Loss Coverage Insurance in Colorado
Storm season in Colorado can bring significant damage, and understanding your insurance coverage before disasters occur is essential. Colorado residents and property owners should evaluate their policies carefully to ensure adequate protection against wind, hail, and other storm-related losses.
Wind Hail Deductibles
All Colorado insurers now use percentage-based deductibles for wind and hail damage on properties with total insured values exceeding $3 million. These deductibles are applied per building, which means each structure on a property is subject to its own deductible calculation. Understanding how these percentage-based deductibles work is critical for property owners to accurately assess their out-of-pocket costs after a storm event.
Homeowner’s Association Coverage
HOAs can purchase deductible buy-down policies to reduce the financial impact of large claims. It is recommended that associations maintain a minimum of $1 million in excess liability coverage through umbrella policies. This additional layer of protection helps shield the association and its members from catastrophic loss scenarios that exceed primary policy limits.
Loss Assessment Requirements
Colorado law requires loss assessment coverage equal to at least two months of current assessments plus reserves. This statutory requirement ensures that unit owners have a baseline level of protection when their association levies special assessments following a covered loss. Property owners should review their policies to confirm compliance with these minimums.
Worker’s Compensation
Worker’s compensation insurance does not cover volunteers. For HOAs, Pinnacol offers affordable coverage options at approximately $500 per year. This coverage protects against injuries sustained by workers, including those caused by uninsured contractors performing work on the property. HOA boards should ensure proper coverage is in place before authorizing any maintenance or construction projects.
Property Management
Coverage for property managers and board members varies significantly by policy. It is important to review the specific terms and conditions of your policy to understand what protections are in place for those managing and governing the association.
Crime and Fidelity Insurance
Crime and fidelity insurance is subject to the same Colorado statutory minimums as loss assessment coverage. These policies protect associations against theft, embezzlement, and other fraudulent acts committed by employees, board members, or third parties with access to association funds.
Equipment Breakdown
Equipment breakdown coverage is included to building limits, providing protection for mechanical and electrical equipment failures that are not typically covered under standard property insurance policies.
Carriers
Several insurance carriers provide coverage options for Colorado properties, including Travelers, United States Liability Insurance, Scottsdale, Liberty Mutual, Nationwide, and others. Working with an experienced insurance broker can help property owners and HOAs find the most suitable coverage at competitive rates.
Coinsurance Penalties
Property owners should be cautious about underinsuring their properties relative to replacement value. For example, a building with an actual replacement cost of $1,000,000 that has an 80% coinsurance clause but is insured for only $750,000 would face a coinsurance penalty in the event of a claim. This penalty can significantly reduce the amount paid on a claim, leaving the property owner responsible for a larger portion of the loss.
For more information about loss coverage insurance in Colorado, contact All Access Insurance in Littleton, CO. Our experienced team can help you evaluate your current coverage and identify any gaps in protection.