It is important for a policyholder to review and understand the various terms and obligations required of them in the event of a loss. One of the most important conditions in many insurances is the restriction of a policyholder's right to sue an insurance company when there is a disagreement about how much damage or loss was caused by the event.
This provision of the policy is often entitled – Legal Action Against Us – and usually includes languages that provide:
Legal Action Against Us
No one may bring legal action against us under this coverage unless:
1. All conditions in this coverage section have been fully complied with; and
2. The action is brought within two years after the date on which the direct physical loss or damage occurred.
Although the time frame for bringing an action is generally defined by state law, in some states an insurance company may contractually stipulate a shorter period for bringing an action. Colorado applies a hybrid strategy.
Colorado requires that all legal action against an insurance company for failure to pay for appropriate damage or loss must be brought within three years from the date of the event causing the damage or loss. In an effort to prevent insurers from shortening this three-year period to unsuspecting homeowners, the Colorado State Legislature enacted § 1
The protection according to the statute 10–4–110.8 (12) (a) applies, however, only to homeowners . All other policyholders, including homeowners, tenant-owner associations, religious organizations and business owners, must comply with the provisions on legal action against us in their insurance. This time period will usually be 1-2 years under most foreign insurance policies in Colorado, but can be as short as six months. the coverages available, terms and obligations required of them under the insurance contract. The requirements of the legal action clause against us should be reviewed and calendared in view of the fact that failure to bring legal action within the required time period may result in a complete bar for legal action.