CO Code § 10-4-508 (2021)
2021 Colorado Code|Title 10 - Insurance|Article 4 - Property and Casualty Insurance|Part 5 - Colorado Insurance Guaranty Association Act|§ 10-4-508. Powers and Duties of Association

  The association shall:     Be obligated to the extent of the covered claims existing prior to a determination of insolvency and arising within thirty days after the determination of insolvency, or before the policy expiration date, if less than thirty days after such determination, or before the insured replaces the policy or on request effects cancellation, if the insured does so within thirty days after such determination, but such obligation includes only that amount of each covered claim that is less than fifty thousand dollars; except that: (a) (I) Be obligated to the extent of the covered claims existing prior to a determination of insolvency and arising within thirty days after the determination of insolvency, or before the policy expiration date, if less than thirty days after such determination, or before the insured replaces the policy or on request effects cancellation, if the insured does so within thirty days after such determination, but such obligation includes only that amount of each covered claim that is less than fifty thousand dollars; except that:   For an order of liquidation with a finding of insolvency by a court of competent jurisdiction entered between July 1, 1988, and August 10, 2011, such obligation includes only that amount of each covered claim that is less than one hundred thousand dollars;    For an order of liquidation with a finding of insolvency by a court of competent jurisdiction entered on or after August 10, 2011, such obligation includes only that amount of each covered claim that is less than three hundred thousand dollars; and    Notwithstanding sub-subparagraph (A) or (B) of this subparagraph (I), the association shall pay the full amount of any covered claim arising out of workers' compensation policies.       In no event is the association obligated to a policyholder or claimant in an amount in excess of the face amount of the policy from which the claim arises.    Notwithstanding any other provision of this part 5, a covered claim does not include any claim filed with the guaranty fund after the earlier of:   Twenty-four months after the date of the order of liquidation; or    The final date set by the court for the filing of claims against the liquidator or receiver of an insolvent insurer.          Be deemed the insurer to the extent of its obligation on the covered claims and to such extent shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent;    Allocate claims paid and expenses incurred among the three accounts separately and assess member insurers amounts separately for each account necessary to pay: The obligations of the association under paragraph (a) of this subsection (1) subsequent to an insolvency; the expenses of handling covered claims subsequent to an insolvency; the cost of examinations under section 10-4-513; and other expenses authorized by this part 5. The assessments of each member insurer shall be in the proportion that the net direct written premiums of the member insurer for the preceding calendar year on the kinds of insurance in the account bears to the net direct written premiums of all member insurers for the preceding calendar year on the kinds of insurance in the account. Each member insurer shall be notified of the assessment not later than thirty days before it is due. No member insurer may be assessed in any year on any account an amount greater than two percent of that member insurer's net direct written premiums for the preceding calendar year on the kinds of insurance in the account. If the maximum assessment, together with the other assets of the association in any account, does not provide in any one year in any account an amount sufficient to make all necessary payments from that account, the funds available shall be prorated and the unpaid portion shall be paid as soon thereafter as funds become available. The association may defer, in whole or in part, the assessment of any member insurer, if the assessment would cause the member insurer's financial statement to reflect amounts of capital or surplus less than the minimum amounts required for a certificate of authority by any jurisdiction in which the member insurer is authorized to transact insurance; but during the period of deferment no dividends shall be paid to shareholders or policyholders. Deferred assessments shall be paid when such payment will not reduce capital and surplus below required minimums. Such payment shall be refunded to those companies receiving larger assessments by virtue of such deferment or, in the discretion of any such company, credited against future assessments. Each member insurer may set off against any assessment authorized payments made on covered claims and expenses incurred in the payment of such claims by the member insurer if they are chargeable to the account for which the assessment is made.    Investigate claims brought against the association and adjust, compromise, settle, and pay covered claims to the extent of the association's obligation, and deny all other claims, and may review settlements, releases, and judgments to which the insolvent insurer or its insureds were parties to determine the extent to which such settlements, releases, and judgments may be properly contested;    Notify such persons as the commissioner directs under section 10-4-510 (2)(a);    Handle claims through its employees or through one or more insurers or other persons designated as servicing facilities. Designation of a servicing facility is subject to the approval of the commissioner, but such designation may be declined by a member insurer.    Reimburse each servicing facility for obligations of the association paid by the facility and for expenses incurred by the facility while handling claims on behalf of the association and shall pay the other expenses of the association authorized by this part 5.       The association may:   Employ or retain such persons as are necessary to handle claims and perform other duties of the association;    Borrow funds necessary to effect the purposes of this part 5 in accord with the plan of operation;    Sue or be sued, and such power to sue includes the power and right to intervene as a party before any court in this state that has jurisdiction over an insolvent insurer, as defined in section 10-4-503 (5);    Negotiate and become a party to such contracts as are necessary to carry out the purpose of this part 5;    Perform such other acts as are necessary or proper to effectuate the purposes of this part 5;    Refund to the member insurers in proportion to the contribution of each member insurer to that account that amount by which the assets of the account exceed the liabilities, if, at the end of any calendar year, the board of directors finds that the assets of the association in any account exceed the liabilities of that account as estimated by the board of directors for the coming year.         History. Source: L. 71: P. 758, § 1. C.R.S. 1963: § 72-34-8. L. 77: (1)(a) amended, p. 514, § 3, effective May 27. L. 88: (1)(a) amended, p. 407, § 1, effective July 1. L. 90: (1)(a) amended, p. 559, § 18, effective July 1. L. 99: (2)(c) amended, p. 87, § 4, effective August 4. L. 2002: (1)(c) amended, p. 75, § 1, effective March 22. L. 2011: (1)(a) amended,(HB 11-1041), ch. 14, p. 39, § 2, effective August 10. History. Source: L. 71: P. 758, § 1. C.R.S. 1963: § 72-34-8. L. 77: (1)(a) amended, p. 514, § 3, effective May 27. L. 88: (1)(a) amended, p. 407, § 1, effective July 1. L. 90: (1)(a) amended, p. 559, § 18, effective July 1. L. 99: (2)(c) amended, p. 87, § 4, effective August 4. L. 2002: (1)(c) amended, p. 75, § 1, effective March 22. L. 2011: (1)(a) amended,(HB 11-1041), ch. 14, p. 39, § 2, effective August 10.    ANNOTATION   Limitation imposed by subsection (1)(a) is constitutional because it is reasonably related to legitimate governmental purposes such as ensuring finality and the prompt recovery of reimbursement from the estates of insolvent insurers. Alexander v. Indus. Claim Appeals Office, 42 P.3d 46 (Colo. App. 2001).   Automobile accident victim entitled only to statutory maximum from fund even though victim obtained judgment in excess of $145,000 against company insured by insolvent insurer. Fontenot v. Haight, 764 P.2d 378 (Colo. App. 1988) (decided prior to 1988 amendment).   The state insurance guaranty association was required to “step into the shoes” of the insolvent insurance company and defend the insureds of the bankrupt company after the claimant was found entitled to maintain her claim for the amount between the limits of her own insurance policy and the state insurance guaranty association's statutory limit. Colo. Ins. Guaranty Assn. v. Harris, 815 P.2d 983 (Colo. App. 1991).   Claimant that filed initial proof of claim six months after deadline for filing such proofs of claim cannot obtain reimbursement for claims it had to pay as a result of a liquidated insurer's insolvency. Colaiannia v. Aspen Indem. Corp., 885 P.2d 337 (Colo. App. 1994).