Similar to most states, Colorado sets forth minimum requirements of insurance for common interest communities under the Colorado Common Interest Ownership Act.
Section 38-33.3-313(1)(a) of the Act requires that the association maintain property insurance on the common elements equal to the replacement cost of the property less applicable deductibles. Where the building contains horizontal boundaries described in the declaration, Section 38-33.3-313(2) requires that the insurance also cover the units, but not the finished interior surfaces of the walls, floors, or ceilings of the units, and need not include improvements and betterments installed by unit owners. If the policy provides coverage for betterments and improvements to units, the increased charges for that coverage should be assessed by the association to those owners with betterments and improvements.
It should also be noted that fidelity coverage, to the extent reasonably available, must be maintained by an association with thirty or more units where a unit owner or employee of the association controls or disburses funds of the association.
Because Colorado does not require an association to maintain insurance for the finished surfaces and improvements of a unit, it is important for owners to identify and understand the coverage provided by the association to determine whether they should purchase additional insurance to protect themselves in the event of a loss.