As Merlin attorney Jonathan Bukowski previously discussed, the Colorado Common Interest Ownership Act (CCIOA) sets forth specific minimum insurance requirements for common interest communities, such as condominiums and homeowners associations (HOAs). These requirements are designed to ensure that common elements and, in some cases, individual units are adequately insured.
In addition to the CCIOA, in May 2023, Colorado passed legislation establishing the Fair Access to Insurance Requirements (FAIR) Plan.1 The legislation creates a shared market plan where insurance companies pool resources to insure high-risk properties they would otherwise reject. FAIR Plans exist in over 25 states as an insurer of last resort for areas prone to natural disasters or urban decay.2
In the context of condominium associations, the FAIR Plan can serve as a safety net if an association is unable to secure property insurance coverage due to the high-risk nature of the property. This is particularly relevant for condominiums located in areas prone to wildfires or other high-risk factors.
The FAIR Plan provides up to $750,000 in property insurance coverage and up to $5 million in commercial property insurance to eligible individuals, businesses, and associations in Colorado. It’s important to note that the FAIR Plan is intended to be used as a last resort and provides only basic coverage.
With the legislation now in place, Colorado is in the process of setting up a Board of Directors to manage the Fair Plan, with a deadline to submit a Plan of Operation by July 2024.3 Access to policies under this plan is not expected until early 2025.
1 https://leg.colorado.gov/bills/hb23-1288
2 https://www.forbes.com/advisor/homeowners-insurance/fair-plans/
