A landmark ruling from the Colorado Court of Appeals has sent a clear message to the insurance industry, imposing a significant $35,600 penalty on Esurance Property & Casualty Insurance Co. for its failure to promptly disclose an auto insurance policy. The decision in Bohanan v. Esurance Property & Casualty Insurance Co. is particularly striking because the policy at the center of the dispute was ultimately found to provide no coverage whatsoever for the accident in question. This case, representing the first appellate interpretation of a key Colorado insurance disclosure statute, has exposed a deep judicial rift, with a dissenting opinion cautioning that the ruling places “virtually boundless obligations” upon insurance carriers. The legal debate focused on a state law mandating that insurers must furnish copies of any policy that “are or may be relevant” to a claim within 30 days of a written request, forcing the court to grapple with the fundamental question of what constitutes potential relevance in the eyes of the law.
A Dispute Born From Unfortunate Timing
The case originated from a traffic collision on the morning of August 31, 2022, when a vehicle operated by Yeraldy Ugalde Arteaga collided with Reesa Bohanan’s car. The pivotal detail, however, occurred approximately 90 minutes after the accident, when a third party purchased an Esurance auto policy that added Arteaga as an insured driver. Following this event, Bohanan’s legal counsel submitted a formal written request for a copy of the policy on September 7. In response, Esurance initiated its standard claims process, an action that would later become a focal point of the court’s analysis. The insurer not only established a claim file but also set aside a bodily injury reserve of $17,100 on September 22. Furthermore, an internal note made as late as September 30 suggested that coverage for the date of the accident appeared to be in effect. These preliminary steps demonstrated that Esurance itself initially treated the policy as if it might be relevant, an observation that heavily influenced the appellate court’s final determination.
As the insurer’s investigation progressed, the critical timing issue came to light. On October 11, Esurance officially concluded that the policy had been purchased after the accident had already occurred, thus invalidating any potential for coverage. Two days later, on October 13—a date that was 36 days after the claimant’s initial request and six days beyond the statutory 30-day deadline—Esurance dispatched a letter to Bohanan’s attorney denying the claim. While the letter explained that the accident was not covered because it preceded the policy’s inception, it crucially omitted a copy of the actual policy document. Esurance did not furnish the policy itself until September 29, 2023, a full 356 days after the legal deadline had expired. The statute’s penalty of $100 for each day of violation led to the total fine of $35,600. The policy’s terms were unambiguous, stating coverage began at 12:01 a.m. on the policy date or the time of purchase, whichever was later, confirming that the 9:03 a.m. purchase could not cover a 7:20 a.m. accident.
A Judicial Tug of War Over Relevance
The case’s journey through the judicial system highlighted profoundly different interpretations of the disclosure law. The initial trial court determined that Esurance had indeed violated the statute but chose to limit the damages to a mere $600. This amount was calculated to cover only the six-day period between the 30-day deadline and the date Esurance sent its letter of denial. The trial court’s rationale was that once Bohanan was formally informed of the non-coverage, the law’s primary objective of transparency had been sufficiently met, making any subsequent delay less consequential. This ruling suggested that an insurer’s communication of its conclusion, even without providing the underlying policy document, could satisfy its statutory duty and mitigate penalties. This perspective prioritized the outcome of the insurer’s investigation over the claimant’s right to independently review the policy language that formed the basis of that denial.
This limited view was fundamentally rejected by the Colorado Court of Appeals in a 2-1 majority decision. The appellate court zeroed in on the precise statutory language requiring the disclosure of policies that “are or may be relevant.” The majority opinion emphasized that the insurer’s own internal actions, including setting financial reserves and taking five weeks to definitively determine non-coverage, served as clear evidence that the policy was, at the very least, potentially relevant during the 30-day response window. The court asserted that the central question was not whether the policy ultimately provided coverage, but whether it could have been reasonably considered relevant at the time the disclosure request was made. To allow an insurer to unilaterally investigate, conclude there is no coverage, and then withhold the policy document would, in the court’s view, completely undermine the statute’s purpose of fostering transparency and empowering claimants to verify the grounds for a denial.
Redefining Insurer Transparency and Obligation
In a sharply worded dissent, Judge J. Jones contended that the majority’s interpretation stretched the legal concept of “relevance” to an illogical and impractical extreme. He argued that a policy purchased after an accident has absolutely zero possibility of providing coverage and, as a matter of logic, cannot be considered relevant under any reasonable definition. In his view, the statutory term “may” implies a plausible likelihood or a reasonable possibility, a condition that is impossible to satisfy when a policy was not in effect at the time of the loss. Judge Jones warned that this ruling establishes a dangerous precedent, effectively compelling insurance companies to disclose policies with “no conceivable possibility of providing coverage.” He expressed concern that this could trigger a wave of “satellite litigation” focused on procedural compliance rather than actual harm, and he suggested that the state’s General Assembly should intervene to clarify the statute’s intent to prevent such unintended consequences.
Ultimately, the overarching finding of the Colorado Court of Appeals was that an insurer’s internal uncertainty about coverage during the 30-day statutory response window does not justify withholding a policy from a claimant. The ruling established that if a fundamental question exists as to whether a policy might apply to a loss, that policy is deemed potentially relevant and must be disclosed within the mandated timeframe. The insurer cannot use its own investigation process as a shield to bypass its disclosure obligations. The case was remanded to the trial court with instructions to enter a judgment for the full $35,600 penalty and to rule on Bohanan’s request for attorney fees, solidifying a new and significantly stricter standard for insurance transparency in Colorado that prioritizes a claimant’s right to information over an insurer’s internal determinations.
