What does Colorado law require regarding the handling of denied claims?

Colorado law mandates that when an insurer denies a claim, they are required to provide a written explanation for that denial. This requirement ensures transparency in the claims process and allows the insured party to understand the reasons behind the insurer's decision. By receiving a detailed written explanation, policyholders are informed of the specific grounds on which their claim was denied, as well as any relevant policy provisions or legal standards that may have influenced that decision. This practice not only fosters trust in the insurer but also empowers insured individuals to make informed decisions about how to proceed, whether that entails appealing the decision or seeking further recourse.

Although other options may seem plausible, they do not align with the requirements set forth by Colorado law. For instance, the notion that insurers must submit all denials to the state lacks specificity and does not reflect the standard protocol regarding claim handling. The option suggesting insurers can deny claims without any explanation contradicts the legal requirement for transparency and fairness. Likewise, while electronic notifications may be a method of communication, they do not fulfill the necessity of providing a written explanation for the denial itself.