The Great Colorado Homeowners Insurance Reform Act of 2013 has been introduced and is moving its way through committee to save the day.  In its current form, the Insurance Reform Act contains a number of provisions that are geared towards making insurance more user-friendly.  The act also contains provisions that address the valuation of property and payment of claims.

In an effort to assist homeowners purchasing insurance in Colorado, the Reform Act requires that all insurance companies provide full copies of policies to owners requesting a copy within three business days of request and that all policies be drafted in a manner that is reasonably understood by a person with a 10th grade reading level.  Insurance companies will have approximately 18 months, if this bill passes, to convert their forms into easily understood language.  

The Reform Act also mandates that certain coverage automatically be included in policies, such as 12 months of Additional Living Expense coverage, with an option to purchase a total of twenty-four months.  The insurance company must, at the time of sale, provide a written explanation of the purpose, terms and additional cost of this coverage. 

The Reform Act also requires the insurance company to re-evaluate the cost to rebuild a dwelling unit on a bi-annual basis.  Additionally, every four years, you can expect a visit from your insurance company to revalidate the insured property replacement costs.
While it is a good idea to obtain accurate reconstruction costs for a dwelling unit, and a determination of actual value, what could happen is that rates will be increased to account for the additional cost of site visits every four years and re-evaluations every two.   We will keep an eye on this legislation to see how it may impact community association policies.

David A. Firmin
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