United Services Automobile Ass’n v. Wenzell.

2026 CO 25. No. 24SC372. Insurer’s Defenses—Failure-to-Cooperate Defense—Excess Insurers—Exhaustion Clauses.

April 27, 2026

In this insurance case, the supreme court considered which insurer defenses are covered by CRS § 10-3-1118. The court concluded that only defenses based in the general cooperation clause, not enumerated conditions precedent, must be raised in compliance with § 10-3-1118’s procedural requirements.

The court also considered whether an excess insurer may include an exhaustion clause in its policy to determine when its duty to investigate, adjust, and pay out a claim begins. The court concluded that while these clauses are valid, exhaustion must be defined by a policyholder’s undisputed damages, not the payment of benefits by an underlying insurer.