If you own a condo, it’s important to understand the laws and regulations you might face. Colorado laws on condo hazard insurance don’t require owners to have coverage, but there are laws that help protect communities and associations as a whole.
Hazard insurance and HO6 policies are typically associated, but it’s important to understand that they technically aren’t the same. An HO6 policy is condo insurance whereas hazard insurance is a broad term that refers to coverage against perils such as hail, fire, lightning, etc.
There are different levels of coverage, such as dwelling fire coverage, that focus on protecting condos from the inside, whereas the outside of your condo can gain protection from your association’s coverage.
Overall, it’s always best to work with a professional to review your coverage needs, compare options, and find the lowest rates. Learn more about Colorado condo laws, how they can affect your coverage, and how to save on insurance in the process.
Colorado Laws Don’t Require Condo Owners To Have Hazard Insurance
No, Colorado laws on condo hazard insurance don’t exist in the sense that condo owners are required to carry the coverage. Furthermore, any type of condo insurance is voluntary but it’s always recommended.
For most, a condo is the largest investment you’ll have or at least one of them. This means that if your condo were to sustain a sizable loss, it would be a financial hardship to restore without proper protection.
Additionally, your home is also your shelter. If you can’t rebuild your home, you’ll lose your place to live, and may face even more financial hardships to purchase housing while waiting for your new home, the money necessary to purchase your new home, etc.
The state of Colorado does require condo associations to carry coverage that is aimed at protecting the community at large, but individual threats may still arise. Again, in order to stay best protected, regardless of any laws or regulations, it’s always important to enroll in the right coverage to protect against perils your home may face.
Colorado Common Interest Ownership Act (CCIOA)
The Colorado Common Interest Ownership Act (CCIOA) (C.R.S. § 38-33.3-313) is legislation that deals with HOAs in the Centennial State. There are many key provisions of CCIOA that apply to all common interest communities, regardless of the date they were constructed.
But while certain provisions specifically pertain to communities formed after July 1, 1992, communities created before that date may also be held to the CCIOA as well.
To better understand whether or not a community constructed before July 1, 1992, is tied to applicable portions of CCIOA, it’s important to assess when the community came to be, the type of community you live in, and the size of the community in relation to its expenses.
The CCIOA is there to help protect those within a community from a variety of perils and the association itself. There are different types of coverage available and the CCIOA requires associations to hold three different types:
Associations must have property insurance for the common elements. The insurance limits should cover the full replacement cost of the insured property, minus applicable deductibles.
Determining the replacement cost is best done through a reserve study or analysis by an insurance specialist. The policy does not need to cover items like land, excavations, and foundations.
The terminology surrounding property coverage can be confusing. Property insurance may also be referred to as casualty insurance. It can be called all-risk, comprehensive, extended coverage, or special form coverage.
All risk generally means coverage for all types of physical loss, except for specific exclusions listed in the policy. Hail, fire, and vandalism are commonly covered in an all-risk or comprehensive policy.
Commercial general liability insurance, or CGL, is required by CCIOA. It provides coverage for claims and liabilities related to the common elements.
The insurance limits must meet the minimum specified in the association documents or determined by the board of directors. Directors are responsible for assessing and determining the appropriate level of liability insurance.
The CGL policy covers the association, board of directors, managers, and their employees and agents. The declarant, as a unit owner and board member, must be included as an additional insured. Unit owners should also be named as additional insureds for claims related to the common elements.
Fidelity coverage is mandatory for communities with thirty or more units when unit owners, employees, or managers have control over community funds. This insurance safeguards the community against unauthorized theft of funds, such as embezzlement.
According to CCIOA, the minimum coverage required is at least two months of current assessments plus reserves, based on the association’s current budget.
However, condominium communities seeking or maintaining FHA certification must carry fidelity insurance equivalent to three months of current assessments plus reserves.
Why You Need Hazard Insurance in Colorado for Your Condo
First and foremost, having hazard insurance for your condo is important for protecting against potential perils. Coverage aims to safeguard your finances and allow a path to restore your property without financial hardship.
But while Colorado laws on condo hazard insurance might not exist for condo owners, there are several stipulations in which you’ll be required to carry the coverage anyways. This includes the following:
You’ve Purchased Your Condo Through a Mortgage
The terms of your mortgage are likely going to require you to have coverage on your condo. While an HO6 policy won’t be as intensive as a traditional homeowners insurance policy, it can still protect you from perils and will satisfy the requirements of mortgages in most cases.
Of course, every lender and mortgage is different. You’re going to want to be sure of your terms and follow them accordingly. In the same way, condo owners are going to want to protect their investment, and so do banks who have a vested interest in the well-being of your property’s value.
Your Condo Association or Homeowners Association Requires Hazard Insurance
If you own a condo, you’re likely in either a condo association, a homeowners association, or both. As a requirement of either or both, it’s likely that some form of condo insurance is a requirement for all residents, even if you own your condo outright.
It’s important to understand the terms of your associations as you can face fines or even expulsion through an uncomfortable and expensive legal process.
Therefore, if hazard insurance or any other form of coverage is necessary, you’ll need to ensure that you are properly covered according to your association’s requirements.
How To Save On Condo Hazard Insurance
If you own a condo, there are many ways to save on coverage. You can bundle your coverage with an auto insurance policy, search for discounts, and even adjust your deductible. But the single greatest way to save on coverage is to shop around.
You’ll want to review your coverage options before purchasing your condo, but even if you are already an owner, it’s a good idea to look at your premiums and coverage needs once every 6 to 12 months.
This is important because needs change as do premiums. In order to be sure that you’re paying the best price and properly protected from what perils you might face as a condo owner.
By comparing condo insurance companies, you can find more discounts, lower premiums, more bundling opportunities, and more.
Here at Freedom Insurance Group, all of our partnerships with insurance companies are top-rated companies. Therefore, when you shop and compare your coverage needs, our team can show you quality coverage at the lowest prices from carriers you can trust.
To get started, get a free online condo insurance quote or contact us to save on Colorado condo insurance today!