State RegulationsCO specificDifficulty 3/5
An insurer denies a Colorado life death claim, the beneficiary sues, and judgment is rendered for the beneficiary. Under C.R.S. § 10-7-112, what interest applies from the filing of the action?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
C.R.S. § 10-7-112 imposes a steeper rate when the insurer denied the claim and judgment is rendered: interest at the federal discount rate plus 4 percentage points, running from the filing of the action. This penalizes unfounded denials and compensates the beneficiary for the cost of litigating. The 2-point margin governs the ordinary settlement period; the 4-point margin is reserved for the denied-claim scenario that ends in judgment.
Why the other options are wrong
- A) A denial does not suspend interest; it triggers the higher judgment rate running from the filing of the action.
- C) The 2-point margin belongs to the ordinary settlement period; a denied claim reduced to judgment carries 4 points.
- D) Denied claims that end in judgment carry statutory interest precisely to punish unjustified denials.
Memory hook
Deny and lose in court, pay four over the discount rate from the day they filed.