident in 2017 but had pre-existing injuries from a prior accident. He filed a UIM claim, alleging US$2.7 million in medical bills. After receipt of his claim, Wenzell’s primary and excess carriers requested his medical records to evaluate damages attributable to his 2017 accident and those from his prior accident. Wenzell failed to execute sufficient medical releases and, subsequently, filed suit for bad faith delay or denial of insurance benefits. The carriers argued Wenzell failed to provide a medical release despite multiple requests over the span of months. Wenzell argued that the Statute barred the carriers from asserting his lack of medical releases as a defense and that the policies’ medical release requirement was a camouflaged failure-to-cooperate defense.

The Colorado Supreme Court held that although the generic failure-to-cooperate defense was governed by the Statute, conditions precedent to recovery were not. The Court considered “generic” duties to include a range of unspecified conduct that a policyholder might not realize the insured expects them to perform. Given the Statute’s aim was to clarify generic duties of cooperation and provide the insured a chance to cure innocent violations, any undefined duties were to be governed by the Statute. In contrast, the Court considered “conditions precedent” to be explicit actions required of the insured that were not nebulous or confusing and did not require clarification or protection by the Statute. Conditions precedent, such as medical release requirements, were designed to ensure the insurer had all relevant information to adjust the claim, and such itemized duties required compliance without additional notice from the insurer. 

The Court, however, did leave a note of warning: “Our holding today should not be understood as an invitation to insurers to try to circumvent section 1118 by establishing novel or unduly onerous conditions precedent. Today’s opinion leaves open the possibility that an insurer could still be subject to a statutory bad-faith claim if it uses conditions precedent in bad faith.” Id. at ¶28 n.5. Although the Court does not discuss what “onerous conditions precedent” may be a basis for bad faith, the Court clearly agrees that requiring medical releases are enforceable conditions precedent defenses, not general cooperation clauses governed by C.R.S. § 10-3-1118. 

Going forward, insurers should monitor opportunities to use the Statute.  Insurers have the ability under Colorado law to use the Statute to pressure uncooperative insureds or counsel to provide crucial information about a claim while also preserving the duty-to-cooperate defense. In particular, any undefined “general duty of cooperation” clauses should cue insurers to consider issuing a letter under the Statute. On the other hand, where the policy outlines specific and detailed conditions to coverage, such as disclosure of Medicare information or medical records, insurers may comfortably assert the insured’s non-compliance as a condition precedent to coverage.
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^{1 Wenzell also addressed a separate certified question, regarding the conditions of trigger for an excess UIM carrier’s coverage. The court, in line with previous holdings regarding exhaustion clauses, held that Colorado adopts the undisputed-damages approach, which triggers an excess UIM carrier’s coverage once the insured’s undisputed damages exceed the primary policy’s underlying limits, regardless of exhaustion of the underlying coverage.}