Yesterday, the Colorado Division of Insurance (DORA) issued Emergency Regulation 22-E-15 Concerning Law and Ordinance Coverage Relating to the Marshall Fire.1
The towns of Louisville and Superior and unincorporated Boulder County are allowing victims of the Marshall Fire to opt out of certain portions of their building codes. The emergency regulation is intended to protect policyholders who have law and ordinance coverage by ensuring 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 the following:
A. Companies shall 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 all payments owed under the primary structure limit and any optional coverages that are applicable, including law and ordinance coverage.
B. Companies shall pay benefits to policyholders for law and ordinance coverage based on the policyholders’ costs incurred 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 chooses to utilize prior building codes, as allowed by the local government, companies shall provide coverage for rebuilding costs for those portions of the building codes in effect on the date of loss that the policyholder chooses to apply, subject to applicable coverage limits.
D. If the policyholder requests that the Dwelling Unit Fire Sprinkler Systems be included in the rebuild, and such a system is required under the building code in effect on the date of loss, the company shall cover the cost of indoor fire sprinklers subject to applicable coverage limits and law and ordinance coverage in the policy.
E. Companies shall not interfere with the policyholder’s decision to rebuild in whole or in part pursuant to a prior building code, including but not limited to use of coverage determinations or limitations to influence this decision.
F. A violation of this section may constitute an unfair claims settlement practice under sections 10-3-1103 and 10-3-1104(1)(h), C.R.S.
By issuing this bulletin on Emergency Regulation 22-E-15, the Colorado Division of Insurance has made it clear that it continues to believe these additional and/or enhanced coverage options provide significant protections for Colorado homeowners and recognizes that insureds impacted by the Marshall Fire “will need access to every available claim dollar they are entitled to under their policy.”2
1 DORA Division of Insurance. Emergency Regulation 22-E-15. Aug. 22, 2022.