Colorado Insurance Consumer Freedom of Choice

On September 13, 2007, Governor Bill Ritter signed HB 07-1104 into law. This law prevents insurance companies from controlling – directly or indirectly – which restoration company you use to restore your property after a fire.

Why was this law passed?

Competition is fundamental to the free market system. Unrestrained interaction of competitive forces will yield the lowest prices with the highest quality for everyone. The right of the individual to choose the restoration company that best serves their needs results in better quality and lower prices across the board.

Insurance companies are in business to make a profit. When you file a claim, insurance companies have a conflict of interest. They have a responsibility to you, the policyholder, but they also have a responsibility to the shareholders to minimize the payout on your claim so they can make more profit. This conflict too often resulted in insurance companies taking advantage of policyholders. Property owners were forced – sometimes unknowingly – into using specific contractors who used sub-standard materials or shoddy workmanship to minimize the pay out of your claim.

The insurance companies had the opportunity to resolve this on their own, but the financial motivation to maximize profit was so strong that they just couldn’t seem to help themselves. That is when the Colorado legislature finally decided to intervene. The legislature realized that, even if they want to do right by their policyholders, insurance companies can lose sight of that because of the pressure to perform financially for their shareholders.

“This law represents a first step, and ensures and preserves a consumer’s right to choose who will restore their home or business following a disaster,” said Don Manger, executive director of Restoration Industry Association. “…this bill will go miles in serving the public, and will reduce the inherent conflict-of-interest of insurers who attempt to limit spending on their own behalf, instead of representing the best interests of the policyholder.”

What are your rights?

1. You have the right to choose your restoration contractor. You are not required to use the restoration firm recommended by your insurance adjuster. They may not require you – directly or indirectly – to use any specific business. They cannot coerce, threaten or incent you to use a particular company. Nor can they use disincentives of any kind to discourage you from using the restoration firm of your choice. Nor can they lie or misinform you so that you use their choice. They may provide you with a list of restoration companies to consider, but they must tell you that you are free to choose.

2. You have the right to have your claim paid promptly – regardless of who you choose to restore your property. Insurers may not tell you – or threaten you – that the failure to use a specific business may result in non-payment or delayed payment of a claim. In fact, they are required to ensure that the estimate is adequate to restore your property to a pre-loss condition within a reasonable time. They must promptly pay the fair market price for the restoration of your property; in accordance with your policy provisions, of course. They are not allowed to force you to use a contractor where they set the price. Finally, you are entitled to see a copy of the estimate upon which your settlement is paid.

3. You have the right to know if your insurance company has a business arrangement with your restoration company. Your insurance adjuster must tell you about any ownership interests in or affiliated business arrangements with a restoration provider when they recommend a firm in which they have a financial interest.

A link to the law can be found via If you feel that your rights have been violated, you can file a written complaint with the Colorado Insurance Commissioner.

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