Chapter 4 - § 4.13 • INSURANCE ON UNITS

• Jurisdiction: Colorado

§ 4.13 • INSURANCE ON UNITS¹³¹

Despite — and in some cases, because of — extensive regulation and mandated simplification, modern insurance policies are difficult for laypersons to understand. Indeed, the large volume of litigation over the interpretation of policies bears witness to the fact that many attorneys and insurance professionals have difficulty unraveling policy language. An additional layer of confusion is added in common interest communities.

The CCIOA requires associations to maintain,¹³² to the extent reasonably available, property insurance on the common elements.¹³³ In the case of a building that is part of a cooperative or contains units having horizontal boundaries described in the declaration, the insurance must include the units but not the finished interior surfaces of the walls, floors, and ceilings of the units.¹³⁴ The insurance does not need to include improvements and betterments installed by unit owners, but if they are covered, any increased charge is to be assessed by the association to those owners. Policies are required to address some specific issues,¹³⁵ including that, if at the time of a loss under the policy, there is other insurance in the name of a unit owner covering the same risk, the association policy provides primary insurance.¹³⁶ The CCIOA warns unit owners that a policy issued to the association does not obviate the need for individual owners to obtain insurance for their own benefit.¹³⁷

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Notes:

^[131] The purpose of the discussion in this section is to alert the reader to the fact that there are issues — particularly with regard to property insurance — regarding insurance and the rights, responsibilities, obligations, and liabilities of the association, individual owners, and carriers that are peculiar to in common interest communities. A more comprehensive discussion of insurance is found in Chapter 5. See also Semaya & MacGregor, Insurance Law for Common Interest Communities: Condominiums, Cooperatives, and Homeowners Associations (2018).

^[132] The insurance must cover claims of one or more insured parties against other insured parties. C.R.S. § 38-33.3-313(1)(b). The CCIOA also requires associations to have "commercial general liability insurance against claims and liabilities arising in connection with the ownership, existence, use, or management of the common elements, and, in cooperatives, also of all units." Id. Unit owners must be included as additional insureds, but only for claims and liabilities...