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 offered within the lawsuit submitting. That’s the reason having an skilled lawyer in your facet, who’s well-versed within the particularities of Colorado necessities, is crucial if a policyholder finds {that a} lawsuit must be filed.
The Case
The just lately determined Alejandro Garcia-Terrazas v State Farm Fireplace and Casualty Firm 1 case out of the Federal District Courtroom of Colorado ought to function a warning to all policyholders. In that case, a policyholder skilled water loss injury to his house, a lined peril beneath his State Farm coverage. Mr. Garcia-Terrazas retained a water mitigation firm to offer photos, a report and an bill to doc the injury sustained within the loss. When State Farm refused to pay full worth for the water loss, Mr. Garcia-Terrazas retained the providers of a public adjuster. Regardless of the general public adjuster’s finest efforts to gather advantages owed beneath the coverage for the loss, State Farm refused to pay extra 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 didn’t state a declare upon which reduction could possibly be granted. 2 To outlive this sort of movement, a policyholder-plaintiff should current sufficient information that, if true, reduction would plausibly stream from the alleged information. 3 Which 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 Similar Mistake
The policyholder-plaintiff’s error within the Garcia-Terrazas case was his failure to offer particular proof supporting his unhealthy religion allegations in opposition to the insurer. In Colorado, to assist 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, nevertheless, if the insurer can present it had an affordable foundation for its denial. 6 In his lawsuit, Mr. Garcia-Terrazas merely alleged that State Farm’s “unhealthy religion conduct…consists of…its insufficient, unreasonable, and improper investigation,…[and] its denial of Plaintiff’s insurance coverage Declare….” 7
The Courtroom decided Mr. Garcia-Terrazas’ allegation was solely conclusory and didn’t 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 courtroom a foundation to evaluate the reasonableness of State Farm’s conduct. 9 The courtroom 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 courtroom granted State Farm’s movement to dismiss the policyholder’s declare.
Key Takeaways
Because the policyholders’ advocate, what are a number 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 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 section on a technicality will not be solely disappointing however can also be financially and emotionally taxing.
Submitting a lawsuit is normally a policyholder’s one and solely alternative to current their declare in courtroom. Policyholders ought to guarantee they’re setting themselves up for fulfillment from the very starting.
Motion Steps for Policyholders to Take:
- Doc every thing. Save emails, letters, studies, and notes about conversations along with your insurer.
- Be particular in your declare. Normal accusations of “unhealthy religion” possible received’t maintain up in courtroom—be aware of particular unreasonable conduct by the insurer and what makes it unreasonable given the circumstances.
- Get professional assist early. A public adjuster or lawyer may also help strengthen your case earlier than it ever reaches a choose, and within the best-case situation, assist a policyholder keep away from the courtroom altogether.
If it’s essential to file a lawsuit, policyholders ought to be sure that they’ve counsel who can adequately and articulately argue the information of their case, so it doesn’t get thrown out of courtroom on an avoidable technicality. Should you consider your insurance coverage firm has wrongfully denied or delayed your declare, don’t wait. Speak to an skilled policyholder lawyer who may also help you defend your rights and current your case within the strongest means 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. Twombly, 550 U.S. 544, 547 (2007); Khalik v. United Air Traces, 671 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. Babbitt, 14 F.3d 1457, 1465 (tenth Cir. 1994); Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
5 Colo. Rev. Stat. § 10-3-1115.
6 Etherton v. House owners 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.
