§ 10-3-537 — Special provisions for third-party claims

Colorado § 10-3-537

• Jurisdiction: Colorado
• Title 10: Insurance
• Art.: Regulation of Insurance Companies

Text

(1) Whenever any third
party asserts a cause of action against an insured of an insurer in liquidation, the
third party may file a claim with the liquidator.

(2) Whether or not the third party files a claim, the insured may file a claim
on the insured's own behalf in the liquidation. If the insured fails to file a claim by
the date for filing claims specified in the order of liquidation or within sixty days
after mailing of the notice required by section 10-3-521, whichever is later, the
insured is an unexcused late filer.

(3) The liquidator shall make recommendations to the court under section
10-3-541 for the allowance of an insured's claim under subsection (2) of this section
after consideration of the probable outcome of any pending action against the
insured on which the claim is based, the probable damages recoverable in the
action, and the probable costs and expenses of defense. After allowance by the
court, the liquidator shall withhold any dividends payable on the claim pending the
outcome of litigation and negotiation with the insured. When appropriate, the
liquidator shall reconsider the claim on the basis of additional information and
amend the said recommendations to the court. The insured shall be afforded the
same notice and opportunity to be heard on all changes in any recommendation as
in its initial determination. The court may amend its allowance as it finds
appropriate. As claims against the insured are settled or barred, the insured shall
be paid from the amount withheld the same percentage dividend as was paid on
other claims of like property, based on the lesser of the amount actually recovered
from the insured by action or paid by agreement plus the reasonable costs and
expense of defense, or the amount allowed on the claims by the court. After all
claims are settled or barred, any sum remaining from the amount withheld shall
revert to the undistributed assets of the insurer. Delay in final payment under this
subsection (3) shall not be a reason for unreasonable delay of final distribution and
discharge of the liquidator.

(4) If several claims founded upon one policy are filed, whether by third
parties or as claims by the insured under this section, and the aggregate allowed
amount of the claims to which the same limit of liability in the policy is applicable
exceeds that limit, each claim as allowed shall be reduced in the same proportion
so that the total equals the policy limit. Claims by the insured shall be evaluated as
in subsection (3) of this section. If any insured's claim is subsequently reduced
under subsection (3) of this section, the amount thus freed shall be apportioned
ratably among the claims which have been reduced under this subsection (4).

(5) No claim may be presented under this section if it is or may be covered by
any guaranty association or foreign guaranty association.

Legislative History

Source: L. 92: Entire part R&RE, p. 1472, � 14, effective July 1.