United Services Automobile Association and State Farm Mutual Automobile Insurance Company v. Anthony Wenzell

── United Services Automobile Association and State Farm Mutual Automobile Insurance Company v. Anthony Wenzell ── Court: Supreme Court of Colorado Date: April 27, 2026 Category: General 1 2026 CO 25 United Services Automobile Association and State Farm Mutual Automobile Insurance Company, Petitioners v. Anthony Wenzell, Respondent No. 24SC372 Supreme Court of Colorado, En Banc April 27, 2026           Certiorari to the Colorado Court of Appeals Court of Appeals Case No. 23CA1327. 2           Attorneys for Petitioner United Services Automobile Association: Spencer Fane LLP Evan Stephenson Jeremy Moseley Denver, Colorado.           Attorneys for Petitioner State Farm Mutual Automobile Insurance Company: Lehotsky Keller Cohn LLP Katherine C. Yarger Denver, Colorado Patterson Ripplinger, P.C. Franklin D. Patterson Karl A. Chambers Greenwood Village, Colorado.           Attorneys for Respondent: Robert J. Anderson, P.C. Robert J. Anderson Scott F. Anderson Timothy G. Buxton Colorado Springs, Colorado Patrick Collins Esq. LLC L. Dan Rector Colorado Springs, Colorado 3           Attorneys for Amici Curiae Colorado Defense Lawyers Association and Colorado Civil Justice League: Wheeler Law, P.C. Karen H. Wheeler Jami A. Maul Jesse O. Brant Greenwood Village, Colorado           Attorneys for Amicus Curiae Colorado Trial Lawyers Association: Western Slope Law Nelson A. Waneka Glenwood Springs, Colorado           Attorneys for Amici Curiae National Association of Mutual Insurance Companies and American Property Casualty Insurance Association: Womble Bond Dickinson (US) LLP Kendra N. Beckwith Holly C. White Elizabeth Michaels Denver, Colorado           Attorneys for Amicus Curiae Rocky Mountain Association of Public Insurance Adjusters: Burg Simpson Eldredge Hersh &Jardine, P.C. D. Dean Batchelder Patrick M. Sweet Englewood, Colorado 4           Attorneys for Amicus Curiae United Policyholders: Levin Sitcoff PC Gideon S. Irving Denver, Colorado.           JUSTICE HOOD delivered the Opinion of the Court, in which CHIEF JUSTICE MARQUEZ, JUSTICE BOATRIGHT, JUSTICE GABRIEL, JUSTICE SAMOUR, and JUSTICE BLANCO joined. JUSTICE BERKENKOTTER dissented.           HOOD, JUSTICE 5          ¶1 In this insurance law case, we are confronted with two distinct issues.          ¶2 First, we are asked to construe the breadth of a new statute, section 10-3-1118, C.R.S. (2025) ("section 1118"), which proceduralizes how insurers may assert a common-law failure-to-cooperate defense. We reverse the conclusion below that the term "failure-to-cooperate defense," as used in section 1118, encompasses all insurer defenses based on any of a policyholder's contractual duties. Instead, we hold that the procedural requirements in section 1118 apply only when the insurer's defense arises from a policy's general cooperation clause.          ¶3 Second, we are asked to determine when an excess underinsured-motorist ("UIM") insurer is required to begin its investigation and adjust a claim if the policy first requires the policyholder to exhaust all underlying insurance before claiming benefits. Because all UIM insurers-primary or excess-have a duty to pay their policyholders' undisputed claims for covered benefits, we affirm the division's conclusion and hold that if an excess UIM insurer includes an exhaustion clause in its policy, that clause is satisfied when a policyholder demonstrates undisputed damages that exceed the maximum limits of all the underlying policies. 6          I. Facts and Procedural History          ¶4 In 2017, Anthony Wenzell was rear-ended while driving. Unfortunately, it wasn't his first accident. He had been involved in a more serious crash in 2014 and required back surgery as part of his recovery.          ¶5 After the 2017 accident, Wenzell filed claims under three insurance policies: the tortfeasor's liability policy, Wenzell's policy with State Farm Mutual Automobile Insurance Company ("State Farm"), and a policy with United Services Autom