Opinion ID: 2584004
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Heading: Insurance Policies in General

Text: An insurance policy is a contract between the insured and the insurer, and as such, it is to be interpreted according to settled principles of contract law. Allstate Ins. Co. v. Huizar, 52 P.3d 816, 819 (Colo. 2002). This general rule, however, has two provisos. First, the contract raises quasi-fiduciary obligations owed by the insurer to the insured. Farmers Group, Inc. v. Trimble, 691 P.2d 1138, 1141 (Colo.1984). Unlike the ordinary commercial contract where the parties seek to ensure a commercial advantage for themselves, the insurance contract seeks to obtain some measure of financial security and protection against calamity for the insured. Id. As a result, the insurer has a common-law duty not to unreasonably withhold payment of benefits it is obligated to make under the insurance contract. Farmers Group, Inc. v. Williams, 805 P.2d 419, 423 (Colo.1991). Second, the contract must comply with applicable statutory requirements. Should the contract fail to conform to any statute, it is unenforceable to that extent. Peterman v. State Farm Mut. Ins. Co., 961 P.2d 487, 492 (Colo.1998). While the No Fault Act requires the insurer to provide certain coverage within its policy, this requirement co-exists with its quasi-fiduciary duty not to deny this coverage unreasonably. Williams, 805 P.2d at 423. Here, we deal with the simple language of a contract, and with the legal implications of that language. Since both the UM and PIP policy provisions are express attempts to conform to statutory requirements, our interpretation of their terms should reflect the overall legislative purpose of the UM and No Fault statutes. See Allstate Ins. Co. v. Parfrey, 830 P.2d 905, 911 (Colo.1992); 7 Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 109:17 (3d ed.1995, updated 2003). Consistent with both the legislative declaration and the general purpose of automobile insurance, our previous cases have interpreted the No Fault Act as providing a floor of recovery for the injuries of policy-carriers for the type of risks one would expect an insurance contract to cover. See, e.g., Aetna Cas. & Sur. Co. v. McMichael, 906 P.2d 92, 103 (Colo.1995). Thus, the legislative intent of the statutes controls our interpretation of the policies. See State Farm Mut. Auto. Ins. Co. v. McMillan, 925 P.2d 785, 792 (Colo.1996) ([S]ection 10-4-609 regulates coverage for injuries caused by uninsured motorists and therefore governs the terms of the insurance contract.) (internal citation omitted).