CO Code § 42-7-414 (2021)
2021 Colorado Code|Title 42 - Vehicles and Traffic|Article 7 - Motor Vehicle Financial Responsibility Law|Part 4 - Proof of Financial Responsibility - Judgments and Convictions|§ 42-7-414. Requirements to Be Complied With

  Except as provided in section 42-7-417, no motor vehicle liability policy or operator's policy of liability insurance shall be issued in this state unless and until all of the requirements of subsection (2) of this section are met.    Every motor vehicle liability policy and every operator's policy of liability insurance accepted as proof under this article shall be subject to the following provisions whether or not contained therein:   The liability of the insurance carrier under any such policy shall become absolute whenever loss or damage covered by such policy occurs, and the satisfaction by the insured of a final judgment for such loss or damage shall not be a condition precedent to the right or obligation of the carrier to make payment on account of such loss or damage. No fraud, misrepresentation, or other act of the insured in obtaining or retaining any such policy, or in adjusting a claim under any such policy, and no failure of the insured to give any notice, forward any paper, or otherwise cooperate with the insurance carrier shall constitute a defense as against the judgment creditor on any such judgment. The insurance carrier shall not be liable on any such judgment if it has not had reasonable notice of an opportunity to appear in and defend the action in which such judgment was rendered or if the judgment was obtained through collusion between the judgment creditor and the insured.    The insurance carrier shall have the right to settle any claim covered by the policy, and if such settlement is made in good faith, the amount thereof shall be deductible from the limits of liability specified in the policy.    No such policy shall be cancelled except as provided in this section and section 42-7-416. The notice of cancellation shall be delivered to the named insured in person or mailed by certified mail, post-office receipt secured, or by registered mail prior to such cancellation. Unless the contract or policy of insurance provides for a shorter period of notice, said notice shall be so delivered or mailed to the address shown in the policy not less than thirty days prior to the date of cancellation. Proof of such mailing shall be sufficient proof of cancellation. Failure by any insurer to comply with the provisions for cancellation in this section and section 42-7-416 shall render invalid any such cancellation.    No such policy shall be cancelled or annulled as respects any loss or damage by any agreement between the carrier and the insured after the said insured has become responsible for such loss or damage, and any such cancellation or annulment shall be void.    The policy may provide that the insured, or any other person covered by the policy, shall reimburse the insurance carrier for payment made on account of any loss or damage claim or suit involving a breach of the terms, provisions, or conditions of the policy. If the policy provides for limits in excess of the limits specified in section 42-7-103 (14), the insurance carrier may plead against any plaintiff, with respect to the amount of such excess limits of liability, any defenses which it may be entitled to plead against the insured, and any such policy may further provide for the prorating of the insurance thereunder with other applicable valid and collectible insurance.    The policy, the written application therefor, if any, and any rider or endorsement which does not conflict with the provisions of this article shall constitute the entire contract between the parties.    When any insurance carrier authorized to do business within the state of Colorado issues a policy of automobile insurance insuring against bodily injury, death, or injury to or destruction of property or showing financial responsibility, except a binder, a complete copy of the insurance policy shall be transmitted to the purchaser within thirty days of the purchase thereof; except that, when such policy is renewed, only a copy of the notice of renewal shall be required. Mailing of the copy of the policy to the address of the purchaser as given at the time of purchase shall be deemed to be a transmittal as required by this section.         The insurance carrier that issues a motor vehicle liability policy accepted as proof under this article shall include the following provision in the policy contract: “If the insured's whereabouts for service of process cannot be determined through reasonable effort, the insured agrees to designate and irrevocably appoint the insurance carrier as the agent of the insured for service of process, pleadings, or other filings in a civil action brought against the insured or to which the insured has been joined as a defendant or respondent in any Colorado court if the cause of action concerns an incident for which the insured can possibly claim coverage. Subsequent termination of the insurance policy does not affect the appointment for an incident that occurred when the policy was in effect. The insured agrees that any such civil action may be commenced against the insured by the service of process upon the insurance carrier as if personal service had been made directly on the insured. The insurance carrier agrees to forward all communications related to service of process to the last-known e-mail and mailing address of the policyholder in order to coordinate any payment of claims or defense of claims that are required.” (3) (a) The insurance carrier that issues a motor vehicle liability policy accepted as proof under this article shall include the following provision in the policy contract: “If the insured's whereabouts for service of process cannot be determined through reasonable effort, the insured agrees to designate and irrevocably appoint the insurance carrier as the agent of the insured for service of process, pleadings, or other filings in a civil action brought against the insured or to which the insured has been joined as a defendant or respondent in any Colorado court if the cause of action concerns an incident for which the insured can possibly claim coverage. Subsequent termination of the insurance policy does not affect the appointment for an incident that occurred when the policy was in effect. The insured agrees that any such civil action may be commenced against the insured by the service of process upon the insurance carrier as if personal service had been made directly on the insured. The insurance carrier agrees to forward all communications related to service of process to the last-known e-mail and mailing address of the policyholder in order to coordinate any payment of claims or defense of claims that are required.”    If service of process is made on the insurance carrier under this subsection (3), the plaintiff shall cause the service of process to be made on the insurance carrier's registered agent.    If service is obtained under this section, the venue for the underlying claim is the same as if the defendant is a nonresident.    Except as expressly provided in this subsection (3), this subsection (3) does not alter or expand the terms and conditions of the insurance policy or liability coverage.    In the contract provision required by this subsection (3), the name of the insurance carrier issuing the policy shall be substituted for the phrase “The insurance carrier.”    If service of process is made on the insurance carrier under this subsection (3) and the court enters judgment or the insurance carrier agrees to a settlement for the damages caused by the absent insured, the amount of the insurance carrier's liability shall not exceed the policy limits of the coverage. A judgment or settlement obtained using service of process on the carrier shall not bar the injured person from subsequently making personal service on the person who caused the injury and seeking additional remedies provided by law.    Payment under the policy pursuant to this section shall not be deemed to be an admission of liability by the alleged tortfeasor and shall not prejudice the right of the alleged tortfeasor to contest his or her liability or the extent of damages owed to the injured party.    As used in this subsection (3), “reasonable effort” means service at the defendant's last-known address, an address obtained from the insurance policy, an address obtained from a driver's license or motor vehicle registration, or any readily ascertainable successor address.         History. Source: L. 94: Entire title amended with relocations, p. 2485, § 1, effective January 1, 1995. L. 2010: (3) added, (HB 10-1164), ch. 196, p. 847, § 3, effective January 1, 2011.    ANNOTATION   Law reviews. For article, “One Year Review of Contracts”, see 34 Dicta 85 . For comment on Am. Serv. Mut. Ins. Co. v. Parviz, 153 Colo. 490 , 386 P.2d 982 (1963), appearing below, see 37 U. Colo. L. Rev. 138 (1964). For article, “The ‘Catch 22' of Underinsured Motorist Settlements”, see 17 Colo. Law. 49 (1988).   Annotator's note. Since this section is similar to repealed § 13-7-23 , CRS 53, relevant cases construing § 13-7-23 have been included in the annotations to this section.   Purpose and provisions of section. The purpose of this section is to foster and promote insurance coverage or, in the event of accident, a bond to insure financial responsibility. Its ultimate object is to provide compensation for innocent persons who might be injured through faulty operation of motor vehicles. Toward these ends, it provides inter alia that: (1) The insurance carrier's liability shall become absolute whenever loss or damage covered by the policy occurs; (2) that attempted satisfaction of final judgment by insured shall not be a condition precedent to the obligation of carrier to make payment; (3) that fraud, misrepresentation or other act of insured in obtaining the policy shall not constitute a defense available to the insurer against a judgment creditor; and (4) limitations upon the cancellation of a policy. Lucas v. District Court, 140 Colo. 510 , 345 P.2d 1064 (1959).   This section applies only to policies issued by an insurance carrier authorized to transact business in this state and to insurance policies issued in this state by companies organized under the insurance laws of this state. Am. Serv. Mut. Ins. Co. v. Parviz, 153 Colo. 490 , 386 P.2d 982 (1963).   Absolute liability of carrier. This section provides that once a policy has been approved by the commissioner of insurance, the liability of the insurance carrier thereunder shall become absolute whenever loss or damage covered by said policy occurs. Safeco Ins. Co. of Am. v. Gonacha, 142 Colo. 170 , 350 P.2d 189 (1960).   Section has no application where policy issued upon false representation. In an action by judgment creditors of the insured against the insurer on an automobile liability policy, where the policy sued upon was not issued in consequence of the insured's previous accident record under the provisions of this section, but was issued by the insurer upon the false representations of the insured with respect to his previous record, this section has no application and it is error to direct a verdict for plaintiffs. Safeco Ins. Co. of Am. v. Gonacha, 142 Colo. 170 , 350 P.2d 189 (1960).   Applied in Genua v. Kilmer, 37 Colo. App. 365, 546 P.2d 1279 (1976).