Non renewal of Homeowner’s policy during rebuild Leah Fuchs asked 2 years ago
Non renewal of Homeowner’s policy during rebuild

We are rebuilding our home lost in the Marshall Fire. We are framing our home now and received a notice of nonrenewal for our homeowner’s policy due to “unacceptable risk.” I’ve contacted our insurer and the DOI, but feel pressure to shop for homeowner’s insurance right away.

We have a Builder’s Risk Policy, but need (and want) to keep our homeowner’s insurance for our lender. I thought we were protected from this by Colorado Revised Statutes Title 10. Insurance § 10-4-110.9. Fire insurance–issuance and renewal of policies within federally designated disaster areas

Do you have any advice on how to shop for homeowner’s insurance while we are under construction?

1 Answers
Joel Laucher Joel Laucher Expert answered 2 years ago
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Hello Leah,

My sympathy goes out to all homeowners who find themselves in this situation.

Contacting your insurance department is a generally a good first start. However, if you have filed a written inquiry or complaint it could take a few days or more to get a response – especially if your regulator is communicating with your insurer.

You might want to also call the regulator just to confirm your belief that you are protected by law. Here is the contact information for the Colorado Division of Insurance:

Phone: 303-894-7499 | Toll free outside the Denver Metro Area: 800-930-3745

I personally find the language in the relevant Colorado statute (below) to be somewhat vague as to how long that renewal protection lasts and how demanding an insurer can be with respect to the mitigation actions it might require of the property owner:​

CO Rev Stat § 10-4-110.9 (2016)

​(2) An insurer shall not refuse to renew an existing fire insurance policy for property that is within an area that has been declared a federally designated disaster area for any reason that is related to wildfire. As a condition of such renewal, an insurer may require a property owner to take reasonable actions to reduce the risk of fire to such property.

If you get the sense you aren’t protected by the nonrenewal statute, until you get a definitive response to your case you can at least get a jump on searching for new coverage. So, on that same call, ask your regulator to provide you with a link to or a list of all the insurers licensed to write homeowners and renters coverage in Colorado. You can also work with your current agent to find coverage. It’s possible you may need to contact several agents or insurers to thoroughly search the market for a new homeowners insurer – that’s why you need that list of homeowners insurers.

Of course, most insurers won’t want to write a homeowners policy on what is currently a construction site. But at this point in time you may simply need to purchase a renters policy for your current residence that also extends liability coverage to the your home property. (That may require an additional coverage endorsement to the renters policy.) You indicated that you already have a Builder’s Risk Policy in place to further protect you.

I believe it is a good idea to contact your lender to explain what you are doing and the coverages you have purchased so they understand you are protecting both your investment and their interests. (In reality, maintaining a full homeowners policy is of no particular value to the lender after a total loss, the only real equity at that point is the value of the land. However, one key value for you behind maintaining your HO policy through the rebuild is because in the current insurance market it can be difficult to find an insurer that will write a new policy in a wildfire-exposed region.)

Hopefully, your lender will be reasonable rather than requiring that either an HO policy be placed immediately or the lender’s own coverage will be put in place with the cost added to your mortgage.