The Colorado Court of Appeals on March 5 announced its decision in Fear v. GEICO Casualty Co., addressing whether an insurer’s internal claim evaluation can be used to establish “undisputed” damages in a statutory unreasonable-delay claim. The case arose from an underinsured motorist dispute in which a trial court concluded that GEICO had unreasonably delayed paying benefits and imposed statutory penalties after relying in part on the insurer’s internal settlement valuation.
The appellate court reversed that portion of the judgment, holding that internal claim evaluations tied to settlement negotiations cannot be used to prove the amount of undisputed benefits owed. Because the trial court relied on GEICO’s internal valuation to conclude that a portion of the plaintiff’s noneconomic damages was undisputed, the panel vacated the finding of unreasonable delay as well as the associated statutory penalties and attorney-fee award.
The court otherwise affirmed the portions of the judgment not dependent on that ruling and remanded the case for further proceedings. The decision clarifies that plaintiffs pursuing delay or bad-faith claims must rely on independent evidence to establish undisputed damages, rather than insurers’ internal settlement analyses created during claim evaluation.