Coloradans whose homes are destroyed or damaged expect their homeowner’s insurance to cover the loss. Unfortunately, some homeowners will experience delayed claims or have their claims denied. Depending on the circumstances, you may be able to fight a delayed or denied homeowner’s insurance claim.
The state of Colorado regulates insurance carriers and provides protections for policyholders. This article breaks down the law that outlines what you are legally entitled to when you need to repair or replace your home and some or all of your personal property.
Talk to Our Attorneys if You Have a Denied Homeowner’s Insurance Claim
Robinson & Henry has a team of litigation attorneys who help homeowners fight insurance companies that renege on their promises to you. Call 303-688-0944 to begin your free case assessment with one of our litigation attorneys if you have a denied homeowner’s insurance claim.
Colorado Law Provides Extra Protection for Homeowners
The stark reality is that each year many Coloradans will lose their home to wildfires, house fires, floods, and other devastating events. These individuals count on their insurance company to help them repair the damage, rebuild or buy another house, and replace lost personal belongings.
The Colorado Homeowner’s Insurance Reform Act of 2013 gave homeowners extra protection in the event of a loss. Insurance companies must follow these rules when offering and administering your plan.
Let’s examine some of the provisions in the portion of state law that governs property and casualty insurance, Colorado Revised Statute section 10-4-110.8.
Extra Coverage to Replace Your Home
Skyrocketing home prices and expensive construction materials mean the cost to replace a home purchased in 2002 will look quite different in 2022 figures. In fact, many homeowners are considered to be underinsured. Meaning, if something happens to their home, they likely will not receive enough insurance money to cover the home’s actual replacement cost. A portion of the Colorado Homeowner’s Insurance Reform Act of 2013 aimed to mitigate this kind of problem by requiring insurance companies to offer policyholders additional coverage in some instances.
The law states that if your dwelling limit is equal to or greater than the estimated cost to replace your house, then you should have the opportunity to purchase extra replacement cost coverage and law and ordinance coverage. Your insurance company must offer you this extra coverage before it issues or renews your policy. C.R.S. § 10-4-110.8 (6)(a)
- Dwelling Limit – The most your insurance company will pay to rebuild your house considering construction costs.
- Extra Replacement Cost Coverage – Provides homeowners a certain amount above the policy limit to replace a damaged structure, if necessary, under current building conditions.
- Law & Ordinance Coverage – Coverage for increased costs of demolition, construction, renovation, or repair associated with the enforcement of building ordinances and laws.
How Much Additional Coverage You Should be Offered
State law sets minimums for added coverage that insurance carriers must offer.
- Extra Replacement Cost Coverage – an amount that is at least 20 percent of the dwelling limit
- Law & Ordinance Coverage – an amount that is at a minimum equal to 10 percent of the dwelling limit
Note: If you haven’t updated your homeowner’s insurance policy in some time, insurance industry experts recommend you review it to ensure your coverage reflects the current market.
Your Policy Should Include Coverage for Additional Living Expenses
If your home is uninhabitable, your homeowner’s insurance policy must include extra coverage for increased living expenses as you repair or replace your home. Additional living expense coverage, or ALE, also pays you for the time it takes you to relocate your household to a new location.
Colorado law requires your insurance company to provide ALE coverage for 12 months. However, your insurer must give you the chance to purchase an additional 12 months for a total of 24 months of ALE if you so choose. C.R.S. § 10-4-110.8 (6)(b)
Setting Your Home’s Replacement Cost
If your house is destroyed or damaged, you are allowed to submit to your insurer your own replacement cost estimate. The appraisal must be completed by a licensed contractor or architect.
Under state law, your insurer must consider your estimate when setting your replacement costs (subject to the insurer’s underwriting requirements). C.R.S. § 10-4-110.8 (8)
Replacing Destroyed or Damaged Belongings in a Total Loss
If your primary residence is completely devastated, you have a couple of options when using your contents coverage to replace your personal possessions. C.R.S. § 10-4-110.8 (11)(a)
The first one is to receive a percentage of your contents coverage without supplying the insurer an itemized list of your belongings. If you choose this route, your insurer must give you at least 30 percent of your contents coverage. You can receive a larger percentage if you and the insurer reach a mutual agreement.
The alternative is to provide your insurer with a written inventory of your personal property that was lost. Taking this step will put you in a position to receive up to the full value of your contents coverage.
How Long You Have to Provide a Written Inventory
Your insurance company must give you at least 365 days to provide an inventory of lost or damaged property if you’ve filed a total loss claim.
Additionally, you are allowed at least 365 days after your additional living expense coverage expires to replace your property and receive recoverable depreciation on that property. C.R.S. § 10-4-110.8 (11)(c)(I) and (II)
If Your Replacement Check is Smaller Than Anticipated
If your insurance payment is less than you expected, you’re entitled to ask how the insurance company arrived at the depreciated value for your belongings. The insurer must provide you with the methodology used to determine the reduced value. C.R.S. § 10-4-110.8 (11)(b)
Your Insurance Company Cannot Control Lawsuit Timelines
If you disagree with how your insurance company handled your claim, you may be able to file a lawsuit. By law, you have a limited time to file a suit. This is called the statute of limitations, and it varies depending on the type of lawsuit you file.
Prior to the Homeowner’s Insurance Reform Act of 2013, it was fairly common for insurance companies to include a policy clause that dictated how long a customer had to file a lawsuit against them. Generally, the insurance company’s time frame was shorter than what state law allowed, constraining policyholders’ legal rights.
Since January 1, 2014, insurers cannot require you to file a lawsuit within a time period that is shorter than the statute of limitations. Contact one of our litigation lawyers if you find a clause like this in your policy.
We Fight Denied Homeowner’s Insurance Claims
Look, your insurance company made certain promises to you when you purchased your policy. And it must live up to those promises. If you believe your insurance company does not meet state standards or is treating you unfairly, set up some time to talk with one of our insurance litigation attorneys. Call 303-688-0944 to begin your free case assessment.