Yesterday, the Colorado Division of Insurance (DORA) issued Emergency Regulation 22-E-15 on legal and regulatory coverage in connection with the Marshall Fire.1
The cities of Louisville and Superior and unincorporated Boulder County are allowing victims of the Marshall Fire to opt out of certain parts of their building codes. The emergency ordinance is intended to protect policyholders who have statutory and regulatory coverage by ensuring that they can choose to rebuild to the building codes in effect at the time of their loss due to the Marshall Fire.
The most important part of the Colorado Bulletin is as follows:
A. Companies must pay benefits to policyholders based on the terms of their policies and for amounts incurred by policyholders to rebuild their homes. These payments shall include any payments due under the primary structure limit and any optional coverages that are applicable; including law and regulation coverage.
B. Companies shall pay benefits to policyholders for statutory and regulatory coverage based on the policyholders̵7; costs to rebuild to the applicable building codes in effect for unincorporated Boulder County, Louisville and Superior on the date of the policyholders’ loss, subject to applicable coverage limits.
C. If a policyholder elects to use prior building codes, as permitted by the local government, the Companies shall provide coverage for remodeling costs for those portions of the building codes in effect on the date of loss that the policyholder elects to apply, subject to applicable coverage limits.
D. If the policyholder requests that the dwelling unit’s fire sprinkler system be included in the remodeling, and such a system is required by the building code in effect on the date of loss, the company shall cover the cost of indoor fire sprinklers with applicable coverage limits and law and regulation coverage in the policy.
E. Company shall not interfere with the policyholder’s decision to rebuild in whole or in part in accordance with previous building codes, including but not limited to the use of coverage determinations or limitations to influence that decision.
F. A violation of this section may constitute an unfair claims settlement practice pursuant to Sections 10-3-1103 and 10-3-1104(1)(h), CRS
In issuing this Emergency Regulation 22-E-15 bulletin, the Colorado Division of Insurance has made it clear that it continues to believe that these additional and/or enhanced coverage options provide significant protection for Colorado homeowners and recognizes that insureds affected by Marshall- the fire “will need access to any available claim dollars that they are entitled to under their policy.”2
1 DORA Insurance Department. Emergency Regulation 22-E-15. August 22, 2022.