Opinion ID: 169669
Heading Depth: 2
Heading Rank: 2

Heading: Sufficiency of the Offer Under Parfrey

Text: In Parfrey, the Colorado Supreme Court held that an insurer's duty to offer for purchase coverage higher than the minimum statutory limits must be performed in a manner reasonably calculated to permit the potential purchaser to make an informed decision. . . . 830 P.2d at 913. [2] The Parfrey court also provided the following factors for us to consider in evaluating an insurer's performance with respect to its offer of enhanced coverage: In determining whether an insurer has fulfilled its statutory duty, a court may appropriately consider such factors as the clarity with which the purpose of [PIP] coverage was explained to the insured, whether the explanation was made orally or in writing, the specificity of the options made known to the insured, the price at which the different levels of [PIP] coverage could be purchased, and any other circumstances bearing on the adequacy and clarity of the notification and offer. Id. at 913. As the court went on to explain, however, in the final analysis, the determination of whether an insurer properly discharged its statutory duty to offer enhanced PIP coverage must be based on the totality of circumstances. Id. at 914. Ms. Reid points to the following in support of her argument that GEICO's offer was deficient under Parfrey: (a) she did not receive any written explanation of enhanced PIP coverage before she obtained her policy; (b) she did not understand the difference between basic PIP and enhanced PIP coverage, and the Option Form provided no clarification; and (c) the Option Form did not provide that the work loss benefit was payable at 85% as described in § 10-4-710(2)(a)(II). Having considered these arguments we conclude that even if Ms. Reid's subjective understanding of enhanced PIP coverage was lacking, the Option Form that she signed was sufficient to discharge GEICO's duty under the Act as interpreted in Parfrey. Ms. Reid emphasizes throughout her brief that she did not receive a written explanation of enhanced PIP coverage until after GEICO issued her policy, and this, she argues, mandates reformation. Part of this argument stems from the No-Fault Act's requirement that an insurer provide written explanations of all available coverages prior to issuing any policy to an insured. § 10-4-706(4)(a). This requirement, however, appears in the section of the No-Fault Act governing minimum or basic PIP coverage, not enhanced PIP, which is dealt with later in § 10-4-710. Therefore, it is far from clear that its mandate applies to GEICO's offer of enhanced PIP coverage to Ms. Reid. We need not decide the issue, however, because we agree with the district court that any failure on GEICO's part was cured long before Ms. Reid had her accident. See Padhiar v. State Farm Auto. Ins. Co., 479 F.3d 727, 732-33 (10th Cir.2007) (declining to decide whether No-Fault Act required written explanation of enhanced PIP coverage based on finding that written explanation had, in fact, been provided). Under Colorado law, [i]f the insurer fails to discharge its duty [to offer enhanced coverage] prior to the issuance of the policy, the duty continues and can be discharged . . . by an adequate notification and offer on some future occasion. Parfrey, 830 P.2d at 912. Because Ms. Reid purchased her policy over the telephone, she obviously did not have the benefit of any written materials. But it is also undisputed that she received at least one written offer of enhanced PIP coverage on or before March 21, 2000. We hold that this offer discharged any continuing duty that GEICO might have had to provide a written explanation and offer of enhanced PIP coverage. See id. We also hold, guided by the factors set forth in Parfrey, that GEICO's offer of enhanced PIP coverage was reasonably calculated to permit Ms. Reid to make an informed decision. The Option Form was in writing and clearly spelled out that [h]igher limits of PIP coverage [were] available at [Ms. Reid's] option. Aplt. App. at 195. The form also explained the purposes of PIP coverage in general: Personal Injury Protection coverage (PIP) pays for reasonable and necessary medical expenses, rehabilitation expenses, loss of earnings, essential services and death benefits subject to a maximum if you have an accident, no matter who was at fault. Basic PIP benefits are required by law on all motor vehicles located in Colorado. Id. at 194. Ms. Reid's options for enhanced PIP coverage were set forth, albeit briefly, in a cogent and understandable format that included the key information that a reasonable purchaser would need to make an informed decision. The Option Form explained what the aggregate dollar limit would be for each option, the amount of the work loss benefit, and how much additional premium Ms. Reid would have to pay. Despite this information, Ms. Reid claims that she did not understand her options with respect to enhanced PIP coverage. Parfrey, however, suggests that we look to the objective reasonableness of GEICO's offer, not the potential purchaser's subjective understanding. Indeed, none of the factors identified by the Parfrey court mention whether the insured actually understood the insurer's offer of coverage. Cf. Leahy v. Guar. Nat'l Ins. Co., 907 P.2d 697, 700 (Colo.Ct.App.1995) (explaining that the reasonableness of an insurer's conduct [in a bad faith case] is measured by objective standards of conduct in the insurance industry.). In this case, the Parfrey factors weigh in favor of GEICO. Finally, Ms. Reid contends that GEICO's offer was deficient for failing to provide a work loss benefit payable at less than the full amount of the injured person's average weekly income. For support, she points to language in § 10-4-710(2)(a)(II) requiring an insurer to offer payment of benefits equivalent to eighty-five percent of loss of gross income per week. Ms. Reid, however, has failed to point to a single case holding that under these circumstances an insurer's offer of enhanced PIP coverage must specify that work loss benefits are payable at the 85% level. And we can think of no reason to disagree with the district court's conclusion that such specificity is not required. See Aplt.App. at 919. We therefore reject this challenge to GEICO's offer and conclude based on the totality of the circumstances that GEICO's offer of enhanced PIP coverage to Ms. Reid was reasonable under Parfrey.