Colorado regulation on first-party property insurance coverage is without doubt one of the strongest within the nation. Nevertheless, even legitimate claims can get dismissed in the event that they aren’t correctly introduced within the lawsuit submitting. That’s the reason having an skilled lawyer in your aspect, who’s well-versed within the particularities of Colorado necessities, is important if a policyholder finds {that a} lawsuit must be filed.
The Case
The lately determined Alejandro Garcia-Terrazas v State Farm Fireplace and Casualty Firm 1 case out of the Federal District Court docket of Colorado ought to function a warning to all policyholders. In that case, a policyholder skilled water loss harm to his residence, a lined peril beneath his State Farm coverage. Mr. Garcia-Terrazas retained a water mitigation firm to offer footage, a report and an bill to doc the harm sustained within the loss. When State Farm refused to pay full worth for the water loss, Mr. Garcia-Terrazas retained the companies of a public adjuster. Regardless of the general public adjuster’s greatest efforts to gather advantages owed beneath the coverage for the loss, State Farm refused to pay further advantages on the declare. As such, Mr. Garcia-Terrazas filed a lawsuit, which, amongst different claims, included allegations in opposition to State Farm for unhealthy religion breach of an insurance coverage contract.
State Farm then requested to throw out the case, stating the lawsuit did not state a declare upon which reduction could possibly be granted. 2 To outlive any such movement, a policyholder-plaintiff should current sufficient information that, if true, reduction would plausibly circulate from the alleged information. 3 That means that information can’t solely be conceivable, however they have to be plausible to outlive a movement to dismiss. Factual allegations have to be simply that: allegations that transcend mere conclusory statements, generalizations, authorized conclusions, or inferences of misconduct by the insurer. 4
Why the Case was Dismissed and How Policyholders Can Keep away from the Identical Mistake
The policyholder-plaintiff’s error within the Garcia-Terrazas case was his failure to offer particular information supporting his unhealthy religion allegations in opposition to the insurer. In Colorado, to help a declare for unhealthy religion, a policyholder should show that advantages are owed beneath the insurance coverage coverage and that the insurer unreasonably delayed or denied cost of the declare. 5 No such unhealthy religion exists, nonetheless, if the insurer can present it had an inexpensive foundation for its denial. 6 In his lawsuit, Mr. Garcia-Terrazas merely alleged that State Farm’s “unhealthy religion conduct…contains…its insufficient, unreasonable, and improper investigation,…(and) its denial of Plaintiff’s insurance coverage Declare….” 7
The Court docket decided Mr. Garcia-Terrazas’ allegation was solely conclusory and did not state any particular information that confirmed State Farm’s conduct as unreasonable and its investigation improper. 8 Likewise, Mr. Garcia-Terrazas additional alleged that regardless of giving State Farm proof from the mitigation firm substantiating his loss, State Farm nonetheless denied his declare. Nevertheless, Mr. Garcia-Terrazas erred by failing to offer specifics on why State Farm’s denial was unreasonable or its investigation insufficient, thereby denying the court docket a foundation to evaluate the reasonableness of State Farm’s conduct. 9 The court docket additional reasoned, it was not sufficient to say State Farm’s denial was unreasonable just because it denied the declare. 10
As a result of Mr. Garcia-Terrazas was unable to offer sufficient factual allegations inside his lawsuit that plausibly confirmed State Farm’s dealing with of his declare was unreasonable, the court docket granted State Farm’s movement to dismiss the policyholder’s declare.
Key Takeaways
Because the policyholders’ advocate, what are a few of the key takeaways we are able to be taught from this case? We are able to notice that allegations of unhealthy religion require greater than mere conclusory statements of misconduct. Persevering by means of the claims dealing with course of already takes a feat of sheer will and willpower for many policyholders. However to then have your case dismissed within the litigation part on a technicality just isn’t solely disappointing however can also be financially and emotionally taxing.
Submitting a lawsuit is often a policyholder’s one and solely alternative to current their declare in court docket. Policyholders ought to guarantee they’re setting themselves up for achievement from the very starting.
Motion Steps for Policyholders to Take:
- Doc every thing. Save emails, letters, reviews, and notes about conversations along with your insurer.
- Be particular in your declare. Basic accusations of “unhealthy religion” probably gained’t maintain up in court docket—pay attention to particular unreasonable conduct by the insurer and what makes it unreasonable given the circumstances.
- Get professional assist early. A public adjuster or lawyer can assist strengthen your case earlier than it ever reaches a decide, and within the best-case situation, assist a policyholder keep away from the court docket altogether.
If it’s essential to file a lawsuit, policyholders ought to be sure they’ve counsel who can adequately and articulately argue the information of their case, so it doesn’t get thrown out of court docket on an avoidable technicality. In the event you consider your insurance coverage firm has wrongfully denied or delayed your declare, don’t wait. Speak to an skilled policyholder lawyer who can assist you defend your rights and current your case within the strongest approach doable.
1 Garcia-Terrazas v State Farm Fireplace & Cas. Co.No. 24-CV-03171, 2025 WL 2576505 (D. Colo. Sept. 5, 2025).
2 FRCP 12(b)(6).
3 Bell Atl. Corp. v. Twombly550 U.S. 544, 547 (2007); Creator v. United Air Traces671 F.3d 1188, 1190 (tenth Cir. 2012); RE/MAX, LLC v. Quicken Loans Inc.295 F. Supp.3d 1163, 1168 (D. Colo. 2018).
4 Garcia-Terrazas v State Farm Fireplace & Cas. Co.No. 24-CV-03171, 2025 WL 2576505, at *1 (D. Colo. Sept. 5, 2025); Hackford v. Babbitt14 F.3d 1457, 1465 (tenth Cir. 1994); Ashcroft v. Iqbal556 U.S. 662, 679 (2009).
5 Colo. Rev. Stat. § 10-3-1115.
6 Etherton v. Homeowners Ins. Co., 829 F.3d 1209, 1226 (tenth Cir. 2016); Garcia-Terrazas v State Farm Fireplace & Cas. Co.No. 24-CV-03171, 2025 WL 2576505, at *5 (D. Colo. Sept. 5, 2025).
7 Garcia-Terrazas v State Farm Fireplace & Cas. Co.No. 24-CV-03171, 2025 WL 2576505, at *6 (D. Colo. Sept. 5, 2025) (citing Docket No. 9 at 3, ¶ 15).
8 Garcia-Terrazas v State Farm Fireplace & Cas. Co.No. 24-CV-03171, 2025 WL 2576505, at *6 (D. Colo. Sept. 5, 2025).
9 Id. at *6.
10 Id. at *6.
