If your home has been damaged or destroyed, you are likely to feel overwhelmed by the loss and by the repair, replace and recovery process that lies ahead. If your property was insured, that insurance policy is the best vehicle to get you back home. If this is your first time navigating the claim process, it’s helpful to recognize that a large insurance claim is basically a business negotiation.
When it comes to insurance lingo, laws and construction estimating, you’re not on a level playing field with the experienced insurance company. But although you may be unfamiliar with your policy and the process in general, there are laws and rules that give you rights. Use them to negotiate and recover the full benefits you’re entitled to under the policy you paid for.
Our goal is to help you understand the laws and rules so you can be your own best advocate and know where and how to get professional help if you need it. Here are your basic homeowners insurance claim rights in Colorado:
You have the right to money and good claim service from your insurance policy:
You have the right to get a complete and current copy of your insurance policy…and read it.
The only way to get the full benefits you’re entitled to is to read your policy over and over until you have a basic understanding of what’s in it. If you do not have a complete and current copy of your policy, request one immediately and make sure you and the company adjuster are working off the same document. In Colorado, the insurer must provide you with a complete copy within 3 days after you request it, within 30 days if you request a certified copy. There’s often math involved in figuring out how much you’re entitled to for dwelling replacement[1], debris removal, trees and building code compliance. If you rely only on the company adjuster you may leave money on the table. UP offers many publications to help you read and understand your policy but if you can’t do it on your own, (and many can’t), consider hiring a policyholder lawyer or public adjuster to help you.
Start by reading your policy’s “declarations page.” It shows how your policy is divided into coverage categories: Dwelling (“Coverage A”), Other Structures (“Coverage B”), Personal Property (“Coverage C”), Loss of Use/Additional Living Expenses (“Coverage D”), as well as other categories such as liability and medical payments. You may also have additional “Endorsements” or extras that may be listed on your declaration page. UP’s “ Simplified Guide to Your Homeowners Policy ” will help you understand your declarations page and what’s inside your policy.
Remember: It will take time to read and understand the fine print – but stick with it. Take notes, highlight and re-read until you have a basic understanding of what you are entitled to.
You have the right to reimbursement for expenses due to losing the use of your home.
“Additional Living Expense” (ALE) coverage, sometimes called “Loss of Use” pays benefits for reasonable expenses for food, lodging, gas, etc. that are over and above your usual costs of living. Get in the habit of keeping all receipts. You usually have to cover the expenses yourself then submit receipts for reimbursement, although insurers will often give you an ALE advance to help you get situated if you ask for it (so ask for it). There is likely to be a limit in your policy for the amount of money you can collect for ALE and the amount of time you have to collect it (in Colorado, ALE must be available for at least 12 months; your insurer should have offered you 24 months at point of sale, so check your policy language to see how long you have). If delays or things beyond your control have made it impossible for you to complete repairs or rebuilding when you hit an ALE time limit, ask (in writing) for an extension[2]. For more information on ALE, read “ Survivors Speak: Information About Insurance Benefits for Temporary Living Expenses (“ALE/Loss of Use”) .
If you’re confused about whether an expense belongs in the ALE versus Contents or Dwelling coverage category, ask yourself: Is this a living expense I incurred because of the loss event? If the answer is yes, it is reasonable for you to seek reimbursement under ALE/Loss of Use coverage. Remember to keep all your receipts because you will most likely need to submit them to your insurance company to collect your “Additional Living Expense” coverage.
You have the right to be paid for your covered losses in a timely manner.
Your insurance adjuster will ask for proof of your damaged property as it existed before the loss, estimates to fix, restore or rebuild, and as much itemization and valuation of losses as you can muster. In Colorado, and in accordance with C.R.S. 10-4-110.8 (11)(a), in the event of a total loss of an owner-occupied primary residence that was furnished at the time of loss, the insurer shall offer the policyholder a minimum of thirty (30) percent of contents coverage without completing an inventory. In order to receive up to the full value of contents, the policyholder must complete the inventory. You will have 365 days after a total loss to submit an inventory of lost or damaged property. You will also have 365 days after you have depleted Additional Living Expense coverage to replace your property and receive the money taken away for depreciation. C.R.S. 10-4-110.8 (11)(c)(i-ii). Letters, photos or statements from family, friends or relatives who visited your home can be helpful. It is critical to list as much detail as you can, because the insurer will rely on this information to justify how much they owe you for the loss under the terms of the policy.
You should also obtain your own estimates from several independent, licensed, reputable contractors, and work toward a settlement with your insurer that is based on these independent estimates (which tend to be more accurate and have a higher dollar value than the estimate provided by your insurer).
Very few people replace a destroyed home by rebuilding an identical home. But it is so important to remember that your insurer is only obligated to pay what it would cost to replace the home you lost. This is often referred to as “scope” of your loss. That’s what they owe – subject to policy limits- so nail that down as soon as possible [3]. The more detail you give your insurer about the cost of replacing the home you lost, the more negotiating power you will have to reach an agreement on what that cost would be if you were going the route of a like kind and quality replacement. Once you reach that agreement, you may have flexibility to make changes and/or buy a replacement home instead of rebuilding. But the best way to go off track in an insurance claim negotiation is to mix apples with oranges by talking about the replacement home before you’ve reached agreement on the cost of replacing the “as was” pre-loss home. For more information, read our publication: Insurance Recovery Tips for the Dwelling Part of Your Claim .
Understand that insurers view all proofs of loss with some skepticism given their training to detect fraudulent claims. In Colorado, anyone who deliberately falsifies any part of a claim will see the entire claim voided–not just the part that was embellished. Honest, innocent mistakes do not jeopardize the entire claim, but be careful not to exaggerate or inflate any claims.
When there is a differential in the insurance company’s scope of loss and the independent rebuild estimates or official “Scope of Loss” you have obtained, you might be being “lowballed” by the insurance company. While this is a common problem, it is prohibited by Colorado law. Lowballing occurs when the insurer attempts to settle a claim for less than its full value by artificially reducing either the scope of repairs, the price of repairs, or both. Read our FAQ about property damage in Colorado for more information.
You have the right to be kept informed on the progress of your claim.
Keep an insurance claim diary where you take and keep detailed notes of all conversations with insurance company representatives…record their names, phone numbers, job titles and supervisor’s names. This will help you keep track of your claim progress and protect your rights. It is important to set deadlines and enforce them and confirm agreements in writing (email counts). For more information on how to communicate with your insurance company, read: Speak UP: How to communicate with your insurance company .
Your rights include that your insurer should immediately pay you what is owed without delay. They should not hold back any part of your benefits while another part is uncertain or under investigation. Nor should your insurer try to pressure or leverage you into settling your entire claim while one portion is not yet finalized. They should just pay the undisputed amount first while the remainder is being investigated and evaluated.
In Colorado, the Unfair Claim Settlement Practices Act [C.R.S. §10-3-1104 (1) (h)] regulates how insurers should treat insureds. Insurers must provide the insured with a prompt explanation for how the claim is being decided based on the policy language, applicable law or unique facts of the claim. They owe the insured a procedural duty of good faith to keep the insured informed about the claim after conducting an unbiased investigation and evaluation. Insurers who deny or delay payment of covered benefits without a reasonable basis, such as by not following industry standards, may face the penalty of paying their insureds twice the amount of the covered benefits (in addition to the covered benefit), plus attorney’s fees and costs, for such misconduct (C.R.S.§§10-3-1115, 1116).
You have the right to file a complaint and/or hire professional help.
Particularly on large claims, you may need the help of a professional to recover your full insurance benefits, especially if you do not feel you are being treated fairly, or if the insurance company is violating your rights under the Colorado Unfair Claim Settlement Practices Act. Attorneys who specialize in representing policyholders and public adjusters are available to help you through your insurance claim. Contingent and percentage fee agreements allow consumers economical access to professional help but affect the amount of your settlement, and percentage fees are always negotiable. Check references and professional standing. To file a complaint with the Colorado Division of Insurance, visit the Colorado Division of Regulatory Agencies at: www.dora.state.co.us
Many homeowners may discover they are “underinsured” and have inadequate coverage to pay for all of their losses. If you are underinsured, you may have little financial recourse against the insurer or sales agent. Getting an insurer to pay more than their contract says they owe you is not easy unless you can show that a “special relationship” existed between you and your agent, such as if the agent agreed to assume additional responsibilities to provide you with adequate coverage to pay for all of your rebuilding or restoration losses [Kaercher v. Sater, 155 P. 3rd 437 (Colo. App. 2006)]. A good policyholder attorney will be able to assess the strength or weakness of your underinsurance claim. For more information visit the Underinsurance Help page.
Remember: to check references and professional standing before hiring professional help.
Visit the “Find Help” directory and read our tips on Hiring Professional Help .
Additional reading and all publications referenced above can be found on the Colorado State Help Page at: http://uphelp.org/resources/state-by-state/Colorado
COLORADO DEPARTMENT OF INSURANCE STATUTES, EMERGENCY REGULATIONS, AND BULLETINS:
You can find current Colorado insurance statutes, emergency regulations, and bulletins here: https://doi.colorado.gov/insurance-statutes-regulations-bulletins#emergencyregs
HOMEOWNERS INSURANCE REFORM ACT OF 2013 (HB 13-1225):
HB 13-1225 requires insurance to: