Colorado Court Rules Rental Companies Like Hertz Are De Facto Insurers Subject to Bad Faith Laws

Colorado Court Rules Rental Companies Subject to Bad Faith Laws

In the case of Babayev v. Hertz, the Colorado Court of Appeals issued a significant decision that was closely analyzed by Bradley Levin, a shareholder at Levin Sitcoff. Levin explained that the court reversed the district court’s ruling, finding that when rental car companies like Hertz offer uninsured/underinsured motorist (UM/UIM) coverage and collect a fee for it, they effectively become insurers. As a result, these companies are subject to Colorado laws governing insurer misconduct, including common law and statutory bad faith laws.

The court’s decision has broad implications, given the prevalence of rental car agreements and the frequent offer of insurance coverage by these companies. The ruling establishes that when consumers purchase such coverage, rental companies owe them the same duties and responsibilities as traditional insurers.

Levin also highlighted another critical aspect of the decision: the court found disputed facts regarding whether Hertz was a de facto insurer that owed the plaintiffs a duty of good faith and fair dealing. The court applied precedents that suggest non-insurers can be treated as de facto insurers if they perform insurer-like functions and have a financial interest in limiting claims.

He emphasized that this decision reflects the Colorado appellate courts’ commitment to ensuring state laws are interpreted to protect consumers’ reasonable expectations of coverage. However, the case may not be fully resolved, as Hertz has filed a petition for certiorari review by the Colorado Supreme Court, which is currently pending.

Check out the full story at https://www.lawweekcolorado.com/article/colorado-attorneys-examine-the-implications-of-recent-appellate-court-decisions/.