In two recent blog posts, I discussed Florida statutory interest which imposes a statutory duty on insurance carriers to pay interest on delayed payment of insurance proceeds.1 If you missed either blog post, then you find them here:

In the latter, I received a comment inquiring about other states with statutory interest. I decided to take the opportunity to discuss statutory interest state-by-state to inform others of this small but important consideration when evaluating a property insurance claim. This blog post will focus on statutory interest in the beautiful State of Colorado.

Colorado Revised Statues, Section 5-12-102(1)(a), states, in relevant part, that “creditors shall receive interest . . . [w]hen money or property has been wrongfully withheld.”2

An insurer wrongfully withholds money if it fails to issue payment for insurance proceeds when there is an obligation to do so.3 The wrongful withholding need not be tortious or in bad faith. There simply needs to be “a reasonable expectation of payment” to render nonpayment “wrongful.”4

Failure to plead a demand for prejudgment interest in a complaint does not waive entitlement. Section 5-12-102 contains no pleading requirement. Rather:

The purpose of section 5-12-102 is to discourage a person responsible for payment of a claim to stall and delay payment until judgment or settlement. . . The provision recognizes the time value of money and represents a legislative determination that persons suffer a loss when they are deprived of property to which they are legally entitled.5

When an insurer wrongfully withholds payment of insurance proceeds, prejudgment interest can be used to hold the insurer accountable for the delayed payment. The court in Thompson v. Catlin Insurance Company (UK) Ltd, recently confirmed that section 5-12-102 applies in the first-party property context.6 In fact, section 5-12-102 requires payment of statutory interest in all claims where payment is wrongfully withheld except personal injury or tort actions, which are left to section 13-21-101.7

Claimants are entitled to 8% statutory interest per annum compounded annually, which accrues from the date the moneys are wrongfully withheld and becomes due on the date payment is issued or the date judgment is entered, whichever occurs first.8

Section 5-12-102 should be considered in evaluating Colorado first-party property claims and aiding those in the uphill battle of obtaining wrongfully withheld policy benefits.

Comment below if there is a particular state you would like me to discuss in an upcoming post.
1 Fla. Stat. § 627.70131(5)(a).
2 C.R.S. § 5-12-102(1)(a) (2018).
3 See Thompson v. Catlin Ins. Co. (UK) Ltd., No. 16SC916, 2018 WL 6442674 (Colo. Dec. 10, 2018) (“A wrongful withholding only requires the failure to pay or deliver money or property when there is an obligation to do so.”).
4 Id.
5 Id. (quoting Mesa Sand & Gravel Co. v. Landfill, Inc., 776 P.2d 362, 364 (Colo. 1989)).
6 Id. (The Colorado statute simply refers to money “[t]hat has been wrongfully withheld.”); see also Beren v. Beren, 349 P.3d 233, 246 (Colo. 2015) (noting that section 5-12-102 codified the doctrine of moratory interest in contract and property damage cases.).
7 Id.; see also Old Republic Ins. Co. v. Ross, 180 P.3d 427, 436 (Colo. 2008) (“[S]ection 5-12-102 . . . governs the award of prejudgment interest in non-personal-injury cases.”).
8 C.R.S. § 5-12-102(b).