State RegulationsCO specificDifficulty 2/5
A disability income insurer in Colorado offers a claimant only a fraction of a clearly covered benefit, telling him that suing is his only realistic option. Under Colorado unfair-claims-practice standards, this tactic is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
C.R.S. § 10-3-1104(1)(h) enumerates compelling policyholders to institute litigation by offering substantially less than the amount ultimately recovered, and failing to explain claim denials, as unfair practices; C.R.S. § 10-16-214 applies the same settlement-practice standards to sickness and accident insurance. Lowball-into-litigation tactics are regulatory violations, not legitimate negotiation.
Why the other options are wrong
- B) The conduct is not lawful negotiation — it is an enumerated unfair practice precisely because it forces litigation.
- C) A later higher settlement does not erase the earlier violation; the statute measures the offer against the amount ultimately recovered.
- D) The conduct is squarely regulated under Colorado's unfair-competition and settlement-practice provisions, not merely a contract dispute.
Memory hook
Lowballing to force a lawsuit is the practice § 10-3-1104(1)(h) names.