Colorado Property & Casualty Insurance Statutes and Regulations

Rate Regulations

References: C.R.S. 10-4-401; 10-4-403; 10-4-416

Colorado regulates the way insurers set and file rates for property and casualty insurance. The major requirements include:

Rates Must Not Be Excessive, Inadequate, or Unfairly Discriminatory

• Rates cannot be too high (excessive)
• Rates cannot be inadequate, which in Colorado means clearly insufficient to sustain projected losses and expenses, or tending, if continued, to create a monopoly in the market
• Rates cannot unfairly discriminate among individuals with the same risk characteristics

File-and-Use System

Colorado uses a file-and-use rating system:

• Insurers file their rates with the Commissioner
• They may begin using the rates immediately unless specifically disapproved

No Rating Based on Disallowed Factors

Disallowed discriminatory rating factors include:

• Race
• Religion
• National origin
• Marital status (except allowed cases tied to risk, e.g., auto policy structure)

No Mid-Term Rate Increases

Under 10-4-416, when an insured has prepaid the premium for a specified policy period, the insurer may not raise the rate or reduce the coverage during that period, unless the risk changed because of the insured’s own acts or the insured misrepresented the risk. The section does not bar a cancellation the policy or law otherwise permits during an initial policy period of up to 60 days.

Summary Disclosure Form

References: C.R.S. 10-4-111; 10-4-636; Bulletins B-5.15; Reg. 5-2-16; 5-1-25; 5-1-26

Colorado requires insurers to provide clear, written explanations of specific policy features.

Purpose of Summary Disclosure Forms

To ensure consumers understand:

• Coverage limits
• Deductibles
• Exclusions
• Key definitions
• Optional coverages
• Claims processes

Auto Insurance Summary Disclosure

Under 10-4-636, insurers and producers must give an applicant a standardized summary disclosure form at the initial purchase, and again at renewal when the major coverages, exclusions or the factors below change. It must explain:

• The major coverages and exclusions
• The general factors considered in cancellation, nonrenewal and premium increases
• How MedPay works: it pays regardless of fault and is primary to health insurance
• Any uninsured motorist property damage coverage the policy provides

Homeowners Summary Disclosure

Under 10-4-111, a homeowners or dwelling fire insurer must give an applicant a summary disclosure form at the initial purchase, and a homeowners policyholder at least annually. Bulletin B-5.15 supplies the forms the Division accepts; the homeowners form outlines:

• Coverage A–D (dwelling, other structures, personal property, loss of use), along with personal liability and medical payments to others
• Replacement cost vs ACV
• Deductibles, which may be a fixed amount, a percentage of the dwelling limit, or both
• Limits on certain personal property
• Exclusions such as flood and surface water, earth movement, mold, and wear and tear

The summary does not replace the policy contract.

Use of Credit Information

References: C.R.S. 10-4-116; Reg. 5-1-25; 5-1-26

Colorado allows insurers to use credit information in rating and underwriting with strict limitations.

Key Requirements

1. No cancellation or nonrenewal based solely on credit information.
2. Consumers must receive a notice of adverse action if credit negatively impacts the rate.
3. Insurers must re-rate the policyholder upon request if credit improves, but no more than once every 12 months.
4. Credit models must be filed with the Commissioner.
5. Prohibited credit factors include:
   • Number of credit inquiries not initiated by the consumer
   • Medical collections
   • Credit information affected by catastrophic events or identity theft