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ADVANCE SHEET HEADNOTE

June 20, 2016

2016 CO 46

No. 14SC99, Am. Family Mut. Ins. Co. v. Hansen—Insurance—Ambiguity, 

Uncertainty or Conflict—Persons Covered—Unfair Practices; Bad Faith; Penalties.

Respondent Jennifer Hansen was injured in a motor vehicle accident and 

presented an underinsured motorist claim to petitioner American Family Mutual 

Insurance Company. As proof of insurance, Hansen offered lienholder statements 

issued to her by American Family’s local agent that identified her as the named insured 

at the time of the accident. American Family’s own records, however, indicated that the 

named insureds on the policy at the time of the accident were Hansen’s mother and 

stepfather. In reliance upon the policy as reflected in its own records, American Family 

determined that Hansen was not insured under the policy and denied coverage. 

Hansen filed an action against American Family asserting, among other things, a

statutory bad faith claim for unreasonable delay or denial of benefits under sections 

10-3-1115 and -1116, C.R.S. (2015). The trial court ruled that the deviation in the records 

issued by American Family’s agent and those produced by its own underwriting 

department created an ambiguity in the insurance policy as to the identity of the named 

insured, and instructed the jury that an ambiguous contract must be construed against 
2

the insurer. The jury found that American Family had delayed or denied payment 

without a reasonable basis for its action. The court of appeals affirmed, finding that the 

lienholder statements created an ambiguity. The Colorado Supreme Court holds that 

because the insurance contract unambiguously named Hansen’s mother and stepfather

as the insureds at the time of the accident, the trial court and court of appeals erred in 

relying on extrinsic evidence to find an ambiguity in the insurance contract. 

Accordingly, American Family’s denial of Hansen’s claim in reliance on the 

unambiguous insurance contract was reasonable, and American Family cannot be held 

liable under sections 10-3-1115 and -1116 for statutory bad faith. 
The Supreme Court of the State of Colorado

2 East 14th Avenue • Denver, Colorado 80203

2016 CO 46

Supreme Court Case No. 14SC99

Certiorari to the Colorado Court of Appeals

Court of Appeals Case No. 11CA1430

Petitioner:

American Family Mutual Insurance Company,

v.

Respondent:

Jennifer Hansen.

Judgment Reversed

en banc

June 20, 2016

Attorneys for Petitioner:

Campbell, Latiolais & Averbach, LLC

Colin C. Campbell

Michael O. Frazier

Denver, Colorado

Attorneys for Respondent:

Springer and Steinberg, P.C.

Michael P. Zwiebel

Denver, Colorado

Kiel & Trueax, LLC

John W. Trueax

Greenwood Village, Colorado

Law Office of Samuel G. Livingston

Samuel G. Livingston

Denver, Colorado

Attorneys for Amici Curiae The Colorado Civil Justice League, The American 

Insurance Association, The Property Casualty Insurers Association of America, and 

The National Association of Mutual Insurance Companies:

Montgomery Amatuzio Dusbabek Chase, LLP
2

Kevin F. Amatuzio

Denver, Colorado

Attorneys for Amicus Curiae Colorado Defense Lawyers Association:

Gordon & Rees LLP

John R. Mann

Denver, Colorado

Sutton Booker P.C.

Jacquelyn S. Booker

Katie B. Johnson

Littleton, Colorado

Attorneys for Amicus Curiae Pinnacol Assurance:

Vaughan & DeMuro

David R. DeMuro

Jennifer C. Madsen

Denver, Colorado

Attorneys for Amici Curiae Colorado Association of Home Builders, The Home 

Builders Association of Metro Denver, and Colorado BUILDS:

Davis & Ceriani, P.C.

Scott W. Wilkinson

George R. Lyons

Denver, Colorado

Attorneys for Amicus Curiae The Colorado Trial Lawyers Association:

Roberts Levin Rosenberg PC

Bradley A. Levin

Michael J. Rosenberg

Denver, Colorado

JUSTICE EID delivered the Opinion of the Court.
3

¶1 Respondent Jennifer Hansen was injured in a motor vehicle accident on 

December 30, 2007. Four months later, she presented an underinsured motorist 

(“UIM”) claim to petitioner American Family Mutual Insurance Company (“American 

Family”), asserting coverage under an American Family auto insurance policy on her 

1998 Ford Escort. As proof of insurance, Hansen offered lienholder statements issued to 

her by American Family’s local agent that identified her as the named insured at the 

time of the accident. American Family’s own records, however, including a November 

2007 declaration page, indicated that the named insureds on the policy at the time of the 

accident were Hansen’s stepfather and mother, William and Joyce Davis (the 

“Davises”). In reliance upon the policy as reflected in its own records, American Family 

determined that Hansen was not insured under the policy and denied coverage. 

Hansen filed an action against American Family asserting claims for breach of contract,

common law bad faith, and statutory bad faith for unreasonable delay or denial of 

benefits under sections 10-3-1115 and -1116, C.R.S. (2015). Prior to trial, American 

Family reformed the contract to name Hansen as the insured, and the parties settled the 

breach of contract claim, leaving only the common law and statutory bad faith claims 

for trial.

¶2 The trial court ruled that the deviation in the records issued by American 

Family’s agent and those produced by its own underwriting department created an 

ambiguity in the insurance policy as to the identity of the named insured, and 

instructed the jury that an ambiguous contract must be construed against the insurer. 

The jury found in American Family’s favor on the common law bad faith claim but in 
4

Hansen’s favor on the statutory bad faith claim, indicating on a special verdict form that 

American Family had delayed or denied payment without a reasonable basis for its 

action. The trial court awarded Hansen attorney fees, court costs, and a statutory 

penalty under section 10-3-1116. 

¶3 American Family appealed the judgment and award of statutory damages to 

Hansen, arguing, among other things, that the trial court erred in finding that the 

lienholder statements created an ambiguity in the insurance contract as to the identity 

of the insured and that, at the very least, the contract was arguably unambiguous such 

that the company had a reasonable basis to deny coverage and could not be liable for 

statutory bad faith. The court of appeals affirmed, finding that the lienholder 

statements created an ambiguity and that, even assuming American Family’s legal 

position was a reasonable one, American Family could still be held liable for statutory 

bad faith. Hansen v. Am. Family Mut. Ins. Co., 2013 COA 173, ¶¶ 36, 43, __ P.3d __. 

¶4 We granted certiorari and now reverse. Because the insurance contract 

unambiguously named William and Joyce Davis as the insureds at the time of the 

accident, the trial court and court of appeals erred in relying on extrinsic evidence to 

find an ambiguity in the insurance contract. An ambiguity must appear in the four 

corners of the document before extrinsic evidence can be considered. See Ad Two, Inc. 

v. City & Cty. of Denver, 9 P.3d 373, 376–77 (Colo. 2000) (“Absent such ambiguity [in 

the terms of the agreement], we will not look beyond the four corners of the agreement 

to determine the meaning intended by the parties.”). In other words, extrinsic evidence 

cannot create ambiguity; it is an aid to ascertaining the intent of the parties once an 
5

ambiguity is found. Accordingly, American Family’s denial of Hansen’s claim in 

reliance on the unambiguous insurance contract was reasonable, and American Family

cannot be held liable under sections 10-3-1115 and -1116 for statutory bad faith. We 

therefore reverse and remand the case for further proceedings consistent with this 

opinion. 

I.

¶5 Hansen bought a 1998 Ford Escort on May 18, 2002. At trial, Hansen testified 

that she purchased an insurance policy on the car in 2002 from the Heath Burchill 

American Family Insurance Agency (“Burchill”), an American Family captive agent. 

On April 9, 2007, Hansen went to Burchill’s office to add more coverage to the policy on 

her Ford Escort. On that date, Hansen obtained a lienholder statement from Burchill

(the “2007 lienholder statement”). Apart from a note at the top of the page stating, 

“FOR LIENHOLDER USE,” the document resembles the declaration page of an 

insurance policy. It lists a policy inception date of August 1, 2002, effective dates of 

“12-15-2006 UNTIL CANCELLED,” $100,000 per person in underinsured motorist 

coverage, and “DAVIS, JENNY” as the named insured. Although Hansen has never 

been named Jenny Davis, Davis is Hansen’s stepfather’s and mother’s last name. 

¶6 On December 30, 2007, Hansen sustained injuries when she was a passenger in a 

vehicle owned and operated by her boyfriend. Because her boyfriend carried only 

$25,000 in insurance, Hansen filed a claim for UIM benefits on April 24, 2008, from 

American Family. 
6

¶7 In contrast to the 2007 lienholder statement issued by Burchill to Hansen, 

American Family’s own underwriting department produced a declaration page 

effective from November 26, 2007, to August 1, 2008 (the “November 2007 declaration 

page”) naming “DAVIS, WILLIAM & JOYCE”—Hansen’s stepfather and mother—as 

the insureds.

1 Because Hansen would be covered under her parents’ policy only if she 

resided with them, the American Family claims adjuster assigned to her case made 

repeated unsuccessful attempts in April and May of 2008 to contact Hansen and 

determine her residence. 

¶8 The matter lay dormant until the fall of 2009, when Hansen received an offer 

from her boyfriend’s insurer to settle her claim for the policy limits of $25,000. In 

response, Hansen contacted Burchill and requested a copy of her policy. She received a 

lienholder statement dated January 13, 2010, identifying “HANSEN, JENNIFER” as the 

named insured at the time of the accident. This document listed the same policy 

 

1 A declaration page “was attached to the front of the policy at the time it was issued 

and an amended declaration was mailed to the named insured in the normal course of 

business upon amendment of the policy.” Hansen, ¶ 25. American Family produced 

historical declaration pages insuring Hansen’s 1998 Ford Escort for effective periods of 

(1) August 1, 2002, to August 1, 2003; (2) October 1, 2002, to August 1, 2003; (3) April 9, 

2007, to August 1, 2007; (4) November 26, 2007, to August 1, 2008; (5) April 23, 2008, to 

August 1, 2008; (6) January 31, 2009, to August 1, 2009; and (7) June 1, 2009, to August 1, 

2009. Each declaration page contained “information particular to the policy, including: 

(1) the policy number; (2) the named insureds; (3) effective dates; (4) a description of the 

insured vehicle; (5) coverages and limits of liability; (6) identification of applicable 

endorsements, which here include the UIM coverage; and (7) an identification of the 

insurance agency.” Id. Additionally, each stated that “[t]hese declarations form a part 

of this policy and replace all other declarations which may have been issued previously 

for this policy.” All these declaration pages listed the Davises as the named insureds.
7

number and vehicle description as the 2007 lienholder statement, but now showed 

effective dates of “12-01-2007 to 08-01-2009.” 

¶9 On January 18, 2010, American Family sent Hansen a letter requesting 

verification of Hansen’s residence at the time of the accident, in order to determine her 

eligibility for UIM coverage under her parents’ policy. The letter advised Hansen that if 

she did not respond, the claim would be closed. On March 1, 2010, Hansen’s attorney 

sent American Family a letter enclosing the January 13, 2010, lienholder statement and 

requesting permission to settle with Hansen’s boyfriend’s insurance company. Relying 

on the certified policy obtained from its own underwriting department, American 

Family denied coverage on April 27, 2010. 

¶10 On August 5, 2010, Hansen filed an action against American Family asserting 

claims for breach of contract, common law bad faith, and statutory bad faith for 

unreasonable delay or denial of benefits under sections 10-3-1115 and -1116.2 In light of 

 

2 Section 10-3-1115 provides in relevant part that

(1)(a) A person engaged in the business of insurance shall not 

unreasonably delay or deny payment of a claim for benefits owed to or on 

behalf of any first-party claimant.

. . .

(2) Notwithstanding section 10-3-1113(3), for the purposes of an action 

brought pursuant to this section and section 10-3-1116, an insurer’s delay 

or denial was unreasonable if the insurer delayed or denied authorizing 

payment of a covered benefit without a reasonable basis for that action.

Section 10-3-1116(1) provides that

A first-party claimant as defined in section 10-3-1115 whose claim for 

payment of benefits has been unreasonably delayed or denied may bring 

an action in a district court to recover reasonable attorney fees and court 

costs and two times the covered benefit.
8

the conflicting records maintained by American Family and its agent, Hansen argued, 

American Family had not conducted a reasonable investigation into her insurance 

claim. 

¶11 On December 8, 2010, Hansen filed a motion for partial summary judgment,

arguing that the discrepancy between American Family’s own records and those issued 

by its agent rendered the identity of the named insured ambiguous. On December 27, 

2010, American Family filed a cross-motion for summary judgment, asserting that the 

insurance policy unambiguously identified the Davises as the named insureds, that 

Hansen did not reside with her parents at the time of the accident, and that the policy 

therefore afforded Hansen no UIM coverage. 

¶12 On January 5, 2011, however, American Family filed a motion to withdraw its 

cross-motion for summary judgment on the question of ambiguity. The motion stated 

that American Family had learned that Hansen owned the Ford Escort and had done so 

since the inception of the policy in 2002. American Family stated that the coverage 

issue was moot because it was voluntarily electing to reform the policy on the Ford 

Escort to provide coverage to the vehicle’s owner. American Family emphasized that 

its motion was not a confession of Hansen’s own motion for summary judgment, but 

that “the circumstances of this claim permit[ted], but [did] not compel” its choice to 

reform the policy. On March 1, 2011, after mediation, the parties settled the contract 

claim for the maximum policy benefit of $75,000 (the $100,000 UIM policy limit minus 

the $25,000 Hansen had already received from her boyfriend’s insurance company).
9

¶13 This settlement, however, did not end the dispute over Hansen’s common law 

and statutory bad faith claims. On March 9, 2011, American Family filed a motion for 

determination of a question of law, again arguing that the Davises were the named 

insureds. On April 12, 2011, the trial court denied the motion, ruling that there were 

material questions of fact in dispute regarding the identity of the named insured at the 

time of the accident. 

¶14 On April 27, 2011, the third day of trial, the trial court determined that the 

insurance contract was ambiguous as a matter of law. In reaching this conclusion, the 

court relied on D.C. Concrete Management, Inc. v. Mid-Century Insurance Co., 39 P.3d 

1205 (Colo. App. 2001), in which the court of appeals found an insurance contract 

ambiguous where the designation of the named insured was unclear. See id. at 1208 

(“From the language ‘Rafael Sanchez DC Concrete Management,’ one cannot tell 

whether there is one named insured or two. Nor can it be ascertained whether DC 

Concrete Management is intended as a d/b/a designation for an individual or refers to 

a separate business entity.”). The trial court held that the identity of the named insured 

here was similarly unclear and therefore ambiguous as a matter of law, and that, 

accordingly, it would instruct the jury that the contract was to be construed against the 

insurance company.

¶15 The jury found in American Family’s favor on Hansen’s common law bad faith 

claim but in Hansen’s favor on her statutory claim. Relevant here, in two special verdict 

forms, the jury found that (1) Hansen was the named insured; (2) American Family had 

delayed or denied payment without a reasonable basis in violation of section 10-3-1115;
10

but (3) the UIM benefit for which payment was delayed or denied without a reasonable 

basis was $0. The trial court awarded Hansen attorney fees and costs pursuant to 

section 10-3-1116, but did not enter a monetary award. On May 9, 2011, Hansen filed a 

motion to amend the verdict, requesting that the court award a penalty of two times the 

covered benefit, or $150,000, under section 10-3-1116. The trial court granted the 

motion. 

¶16 On May 10, 2011, American Family filed its own motion to reconsider entry of

judgment, arguing that it could not have denied Hansen’s claim without a reasonable 

basis when the identity of the named insured was “fairly debatable.” See Travelers Ins. 

Co. v. Savio, 706 P.2d 1258, 1275 (Colo. 1985) (“[A]n insurance company . . . may 

challenge claims which are fairly debatable and will be found liable only where it has 

intentionally denied (or failed to process or pay) a claim without a reasonable basis.”

(quoting Anderson v. Cont’l Ins. Co., 271 N.W.2d 368, 377 (Wisc. 1978))). The trial court 

denied the motion, and issued a final judgment in Hansen’s favor for $199,683.28 in 

attorney fees and costs and a statutory penalty of $150,000 under section 10-3-1116. 

¶17 American Family appealed the judgment and award of statutory damages to 

Hansen, arguing that the trial court erred by (1) concluding that the insurance policy 

was ambiguous and referring its construction to the jury; (2) denying American 

Family’s motion to reconsider entry of judgment when the identity of the named 

insured was “fairly debatable”; (3) entering judgment in Hansen’s favor on her 

statutory claim when the jury found that the UIM benefit for which payment was 

delayed or denied without a reasonable basis was $0; and (4) awarding two times the 
11

covered benefit under section 10-3-1116(1) without setting off the $75,000 settlement 

against the statutory penalty.

¶18 The court of appeals upheld the judgment and award of damages. The court of 

appeals, like the trial court, found that “the preparation and delivery to the claimant of 

a lienholder statement by the insurance agent which was inconsistent with the 

declaration pages maintained by the insurance company” created an ambiguity in the 

insurance policy as to the identity of the named insured. Hansen, ¶ 34. Consequently, 

the court of appeals concluded that although the trial court erred in instructing the jury 

regarding the contract, the error was harmless because the jury was properly instructed 

in how to resolve the ambiguity. Id. at ¶ 36 n.2. 

¶19 The court of appeals also rejected American Family’s argument that because the 

identity of the named insured was “fairly debatable,” the company could not have 

unreasonably delayed or denied payment of a benefit under sections 10-3-1115

and -1116 as a matter of law. Id. at ¶ 37. Even assuming that coverage was “fairly 

debatable” because the policy was arguably unambiguous as to the named insured, the 

court of appeals held, American Family was not entitled to judgment as a matter of law 

on Hansen’s statutory claim. Id. at ¶ 43. 

¶20 The court of appeals also held that the $0 entered by the jury did not matter 

because the parties had defined the covered benefit for purposes of section 10-3-1116 in 

their mediated settlement of Hansen’s breach of contract claim for $75,000. Id. at ¶¶ 53, 

58. Finally, the court of appeals rejected American Family’s argument that the covered 

benefit ($75,000) had to be set off from “two times the covered benefit” under section 
12

10-3-1116, reasoning that the statutory language did not require such a setoff. Id. at 

¶¶ 59, 63. 

¶21 We granted certiorari3 and now reverse. Because the insurance contract 

unambiguously named William and Joyce Davis as the insureds at the time of the 

accident, the trial court and court of appeals erred in using the extrinsic evidence of the 

lienholder statements to find an ambiguity in the contract. Accordingly, American 

Family’s denial of Hansen’s claim in reliance on the unambiguous insurance contract 

was reasonable, and the company cannot be held liable under sections 10-3-1115

and -1116 for statutory bad faith. We therefore reverse and remand the case for further 

proceedings consistent with this opinion.

 

3 We granted certiorari to review the following issues:

1. Whether the court of appeals impermissibly relied upon extrinsic 

evidence to conclude that the respondent’s insurance policy was 

ambiguous.

2. Whether the court of appeals erred in perceiving a factual issue with 

regard to the reasonableness of the insurer’s initial denial of the 

insured’s claim, despite its assumption that the insurer’s coverage 

position was “fairly debatable.”

3. Whether the respondent may recover under section 10-3-1116, C.R.S. 

(2014), despite the jury’s determination that the amount of the claim 

for which payment was unreasonably delayed or denied was “0.”

4. Whether section 10-3-1116, C.R.S. (2014), authorizes an insured whose 

claim has been unreasonably delayed or denied to bring an action to 

recover two times the covered benefit in addition to the covered 

benefit itself.
13

II.

¶22 American Family argues that the court of appeals erred in holding that 

lienholder statements extrinsic to the insurance contract created an ambiguity in the 

contract. We agree.

¶23 Whether a contract is ambiguous is a question we review de novo. Fed. Deposit 

Ins. Corp. v. Fisher, 2013 CO 5, ¶ 9, 292 P.3d 934, 937. In this case, there is no dispute 

that the November 2007 declaration page named “DAVIS, WILLIAM & JOYCE” as the 

insureds at the time of the accident. Hansen, ¶ 26. There also is no dispute that the 

November 2007 declaration page was part of the insurance contract. See 16 Williston on 

Contracts § 49:25 (4th ed. 2016) (“The contents of a declarations sheet, or the 

declarations page, of an insurance policy is regarded as part of the insurance contract.”). 

Finally, there is no dispute that a declaration page such as the November 2007 

declaration page at issue in this case defines the coverage available under the policy. 

See id. (“[The declarations page] is held to define the coverage afforded the 

insured . . . .”). Hansen argues, however, that the 2007 lienholder statement4 issued by 

Burchill naming Jenny Davis as the insured creates an ambiguity in the insurance 

contract as to the identity of the insured on the date of the accident. 

¶24 An insurance contract is subject to the general rules of contract interpretation. 

USAA Cas. Ins. Co. v. Anglum, 119 P.3d 1058, 1059 (Colo. 2005). A contractual term is 

 

4 American Family describes a lienholder statement in the insurance context as a 

document generated by the insurance agency and provided to third persons, typically 

an insured’s lender, to verify that an insured has obtained coverage for a financed 

vehicle. Hansen does not dispute this description.
14

ambiguous “if it is susceptible on its face to more than one reasonable interpretation.” 

Id. at 1059–60. Absent such ambiguity, “we will not look beyond the four corners of the 

agreement to determine the meaning intended by the parties.” Ad Two, 9 P.3d at 376–

77. In this case, there is no ambiguity with regard to the identity of the insureds 

“DAVIS, WILLIAM & JOYCE.” Those names do not include Hansen. 

¶25 In reaching a contrary conclusion, the trial court relied on D.C. Concrete 

Management, Inc. v. Mid-Century Insurance Co., 39 P.3d 1205 (Colo. App. 2001). In 

that case, the court of appeals concluded that an insurance policy identifying the 

insured as “Rafael Sanchez DC Concrete Management” was ambiguous because it was 

impossible to tell if there was one named insured or two. Id. at 1208. As the court of 

appeals observed, it could not ascertain from the designation of the insured “whether 

DC Concrete Management is intended as a d/b/a designation for an individual or 

refers to a separate business entity.” Id. Unlike the policy at issue in D.C. Concrete, 

however, the November 2007 declaration page plainly identifies the Davises as the 

named insureds on the date of the accident. Thus, as the court of appeals correctly 

observed here, “[no] ambiguity arises . . . from an ambiguous designation of the named 

insured on the applicable declaration page.” Hansen, ¶ 34. 

¶26 Although the court of appeals determined that there was no ambiguity as to the 

named insureds on the November 2007 declaration page, it went on to conclude that an 

ambiguity was created by “the preparation and delivery to the claimant of a lienholder 

statement by the insurance agent which was inconsistent with the declaration pages 

maintained by the insurance company.” Id. The problem with finding that this 
15

extrinsic evidence created an ambiguity is that an ambiguity must appear in the four 

corners of the document before extrinsic evidence can be considered. See Ad Two, 9 

P.3d at 376–77 (“Absent such ambiguity [in the terms of the agreement], we will not 

look beyond the four corners of the agreement to determine the meaning intended by 

the parties.”). In other words, extrinsic evidence cannot create ambiguity; it is an aid to 

ascertaining the intent of the parties once an ambiguity is found.

¶27 For example, in USI Properties East, Inc. v. Simpson, 938 P.2d 168 (Colo. 1997), 

the plaintiff raised several arguments regarding the intention of the parties contrary to 

the plain and unambiguous meaning of a water rights stipulation. We rejected these 

arguments, noting that “we do not use extraneous evidence to prove intent where no 

ambiguity exists.” Id. at 174 n.8. Because the stipulation was free from ambiguity, we 

held, “we will enforce it as written without looking beyond it for a different 

interpretation.” Id. at 174. USI Properties East is simply one case applying the 

fundamental principle of contract law that an unambiguous contract cannot be made 

ambiguous by extrinsic evidence. See, e.g., Fisher, ¶ 1, 292 P.3d at 935; Ad Two, 9 P.3d 

at 376–77; Cheyenne Mountain Sch. Dist. No. 12 v. Thompson, 861 P.2d 711, 715 (Colo. 

1993); Schmelzer v. Condit, 195 P. 323, 324 (Colo. 1920). 

¶28 Here, the dispute is not over the meaning of “DAVIS, WILLIAM & JOYCE” on 

the declaration page, but rather over whether the designation of Hansen’s parents as the 

named insureds on the policy insuring her Ford Escort accurately reflected the intent of 

the parties. Because there was no disagreement over the meaning of the contract terms 

as written, extrinsic evidence was not admissible to create an ambiguity.
16

¶29 Hansen makes a slightly different argument that Burchill’s issuance of the 2007 

lienholder statement to her created an ambiguity because insurance agents have the 

authority to bind insurance companies. We need not consider whether agents have 

such authority generally or if the agent had such authority in this case, however, 

because Hansen does not claim that the 2007 lienholder statement constitutes a contract 

of insurance standing on its own, nor does she explain how it could modify the 

November 2007 declaration page naming her mother and stepfather as the insureds. 

Nor can she rely on the January 13, 2010, lienholder statement, given that the agent’s 

issuance of a lienholder statement two years after the accident cannot have any effect on 

the identity of the named insured at the time of the accident. At bottom, this alternative 

argument fails for the same reason stated above, namely, that extrinsic evidence is not 

admissible where there is no ambiguity in the contract itself.

¶30 Hansen further argues that, even if the insurance contract itself is unambiguous, 

ambiguity nevertheless arises under the doctrine of reasonable expectations. In 

Colorado, the reasonable expectations of insureds have “succeeded over exclusionary 

policy language . . . where, because of circumstances attributable to an insurer, an 

ordinary, objectively reasonable person would be deceived into believing that he or she 

is entitled to coverage, while the insurer would maintain otherwise.” Bailey v. Lincoln 

Gen. Ins. Co., 255 P.3d 1039, 1048–49 (Colo. 2011). Hansen argues that, by issuing her a 

document identical to a declaration page in every respect save for the notation “FOR 

LIENHOLDER USE,” Burchill created a reasonable expectation of coverage—and that, 

as this court noted in Bailey, “honoring the reasonable expectations of insureds over 
17

exclusionary contract language may be appropriate even in the absence of contract 

ambiguity.” Id. at 1054. However, the doctrine of reasonable expectations applies only 

to “the reasonable expectations of insureds,” id. (emphasis added), and thus only after 

it is determined that the claimant is an insured. In this case, Hansen cannot rely on her 

reasonable expectations to establish her identity as the named insured when the 

November 2007 declaration page unambiguously identifies “DAVIS, WILLIAM & 

JOYCE” as the insureds. 

¶31 Importantly, a finding of no ambiguity does not leave Hansen without a remedy. 

Indeed, she could have sought reformation of the contract to accurately reflect the 

intention of the parties. See, e.g., Md. Cas. Co. v. Buckeye Gas Prods. Co., Inc., 797 P.2d 

11, 14 (Colo. 1990) (holding that reformation of an insurance contract was appropriate 

where there was a mutual mistake as to the date when an additional insured was to be 

added to the policy). And in fact, after receiving documentation from Hansen verifying 

that she was the owner of the vehicle, American Family elected to reform the policy to 

substitute Hansen for her mother and stepfather as the named insured and provide 

coverage for her injuries. Hansen, ¶¶ 9–10.

¶32 Because we find that the November 2007 declaration page unambiguously 

named William and Joyce Davis as the insureds, we conclude that the court of appeals 

erred in relying on extrinsic evidence to find an ambiguity in the contract. We further 

hold that American Family’s denial of Hansen’s claim in reliance on the unambiguous 

insurance contract was reasonable. Under section 10-3-1115, an insurer’s delay or 

denial is unreasonable “if the insurer delayed or denied authorizing payment of a 
18

covered benefit without a reasonable basis for that action.” § 10-3-1115(2) (emphasis 

added). Hansen’s statutory claim must therefore fail, because American Family had a 

reasonable basis for denying coverage. We note that Hansen does not dispute 

American Family’s argument that if the contract is unambiguous, its denial of coverage 

was reasonable. Because we find that American Family had a reasonable basis for 

denying coverage based on the unambiguous language of the contract, we need not 

consider its alternative argument that its denial of coverage was, at the very least, a 

“fairly debatable” position.

¶33 Given our holding that Hansen’s statutory claim fails based on the unambiguous 

language of the insurance contract, she cannot recover attorney fees, court costs, or two 

times the covered benefit under section 10-3-1116(1). We thus need not reach American 

Family’s arguments regarding the jury’s finding of $0 unreasonably delayed or denied 

and the proper calculation of the statutory penalty.

III.

¶34 For the foregoing reasons, we reverse the judgment of the court of appeals and 

remand the case for further proceedings consistent with this opinion.