The rising cost and availability of property insurance in Colorado is a statewide concern. The increasing frequency and impact of natural disasters such as hail, high winds, and wildfires are significant contributing factors to the current challenges in the insurance market, along with the increasing cost of materials and labor.
To help ensure homeowners and commercial property owners in Colorado have access to property insurance even in areas prone to natural disasters or other risks, the legislature passed HB23-1288, which created the Fair Access to Insurance Requirement (“FAIR”) Plan. The bill was signed into law by the Governor on May 12, 2023.
In January 2024, the Governor appointed a board that began work to create the Colorado FAIR Plan Association. The Board submitted the Plan of Operation to the Division of Insurance, which approved it July 26, 2024.
Further information about the FAIR Plan Statutes can be found within CRS 10-4-1801 through CRS 10-4-1812.
What is the FAIR Plan?
The FAIR Plan is designed to provide property coverage when traditional insurance is unavailable. It is an insurer of last resort, with higher premiums and limited coverage for properties facing high disaster risks.
Key Coverage Details
- Homeowners Property: Coverage not to exceed the total of $750,000 for property and contents combined for actual cash value, not replacement cost
- Commercial Property: Coverage not to exceed the total of $5,000,000 for property and contents combined for actual cash value, not replacement cost
A property location is defined as a single building with at least 100 feet of distance between it and any other insured building. Additionally, coinsurance may apply for underinsured risks.
Eligibility for the FAIR Plan
A homeowner or commercial property owner may qualify for the FAIR Plan if:
- They have received three declinations from standard insurers; and
- Their property is considered uninsurable due to high-risk factors like wildfire exposure, location, claim history, or age
The FAIR Plan should be considered a last resort for coverage, and not a long-term solution.
What HOAs Need to Know About the FAIR Plan
- Governing Documents: Cannot be altered to subdivide the community into separate buildings to meet FAIR Plan requirements.
- Limited Perils Covered: Only covers direct loss from fire or lightning, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, volcanic eruption, vandalism or malicious mischief.
- Underwriting and Inspections: Properties will still undergo inspections to determine eligibility. The FAIR Plan can deny applications if properties do not meet underwriting standards.
Due to these limitations, the FAIR Plan may not adequately meet the needs of larger or high value associations.
HOA board members, community association managers, and unit owners are strongly encouraged to:
- Learn more about the Colorado FAIR Plan by visiting: coloradofairplan.com
- Contact a licensed insurance professional to discuss eligibility, other coverage options, and how the FAIR Plan can be used alongside additional layers of coverage to protect your community.
Additional Resources:
For more information about the current challenges in property insurance in Colorado, including the causes behind increasing premiums, tips regarding coverage and other resources, please visit the Colorado Division of Insurance.
Toolkit For Homeowners and HOAs on Insurance