- On January 5, 2019
Colorado homeowners face a unique set of challenges each year when it comes to protecting their homes – massive hail, wildfires and other catastrophic storms are just a few many people deal with each year. Even if you’ve never had to file a storm damage claim, your home is probably underinsured. One study shows that 60% of homes across the US you are underinsured by at least 17%. That means that should you have to file a homeowner’s claim, your insurance may not cover the full cost of repairs!
DORA Bulletin No. B-5.35
The Colorado Division of Insurance reissued a bulletin to insurance companies to help policyholders and prevent gaps in coverage. The bulletin gives insurance companies guidance and lists additional coverages that must be offered when policies are renewed. Here is a breakdown:
- Extended Replacement-Cost coverage equal to at least twenty percent of the dwelling limit
- Law and Ordinance coverage equal to ten percent of the dwelling limit
- Additional Living Expense coverage for a total of twenty-four months
What This Means For Homeowners
While the bulletin doesn’t require insurance companies to include these coverages automatically, they must offer them when renewing a policy.
If you don’t factor in how building materials, home value, etc. can increase over time, you could be underinsuring your home by more than you think. Often, this means homeowners have to pay out of pocket to restore their home to pre-loss conditions because the coverage limit on the policy is not high enough. That’s where the extended replacement-cost coverage comes into play. With the bulletin, insurance companies are required to offer extended coverage to at least 20% of the home’s limit.
Also, having additional law and ordinance coverage protects homeowners from having to pay for expensive city, state or county code upgrades out of pocket. Again, the bulletin doesn’t require insurance companies to include these coverages automatically! It only means they must offer them at the time of renewal. This type of extended insurance coverage is a good one for many homeowners to consider.
Finally, Bulletin N. B-5.35 requires insurance companies to offer additional living expenses coverage for up to two years. While two years sounds like a long time, it isn’t if your home is a total loss due to a fire or flood. If you live in a disaster-prone area, like a flood hazard zone, you may want to think about this additional coverage option.
It’s NEVER a good idea to renew your homeowners’ insurance policy without reviewing coverage limits and options. Not sure what type of coverage is enough or how much? Reach out to a local professional who can help!