No Ambiguity, No Problem, No Statutory Bad Faith
Summary: American Family insured William and Joyce Davis, Jennifer Hansen’s parents, and named the Davises on the declarations sheet. Hansen was injured in an auto accident, settled her claim, and presented an underinsured motorist (UIM) claim to American Family. American Family denied coverage and Hansen filed claims for breach of contract, common law bad faith, and statutory bad faith. After the breach of contract claim was resolved, the common law and statutory bad faith claims were tried. A verdict for American Family was returned on the common law bad faith, but a verdict was returned for Hansen on the statutory bad faith claim finding American Family “had delayed or denied payment without a reasonable basis,” and further finding the damages were $0 for the delayed or denied payment. The trial court awarded Hansen her attorney fees, costs, and entered a $150,000 penalty, two times the covered UIM benefit. The Court of Appeals affirmed, but the Supreme Court of Colorado reversed.