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Insurers must be prepared for new state law set to go into effect

On Behalf of | Nov 13, 2023 | Insurance Defense News

Disputes over insurance are common in Colorado. Often, this is viewed from the perspective of the insured as they make assertions that the insurance company is trying to avoid making payouts based on the policy. Given the unexpected disasters that have been happening and how people are left to go back and forth with their insurer, it is no surprise that disagreements can escalate.

A new law set to go in effect at the start of 2024 is designed to foster clarity between an advertisement and what the insurance policy does. Just as policyholders should be prepared, so too should insurers.

Insurance advertisement and the policy must be clear

According to the law, the documents must be in the same language as the advertisements that are shown in the state. That includes how the person seeks a quote, what the coverages are and a full explanation of the benefits when filing a claim.

People might not go through an entire policy when they sign it. This could result in their failure to understand when there might be exclusions that will impact whether they will receive a payment after an incident. This must be clear based on the new law. The law also addresses policies that are available in languages other than English. The policyholder must receive a new or renewal policy in their chosen language.

These new rules must be followed since the failure to do so can result in the insurer facing the prospect of exclusions or rejections being voided. That can mean the insurer needs to pay the policyholder’s legal fees and will not collect on premiums.

Know the new insurance law to avoid complex disputes

There is an endless stream of advertisements seemingly everywhere as to the importance of insurance. Just about anything in a person’s life from their home, business, auto, property and more can be covered by insurance. However, many disagreements stem from how the advertisement was interpreted, what the policy covers and to what extent.

With the new law starting on Jan. 1, 2024, it is inevitable that misunderstandings will arise. The insurance companies must be fully up to date on the law and react accordingly in adhering to it. When there are allegations that they are not living up to their end of the bargain, they need to be shielded by a comprehensive insurance defense.