As Colorado associations continue to struggle with exponentially increasing insurance premiums and wind/hail deductibles, boards and community managers alike struggle to find ways to ease the financial struggle. Whether the relief comes through document amendments pushing more insurance obligations onto the owners, or continuing to increase deductibles, the relief is oftentimes short-lived.
However, another option exists that associations do not typically utilize: obtaining insurance audits. Insurance audits are performed by associations’ legal counsel and involve reviews of existing insurance policies and all related endorsements, as well as the governing documents and the insurance requirements contained therein.
Upon review of such documents, a written report is produced identifying gaps in coverage, instances where insurance does not comply with the requirements of the governing documents or Colorado law, and identifying possible legal consequences of various policy provisions.
Occasionally, insurance audits reveal associations are over-insuring by including certain components of the community the declaration does not require they insure. Sometimes, associations are paying for endorsements that may not be needed for that particular community. Should such overages be discovered, associations stand to reduce their premiums by removing certain coverage components from policies.
When it comes to insurance analysis, there are legal nuances including some very specific requirements imposed by Colorado law. Oftentimes these nuances are missed because they involve a legal analysis of documents and Colorado law. Therefore, the best approach is to have both your insurance professionals and legal professionals review the insurance policies.
At Altitude Community Law P.C., we offer two types of insurance audits: a full insurance audit and a basic insurance audit. A full insurance audit includes review of an association’s insurance policies (including property, liability, directors and officers, fidelity, workers’ compensation, etc.) and all related endorsements. Once we complete the review, we will create a report that includes a comparison chart of what is required versus what the association has. The full insurance audit also includes comments and recommendations for each of the policies and endorsements the association has in place.
A basic insurance audit is a less expensive alternative to the full insurance audit. With a basic audit, we will review your governing documents and all declaration pages (the cover pages containing overviews of coverage for each policy) of your insurance policies and endorsements. Upon review of same, we will provide you with a report similar to the report for a full insurance audit. However, such report would not contain any comments on the policy contents outside of the declaration pages.
Both types of insurance audits are useful and can identify deficiencies and overages in your insurance coverage, so please do not hesitate to contact an Altitude attorney at 303.432.9999 or at [email protected] if you have any additional questions concerning insurance audits.