11 Plaintiffs, Philip Jordan and Roberta Jordan, appeal the district court's summary judgment in favor of defendant, Safeco Insurance Company of America, Inc., on their claim that Safeco unreasonably denied them underinsured motorist benefits. We affirm.
¶ 2 Among the issues the Jordans raise is an issue of first impression in Colorado. Under section 10-4-609, C.R.S.2012, as amended effective January 1, 2008, may an insurer providing underinsured motorist (UIM) insurance deny an insured such coverage for the difference between the limit of the tort-feasor's liability insurance coverage and the amount of a settlement paid by the tortfeasor to the insured? We conclude that it may.
I. Background
T3 In 2009, J.F., a minor driver, and the Jordans were involved in an automobile accident. The Jordans were injured, and they sued J.F. J.F.'s automobile insurance policy covered damages for injuries to others up to $100,000 per person or $300,000 per accident. Mr. and Mrs. Jordan settled their claims against J.F. for $60,000 and $38,500, respectively.
T4 The Jordans sought UIM benefits under their policy with Safeco, asserting that the policy covers all damages unpaid under the settlements, up to the policy limit.
15 The Jordans sued Safeco, asserting claims for (1) common law bad faith breach of an insurance contract; (2) unreasonable delay and denial of payment of a claim for benefits in violation of sections 10-83-1115 and -1116, C.R.S.2012
I 6 The district court granted Safeco's motion for summary judgment. The court determined that under amended section 10-4-609, the Jordans' claims were viable only if either Mr. or Mrs. Jordan could establish damages exceeding $100,000 (J.F.'s policy limit).
17 On appeal, the Jordans challenge only the district court's grant of summary judgment in favor of Safeco on their second claim under sections 10-38-1115 and -1116, and its refusal to grant them summary judgment on that claim. They concede that no material facts are disputed.
II. Standard of Review
T8 We review a grant of summary judgment de novo. Shelter Mut. Ins. Co. v. Mid-Century Ins. Co., 246 P.3d 651, 667 (Colo.2011). Summary judgment is appropriate when no genuine issue of material fact exists and the moving party is entitled to judgment
III. Discussion
¶ 9 In challenging the district court’s order granting summary judgment for Safeco and its refusal to grant their motion for summary judgment, the Jordans contend that Safeco unreasonably denied their UIM claim because payment was required by (1) the plain terms of the Safeco policy; and (2) section 10-4-609. We conclude, however, that Safe-co’s denial of coverage was legally permissible under both the clear language of the policy and the unambiguous terms of section 10-4-609. Therefore, Safeco did not unreasonably delay or deny a claim for payment of benefits in violation of sections 10-3-1115 and -1116 as a matter of law.
A. The Safeco Policy
¶ 10 The Safeco policy’s UIM coverage provision (Part C, “INSURING AGREEMENT,” section A) says that Safeco
will pay damages under this coverage caused by an accident with an underin-sured motor vehicle only if 1. or 2. below applies: 1. The limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements, or 2. [not applicable].4
¶ 11 The policy later defines an underin-sured motor vehicle (in Part C, “INSURING AGREEMENT,’’ section C) as follows:
“Underinsured motor vehicle” means a land motor vehicle, the ownership, maintenance or use of which is insured or bonded for bodily injury at the time of the accident, but the amount paid for bodily injury under such insurance or bonds is not enough to pay the full amount the insured is legally entitled to recover as damages.
¶ 12 And, as also relevant here, the UIM portion of the policy contains a provision regarding the effect of other insurance on UIM coverage (in Part C, “OTHER INSURANCE,” section B). It states: “[UIM] Coverage shall be excess over all bodily injury liability bonds or policies applicable at the time of the accident.”
¶ 13 We review the interpretation of an insurance contract de novo, employing “well-settled principles of contractual interpretation.” Allstate Ins. Co. v. Huizar, 52 P.3d 816, 819 (Colo.2002); accord Shelter Mut. Ins. Co., 246 P.3d at 666. We construe the plain language of the contract to fulfill the intent of the insured and the insurer, and we resolve ambiguities in favor of the insured. Shelter Mut. Ins. Co., 246 P.3d at 666.
¶ 14 We agree with Safeco and the district court that the policy terms unambiguously provide for payment of UIM benefits only for damages above the tortfeasor’s insurance policy liability limit.
¶ 15 The relevant UIM coverage provision states that Safeco will pay UIM benefits if “the limits of liability ... have been exhausted by payment of judgments or settlements.” These terms clearly restrict Safeco’s UIM liability to amounts exceeding an underin-sured tortfeasor’s insurance policy’s limit of liability. Contrary to the Jordans’ assertion, the coverage provision does not say that the tortfeasor’s limit of liability is deemed to be exhausted by the payment of any judgment or settlement, regardless of the amount. Rather, it plainly conditions payment of UIM benefits on exhaustion of the tortfeasor’s limit of liability, however such exhaustion occurs. See Birchfield v. Nationwide Ins., 317 Ark. 38, 875 S.W.2d 502, 503 (1994) (holding that similar language unambiguously required exhaustion of tortfeasor’s policy limit before UIM coverage was available); Hill v. Am. Family Mut. Ins. Co., 150 Idaho 619, 249 P.3d 812, 815-16 (2011) (noting that identical policy language is common in the insurance industry and holding that it unambiguously requires exhaustion of a tortfeasor’s
116 Also contrary to the Jordans' assertion, the policy's definition of "underin-sured motor vehicle" does not dictate a different conclusion. To be sure, a condition of UIM coverage under the policy is that the vehicle is underinsured, as defined in the policy. But, as noted, the coverage provision further conditions payment of UIM benefits - as relevant here, by requiring exhaustion of the tortfeasor's liability policy limit. The definition of "underinsured motor vehicle" does not negate that further condition.
T 17 The cases on which the Jordans rely primarily, Freeman v. State Farm Mut. Auto. Ins. Co., 946 P.2d 584 (Colo.App.1997); State Farm Mut. Auto. Ins. Co. v. Tye, 931 P.2d 540 (Colo.App.1996); and State Farm Mut. Auto. Ins. Co. v. Bencomo, 873 P.2d 47 (Colo.App.1994), are distinguishable. In Freeman and Bencomo, the relevant policy provisions granted coverage once the limits of liability for all bodily injury policies had been "used up" by payments of settlements or judgments. Freeman, 946 P.2d at 585; Bencomo, 873 P.2d at 49. The divisions analyzed the meaning of those provisions in light of the former version of section 10-4-609. As discussed in Part IIIB below, before the 2008 amendments to that section, subsection (5) of the statute required UIM coverage for damages in excess of amounts paid pursuant to a tortfeasor's liability policy. As amended, however, section 10-4-609 requires coverage for amounts in excess of a tortfeasor's liability policy limit.
[ 18 Tye also relied on the prior version of section . 10-4-609. The division expressly construed the phrase "paid or payable" in the UIM coverage provision there at issue in light of former subsection 10-4-609(5). Tyg, 931 P.2d at 542-48.
T 19 The coverage provision at issue in this case does not include that same "used up" or "paid or payable" language at issue in the cases decided under the prior version of seetion 10-4-609. And, the policy here includes an additional relevant provision not mentioned in the earlier cases: namely, the "other insurance" provision in the UIM part of the policy, stating that "[UIM] Coverage shall be excess over all bodily injury liability bonds or policies applicable at the time of the accident." This provision, like the coverage provision, clearly indicates that UIM benefits are payable only after the limit of the tort-feasor's liability policy is exhausted. See Apodaca v. Allstate Ins. Co., 255 P.3d 1099, 1103 (Colo.2011) (discussing "excess" insurance); DiCocco v. Nat'l Gen. Ins. Co., 140 P.3d 314, 316 (Colo.App.2006) ("An excess insurer is one whose coverage of a given loss is activated only after the magnitude of the loss exceeds the limits of the applicable 'primary insurance.").
T20 And in any event, the prior version of section 10-4-609 does not apply to this case. Because the decisions in Freeman, Tye, and Bencomo were based in large part (perhaps entirely) on the prior version of section 10-4-609, they do not influence the outcome here.:
B. Section 10-4-609
121 Next, the Jordans contend that under the current version of section 10-4-609, an insured's good-faith settlement with a tortfeasor necessarily "exhausts" the tortfea-sor's liability limits. Thus, they argue, if their Safeco policy does not cover the difference between what they received in settlement and J.F.'s insurance policy liability limit, the condition on UIM coverage in the Safeco policy is unenforceable. We reject this contention.
122 Even if a UIM coverage provision is unambiguous, we may conclude that it is void if it conflicts with the UIM insurance statute by diluting, conditioning, or limiting coverage mandated thereby. Farmers Ins. Exch. v. Anderson, 260 P.3d 68, 75 (Colo.App.2010); see DeHerrera v. Sentry Ins. Co., 30 P.3d 167, 173 (Colo.2001) ("An insurance contract that denies statutorily mandated coverage is void and unenforceable."). We perceive no such conflict here.
123 Section 10-4-609 is intended "to ensure the widespread availability of protec
1 24 Before the 2008 amendments to seetion 10-4-609, subsection (5) thereof provided: j
The maximum liability of the insurer under the uninsured motorist coverage provided shall be the lesser of:
(a) The difference between the limit of uninsured motorist coverage and the amount paid. to the insured by or for any person or organization who may be held legally liable for the bodily injury; or
(b) The amount of damages sustained, but not recovered.
Ch. 92, see. 1, § 10-4-609(5), 1988 Colo. Sess. Laws 455 (emphasis added).
1 25 Underinsured motor vehicles were defined, as relevant here, as vehicles insured for less than the uninsured motorist coverage under the insured's policy, or vehicles for which payments to persons other than the insured reduced coverage for the vehicle to less than the uninsured motorist coverage under the insured's policy. See Ch. 92, see. 1, § 10-4-609(4), 1983 Colo. Sess. Laws 455.
T26 Senate Bill 07-256, now codified at sections 10-4-609 and 104-418,
[Underinsured motorist coverage] shall be in addition to any legal liability coverage and shall cover the difference, if any, between the amount of the limits of any legal liability coverage and the amount of the damages sustained ... up to the maximum amount of the coverage obtained pursuant to this section.... The amount of the coverage available pursuant to this seetion shall not be reduced by a setoff from any other coverage ....
(Emphasis added.)
T27 It is against this backdrop that we must consider the Jordans' statutory construction argument, and the three cases on which they again rely, Freeman, Tye, and Bencomo. Taken together, those cases stand for the proposition that UIM benefits must be provided for damages in excess of any amount paid by a tortfeasor in settlement or of any judgment against the tortfeasor. But, as discussed above, the statute which was the linchpin of the holdings in those cases, seetion 10-4-609, has since been changed materially.
128 We presume that the General Assembly has knowledge of existing statutes and relevant judicial decisions when it enacts legislation. In re Miranda, 2012 CO 69, ¶ 17, 289 P.3d 957; Colo. Water Conservation Bd. v. City of Central, 125 P.3d 424, 434 (Colo.2005). "Thus, when a statute is amended, the previous judicial construction stands only to the extent that it remains unaffected by the amendment." People v. O'Donnell, 926 P.2d 114, 115 (Colo.App.1996); accord Rauschenberger v. Radetsky, 745 P.2d 640, 643 (Colo.1987) ("When a statute is amended, the judicial construction previously placed upon the statute is deemed approved by the General Assembly to the extent that the provision remains unchanged.").
{$29 As noted, effective January 1, 2008 (before the effective date of the Jor-dans' policy and the accident in this case), the General Assembly repealed subsection
¶ 30 Had the General Assembly intended to preserve UIM coverage for the gap between a settlement amount and a tortfea-sor’s liability policy limit, it could have incorporated the language from subsection 10-4-609(5), or similar language, into the amendments. It did not. Instead, it used materially different language plainly changing the meaning of the statute. Essentially, it changed Colorado’s UIM statutory scheme from a “reduction” approach—where UIM coverage was reduced by any payment received or judgment against the tortfeasor— to an “excess” approach—where UIM coverage is payable for damages exceeding the tortfeasor’s liability policy limit, subject only to the UIM coverage limit in the insured’s policy. See Curran v. Progressive Northwestern Ins. Co., 29 P.3d 829, 832 (Alaska 2001) (discussing the difference between the two approaches in the UIM context); see also DiCocco, 140 P.3d at 316 (defining an excess insurer). The excess approach is favored by many, perhaps most, states.
¶ 31 Nonetheless, the Jordans (and amicus curiae the Colorado Trial Lawyers Association) contend that interpreting subsection 10-4-609(l)(e) in this way leads to absurd results because that interpretation (1) creates a gap of uncovered damages in cases like this; (2) benefits insurers, in contravention of public policy; and (3) will encourage more litigation. We are not persuaded.
¶ 32 The facts of this case present a situation where the insureds may suffer a gap in coverage, and would have been better off under the old version of the statute.
¶ 33 Courts in many other states have held that under UIM statutes (or former statutes, in the ease of Minnesota) worded similarly to section 10—4—609(l)(e), insurers, are required to pay UIM benefits, if at all, only when the insured’s damages exceed the tortfeasor’s liability policy limit; the UIM insurer is not required to pay for any gap in coverage. See, e.g., Aetna Cas. & Sur. Co. v. Farrell, 855 F.2d 146, 149-50 (3d Cir.1988) (applying New Jersey law); Curran, 29 P.3d at 832; Country Mut. Ins. Co. v. Fonk, 198 Ariz. 167, 7 P.3d 973, 976, 978 (Ariz.Ct.App.2000); Taylor v. Gov’t Employees Ins. Co., 90 Hawai’i 302, 978 P.2d 740, 752 (1999); Hill, 249 P.3d at 821; Schmidt v. Clothier, 338 N.W.2d 256, 261 (Minn.1983); White v. Continental Ins. Co., 119 Nev. 114, 65 P.3d 1090, 1092 (2003); Buzzard v. Farmers Ins. Co., Inc., 824 P.2d 1105, 1112 (Okla.1991); D’Adamo v. Erie Ins. Exch., 4 A.3d 1090, 1095 (Pa.Super.Ct.2010); Cobb v. Benjamin, 325 S.C. 573, 482 S.E.2d 589, 590, 597 (S.C.Ct.App.1997); Olivas v. State Farm Mut. Auto. Ins. Co., 850 S.W.2d 564, 565 (Tex.App.1993); Hamilton v. Farmers Ins. Co. of Washington, 107 Wash.2d 721, 733 P.2d 213, 217 (1987).
35 In essence, the Jordans (and amicus) contend that any interpretation of insurance statutes which could result in less coverage than was available under prior law must be against public policy. But the statute necessarily reflects public policy. Huriey, 90 Cal. Rptr.2d at TOL. And the Jordans have not cited any authority for the proposition that the General Assembly cannot change the law in a way that, in some instances, may prove detrimental to insureds. We are not at liberty to impose any such policy restriction on the actions of the General Assembly. Hamill v. Cheley Colo. Camps, Inc., 262 P.3d 945, 954 (Colo.App.2011) (judiciary's role is to recognize and enforce public policy implemented by the General Assembly); see Board of Cnty. Commr's v. Colo. Dep't of Pub. Health & Env't, 218 P.3d 336, 343 n. 11 (Colo.2009) (public policy concerns are properly addressed to the General Assembly); Scoggins v. Unigard Ins. Co., 869 P.2d 202, 205 (Colo.1994) ("We will not judicially legislate by reading a statute to accomplish something the plain language does not suggest, warrant[,] or mandate."); see Curran, 29 P.3d at 833 ("public policy can guide statutory construction but cannot override a clear and unequivocal statutory requirement").
1 36 As noted, the General Assembly's decision not to require coverage for the so-called gap serves legitimate policy interests. And we observe that, considered as a whole, the General Assembly's amendments to the UIM statute will, in most if not all cases, as discussed below, prove more beneficial to the insureds than prior law.
137 The new version of the UIM statute increases the amount of UIM coverage that an insurer must offer. § 10-4-609(2).
[ 38 Also, under the new statutory scheme, insurers of all potentially applicable UIM policies (such as those covering the vehicle, driver, passenger, or pedestrian) are liable for damages, as the policies must be allowed to "stack" - that is, a second policy's coverage begins where the first policy's coverage leaves off, without reducing the amount of available recovery under the second policy. See § 10-4-609(1)(c); Snell v. Progressive Preferred Ins. Co., 260 P.3d 37, 38 (Colo.App.2010) (discussing the amendments to $ 10-4-609).
139 Nor are we swayed by the Jordans argument that allowing insureds to be responsible for a gap in coverage will "coerce" insureds to sue, rather than settle with, tort-feasors. The amendments to section 10-4-609 do not diminish the factors that generally encourage settlement. And enforcing the plain language of the amended statute will eliminate litigation between insureds and insurers over the reasonableness of insureds' settlements with tortfeasors. In any event, we are not free to rewrite the statute because enforcement of the unambiguous language might lead to a marginal increase in litigation.
T40 We conclude that the district court properly determined that, as a matter of law, Safeco was not obligated to pay UIM benefits to the Jordans. It follows that Safeco was entitled to summary judgment on the Jordans' claim under sections 10-83-1115 and -1116.
T 41 The judgment is affirmed.
. The terms "uninsured" and "underinsured" appear in tandem in both the insurance contract provision at issue and the statute at issue (section 10-4-609). Though section 10-4-609 is titled "Insurance protection against uninsured motorists-applicability," it concerns both uninsured and underinsured motorist coverage. Throughout this opinion, we refer only to underinsured motorist benefits, because J.F. was not an uninsured motorist.
. The terms appearing in bold type in this opinion appear in bold type in the policy. In insurance contracts, terms appearing in bold print usually have a special meaning defined elsewhere in the policy. See, e.g., Mid-Century Ins, Co. v. Robles, 271 P.3d 592, 595 n. 2 (Colo.App. 2011) (noting that policy terms written in bold type are defined terms); Miller v. Ho Kun Yun, 400 S.W.3d 779, 785-86 (Mo.Ct.App.2013) (same, with respect to a UIM provision).
. These statutes give an insured a cause of action against an insurer for unreasonable delay or denial of payment of a claim for benefits. The insured may recover ""two times the covered benefit" and reasonable attorney fees and costs.
. The Jordans' UIM coverage under the Safeco policy was limited to $100,000.
. Subsection 10-4-418(2)(c), which had expressly permitted anti-stacking provisions in insurance contracts, was repealed by the bill.
. As discussed below in footnote 7, we do not decide whether an insured must actually exhaust the limit of the tortfeasor’s liability policy before being entitled to any UIM coverage. If so, there would not be a "gap” because the insurer would not be liable at all absent actual exhaustion of the tortfeasor’s liability policy coverage.
. It appears that every court to have addressed the issue of gap coverage under UIM statutes similar to amended section 10-4-609 has held
. The insurer must offer UIM coverage. But the named insured may reject it in writing. § 10-4-609(1)(a). |
. This is the purpose of the last sentence of subsection 10-4-609(1)(c) (''The amount of coverage available pursuant to this section shall not be reduced by a setoff from any other coverage...."). Contrary to the Jordans' suggestion, that sentence does not mean that an insurer is liable for any amount above what an insured receives from a tortfeasor, regardless of the tort-feasor's liability policy limit. Such an interpretation would negate the first sentence of the subsection.