2021 COA 149
Colo. Ct. App.2021Background
- Metropolitan issued a Colorado auto policy (effective May 15, 2010) to Edward and Margaret Mullen; the policy initially included UM/UIM limits of $100,000/$300,000.
- Around May 6, 2010 Metropolitan mailed a ~70-page packet including a standalone UM/UIM Selection Form, a Summary Disclosure, the policy, and declarations.
- Edward signed and returned the Selection Form electing $25,000/$50,000 UM/UIM; Metropolitan processed the change (effective July 15, 2010) and refunded part of the premium.
- Edward died November 2010; Margaret remained on the policy. In October 2018 she suffered injuries from an underinsured motorist and received $25,000 (the UM/UIM limits Metropolitan had paid).
- Margaret sued for a declaratory judgment that Edward’s 2010 selection was legally ineffective because Metropolitan failed to notify and offer UM/UIM coverage in a manner reasonably calculated to permit an informed decision; the district court granted summary judgment for Metropolitan.
- The Court of Appeals reversed: it held Metropolitan did not satisfy its Parfrey duty because the Selection Form misstated the law (using an outdated definition of “underinsured”) and presented confusing/inaccurate coverage and premium information.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Metropolitan satisfied its statutory duty under § 10-4-609(2) to offer UM/UIM in a manner reasonably calculated to permit an informed decision (Parfrey standard) | Metropolitan’s Selection Form and packet were misleading and confusing (incorrect definition of underinsured motorist; inaccurate/omitted premium and limits info), so the offer was not reasonably calculated to permit an informed choice | Metropolitan provided the required offer: the standalone Selection Form plus Summary Disclosure and policy gave adequate notice; one-time duty was satisfied | Held for Plaintiff: COA reversed. The Selection Form misstated current law and was confusing (misleading limits and premium info), so Metropolitan failed its Parfrey duty |
| Whether the insurer must offer UM/UIM before the policy is issued or renewed (timing of the statutory offer) | Offer must be made before issuance/renewal per § 10-4-609(2); Metropolitan’s contemporaneous delivery with the issued policy failed the timing requirement | Metropolitan contended its one-time duty was satisfied by providing the Selection Form prior to when insureds needed UM/UIM | Not decided: COA resolved the case on adequacy (Parfrey) and did not reach timing question |
| Whether Edward’s 2010 election binds Margaret after his death for the 2011 renewal and later policies | Edward’s post-issuance election was ineffective for the 2010 policy and, because he died before the 2011 renewal, he lacked authority to bind Margaret for renewals | As named insured, Edward had authority and his selection bound Margaret; insurer satisfied its duty | Not decided by COA (district court had held in Metropolitan’s favor, but COA resolved case on offer adequacy and remanded for judgment for Margaret) |
Key Cases Cited
- Allstate Ins. Co. v. Parfrey, 830 P.2d 905 (Colo. 1992) (establishes insurer's one-time duty to notify/offer UM/UIM and Parfrey factors for adequacy)
- Airth v. Zurich Am. Ins. Co., 488 P.3d 308 (Colo. App. 2018) (discusses timing/one-time duty and evaluating offer under totality of circumstances)
- Jordan v. Safeco Ins. Co. of Am., Inc., 348 P.3d 443 (Colo. App.) (explains 2008 statutory amendment changing UM/UIM from reduction to excess approach)
- Jewett v. Am. Standard Ins. Co. of Wis., 178 P.3d 1235 (Colo. App. 2007) (failure to make statutorily required offer incorporates additional coverage by operation of law)
- Briggs v. Am. Nat'l Prop. & Cas. Co., 209 P.3d 1181 (Colo. App. 2009) (misleading or materially inaccurate selection materials can defeat statutory compliance)
- Reid v. Geico Gen. Ins. Co., 499 F.3d 1163 (10th Cir. 2007) (Parfrey requires objective-reasonableness inquiry into insurer's offer)