The Colorado Supreme Court answered this question in State Farm v. Johnson (2017 CO 68).
In this case, Brian Johnson (“Johnson”) asked a friend to handle the purchase of insurance for a new car they had bought together. She did, and when she bought it, she said no to Uninsured/Underinsured Motorist (“UM/UIM”) coverage. After an accident with an underinsured motorist, Johnson said that his friend’s rejection of UM/UIM of the coverage was not binding on him—that was her choice for her only.
The Supreme Court looked at whether the does the UM/UIM statute (section 10-4-609 C.R.S) required each person on the insurance policy to reject the UM/UIM coverage, or is one named insured person’s rejection binding to anyone on the policy?
Johnson had regularly given this responsibility to his friend—also on the insurance policy. Because this had been their practice in the past, and the two jointly owned the car, that the evidence showed that she had implied authority. The friend’s authority was enough to purchase the insurance policy, and was also implied authority to reject the UM/UIM coverage. She did reject the UM/UIM coverage for on Johnson’s behalf. Because she rejected the coverage, the Supreme Court reversed the lower court’s decision for further proceedings in accordance with the Supreme Court’s decision.
The Supreme Court also examined whether the Colorado legislature, in writing that statute, negated the common law principles of implied authority and apparent authority. The Court examined the language of the statute and said nothing in it stops an agent from exercising apparent or implied authority to reject the UM/UIM coverage.
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Nationally recognized litigation attorney Thomas Metier practice areas include traumatic brain injuries, spinal cord injuries, trucking accidents and motor vehicle accidents. He is licensed to practice in Colorado, Wyoming, the U.S. District Court–District of Colorado, and the U.S. District Court–District of Wyoming, the 10th Circuit Court of Appeals and the U.S. Supreme Court.