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State Farm Mutual Automobile Insurance Co. v. Brekke12/6/2004
insurer and the insured. Goodson, 89 P.3d at 415; see also State Farm Mut. Auto. Ins. Co. v. Kastner, 77 P.3d 1256, 1259 (Colo. 2003). One of the aspects of this quasi-fiduciary duty is an insurance provider's duty to investigate and adjust a claim in good faith. Lazar v. Riggs, 79 P.3d 105, 107 (Colo. 2003); Trimble, 691 P.2d at 1142. If an insurance provider does not investigate and process the insured's claim in good faith, it has violated its quasi-fiduciary duty. See Cary, 68 P.3d at 466. Therefore, prior to litigation between an insurance provider's insured and an uninsured motorist, the insurance provider is under a duty to conduct a good-faith investigation of the accident that caused its insured's injury. In Peterman we also stated that nothing in UM litigation vitiated the underlying contractual and quasifiduciary duty that the insurer owes its insured. Peterman, 961 P.2d at 494.
In addition to the quasi-fiduciary duty owed by the insurance company to the insured, the insured owes contractual duties of cooperation and reporting to the insurance provider. For example, their contracts required Brekke and Shaffer to cooperate with and assist State Farm when asked in the process of negotiating settlements, securing and giving evidence, attending hearings and trials, and assisting witnesses to attend hearings and trials. The contracts also impose an additional list of duties on Brekke and Shaffer designed to assure that State Farm had all the information about the nature of the UM claim before it paid the claim. If these duties are fulfilled, the insured will provide extensive information to the insurance provider that it may use to determine what occurred in the accident underlying the UM claim. These duties of reporting and cooperation required by the insurance provider from its insured create an exceptionally close relationship between the two parties.
Thus, in surveying the reciprocal duties of the two parties, the insurance provider's quasi-fiduciary duty to its insured to investigate the accident is balanced by the insured's contractual duty to provide information and cooperation to the insurance provider about the accident. If both parties have fulfilled these reciprocal duties, virtually all relevant facts and issues likely to arise in the tort litigation will be known by both the insurance provider and its insured long before any suit is filed.
Huizar and Peterman guide what litigation procedures comply with the public policy that protects the insured from being forced to traverse undue procedural hurdles and re-litigate matters prior to a recovery under a UM policy. Huizar, 952 P.2d at 348; Peterman, 961 P.2d at 493. If an insured must submit to all the procedures and expenses of discovery and trial when both parties have already fulfilled their reciprocal duties, the system has created redundant procedures much like the undue procedural hurdles disapproved by Huizar and Peterman. See Huizar, 952 P.2d at 348; Peterman, 961 P.2d at 494. Public policy does not allow such redundant procedures to dilute coverage in the UM context.
Therefore, because of the reciprocal duties we have outlined, and following Huizar and Peterman, we hold that the role of the insurance provider in its insured's litigation with an uninsured motorist is unique and is not that of a co-defendant with the uninsured motorist who may invoke the full panoply of trial procedures, including the right to a jury trial. Although the insurance provider's unique role prevents it from participating as a co-defendant that can demand a jury trial, limited participation may be required to permit the insurance provider to present legitimate defenses that the uninsured motorist fails to raise. In such
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