Facing Property Insurance Challenges

Skyrocketing premiums for property insurance coverage for many common interest communities in Colorado, particularly condominium projects, are becoming a financial nightmare for those communities impacted by the premium hikes and the homeowners who live in them. In fact, the Speaker of the House in Colorado is sponsoring House Bill 24-1108 to require the Commissioner of Insurance to conduct a study on the property insurance market for common interest communities in Colorado and to make recommendations on measures and programs to ensure the long-term sustainability and availability of property insurance coverage. Unfortunately, assuming HB 24-1108 passes both chambers of the General Assembly and is signed into law by the Governor, the results of the study will not be published until 2026.

Since skyrocketing property insurance premiums are creating a real crisis now for HOAs in Colorado, here are some tips for attempting to blunt the impact of these premium hikes:

● Consider utilizing a reputable insurance broker who specializes in insurance for community associations and is able obtain quotes from multiple carriers that provide property insurance coverage.

● Look at the Declaration for your community to review the property insurance coverage your community association is required to provide on the units, if any, and consult with your legal counsel and insurance broker on whether an amendment to the Declaration would assist in reducing the premiums your community association will pay for property insurance coverage.

● If your Declaration provides a cap on the deductible that the Association may have on property insurance coverage, amend the Declaration to get rid of the deductible cap. The amount of the deductible for property insurance coverage is one way to help reduce the premium for the coverage.

● Do not defer maintenance in your community. Deferred maintenance can result in claims on your property insurance coverage which will typically result in increased premiums.

● Talk with your insurance broker about having a risk assessment conducted in your community to identify items that can be addressed to assist in reducing the premium for your property insurance coverage.

● If your community gets hit with a high premium, talk with your legal counsel about whether you need to amend the budget to cover the premium hike or if you have the ability to levy a special assessment to cover the premium. You will also want to work through the required process with your legal counsel for amending the budget or levying a special assessment.

Skyrocketing premiums is something that many community associations in Colorado are currently facing or will be facing in the future. Now is the time for community associations to take the necessary steps to assist with managing these premium increases.