Fear v. GEICO Casualty Co.
2024 CO 77. No. 23SC333. Insurance—Non-economic Damages—Underinsured Motorist Coverage.
December 23, 2024
The supreme court considered whether it is reasonable as a matter of law for an underinsured motorist (UIM) insurer to refuse to pay non-economic damages to an insured on the ground that such damages are “inherently subjective” and thus are always reasonably disputed until the remainder of the insured’s claims are resolved. The court also granted certiorari to decide whether an insurer’s internal settlement evaluation is admissible as evidence of undisputed “benefits owed” under State Farm Mutual Automobile Insurance Co. v. Fisher, 2018 CO 39, 418 P.3d 501.
The court first concluded that CRE 408 bars the admission of the kind of claim evaluation at issue here to show an amount of undisputed benefits owed, although the evaluation may be admissible for other purposes, including, for example, to establish an insurer’s good or bad faith.
Next, the court concluded that the court of appeals division below erred in determining that it is reasonable as a matter of law for an insurer to refuse to pay non-economic damages (or any portion of alleged non-economic damages) before resolving the rest of an insured’s claim because such damages are inherently subjective and therefore are always subject to reasonable dispute under Fisher. In the court’s view, it is conceivable that non-economic damages (or some portion of alleged non-economic damages) could be undisputed (or not subject to reasonable dispute) in a particular case, and in such a case, under Fisher, an insurer would be required to pay those damages without obtaining a release of an insured’s entire claim. Here, however, the sole evidence advanced by petitioner to demonstrate that a portion of his non-economic damages was undisputed (or not reasonably disputed) amounted to nothing more than an assertion that the claim evaluation proved the amount of the allegedly undisputed non-economic damages, which the court concluded is inappropriate under CRE 408.
Accordingly, the court affirmed the judgment of the division below, albeit in part on different grounds.