Colorado Policyholders Seek Lawsuit over Auto Insurance Premiums

May 17, 2004

A group of Colorado motorists claim they have overpaid auto insurance premiums for the past 25 years and should be reimbursed.

Insurance representatives claim if the proposed class-action lawsuit is successful, it could cost the industry at least $300 million and up to $1 billion.

The case stems from claims by a group of residents that insurers did not inform them that a household needs to pay only once for uninsured and underinsured motorist insurance, no matter how many cars or drivers are in the household.

A suit filed last year in Boulder District Court claims 33 insurance companies have been selling uninsured motorist coverage for each vehicle in a household, and that policyholders are due the overcharges.

The companies failed to properly inform consumers about uninsured-motorist insurance options, and as a result, many policy owners have unnecessarily paid two or three uninsured-motorist premiums, according to lawyers for consumers trying to certify the class-action suit.

Lead attorney Robert Hill told Boulder District Judge D.D. Mallard on Thursday that they want the amount paid in excess back for policyholders.

Mallard was hearing a request by the insurers to dismiss the suit.

Consumers brought their legal action after a 2001 Colorado Supreme Court decision affirmed the principle that uninsured motorist coverage follows the policyholder, not the vehicle.

Lawyers for the companies, which include Colorado’s largest insurance firms, argued it has been the practice of insurers for 25 years to access risk and price uninsured-motorist coverage on a per-vehicle basis.

Insurers’ attorney John Vaught said it would be “unmanageable” for insurers to review more than 100,000 insurance transactions to determine what policyholders were told verbally and in writing about coverage options.

Mallard said she will issue a written opinion on the companies request for a dismissal of the suit.

Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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