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American Family Mutual Insurance Co. v. Allen12/6/2004
people, then expert testimony is not required. See Gerrity, 946 P.2d at 931.
B. Application
Having decided that in some cases expert testimony may not be required, we address whether in this case expert testimony is required to establish what constitutes a reasonable investigation or denial of an insured's claim in order to prove that American Family breached its duty of good faith. We begin by recognizing that whether the standard of care is a matter of common knowledge is committed to the sound discretion of the trial court. People v. Fasy, 829 P.2d 1314, 1317-18 (Colo. 1992).
The reasonableness of an insurer's investigation into the underlying events of an automobile insurance claim is not a technical question and does not require additional professional training beyond the knowledge of the average juror. Nor does a determination of what constitutes a reasonable explanation for denying a claim require special knowledge or training. The insurer is corresponding with its insured who is not required to have a particular ability to understand why coverage is denied. Although American Family's employees receive training and handbooks on investigating claims, this does not make expert testimony necessary to establish a standard of care. To hold otherwise would effectively require expert testimony any time a defendant acts pursuant to a manual or industry training.
Therefore, we hold that expert testimony with respect to what constitutes a reasonable investigation or denial of a claim was not needed in this case. Here, the Unfair Claims Practices Act also provided the jury with valid, but not conclusive, evidence of what constitutes a reasonable investigation or denial of a claim. American Family conceded that it had adopted the standards in the Act in its policies and procedures. In the terms of this statute, a reasonable investigation is one that is based upon "all available information." The Act also states that a denial of an insured's claim must have a "basis in the insurance policy" or "applicable law." This evidence of the standard of care could assist the jury in determining whether American Family had acted unreasonably in investigating or denying Allen's claim.
The trial court properly instructed the jury that an insurance company breaches its duty of good faith if it acted unreasonably in either the investigation or denial of Allen's PIP claim, or providing an unreasonable explanation for the denial of the claim. The instructions also incorporated the Unfair Claims Practices Act and allowed the jury to "consider violation [of the Act] in determining whether the defendant acted unreasonably in denying payment of the plaintiff's insurance claim."
Reviewing the record, we find sufficient evidence for the jury to conclude that American Family's investigation and denial of Allen's claim was unreasonable. Bohrer v. DeHart, 961 P.2d 472, 476-77 (Colo. 1998). Testimony showed that American Family had concluded its investigation without exploring the conflicting statements it received from Jackson and his wife or by talking with Allen. American Family's denial of coverage letters to Jackson and Allen referenced non-existent sections of the policy and contained legal misstatements as a basis for denying her claim.
Based upon the jury instructions and the evidence presented at trial, a reasonable jury could have evaluated American Family's conduct and reached the conclusion that American Family acted unreasonably under the circumstances. Therefore we affirm the court of appeals on this issue.
Conclusion
For the reasons stated above, we reverse in part and affirm in part and return this case to the co
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