Over the past few years Colorado has seen numerous catastrophic wildfires that brought to light a very uncomforatble truth. Most Coloradoans do not keep their homeowners insurance policies up to date to provide adequate coverage in the event of total loss. In response to this issue, Colorado stepped up and passed the Homeowners Insurance Reform Act of 2013 which has become active since January 1, 2014 in Colorado.What does this mean to Colorado Homeowners and Homeowners Insurance companies?For the Insurance Carriers:

• Homeowners insurance companies must update all policy language so it is easy to understand - which means written at a 10th grade level.
• Every two years, the homeowners insurance company must provide its policyholders an updated estimate of the replacement cost based on construction inflation index.
• All homeowners policies must provide at least one year of additional living expense coverage at all for up to 24 months of additional living expense coverage.

For the Homeowners:

• There will be a disclosure in all homeowners policies that puts the responsibility back on the policyholder to determine whether there are amount of insurance is adequate.
• Homeowners will have the option of collecting 25% of their contents coverage reflected in the policy declaration without requiring a contents inventory.

The big thing to remember is that the disclosure above protects the insurance company. Here are two things Martin Insurance Group recommends:

1. Review your policy with your agent to make sure the amount of coverage your policy carriers is in line with the replacement cost provided by your carrier.
2. Don't assume market value is the same as cost of new construction.

Bottom line is, you the homeowner are now fully responsible for making sure your home is insured to its replacement value. Your carrier is doing your replacement cost homework for you, and your agents at Martin Insurance will be glad to review the changes with you, so please do not hesitate to contact our office to schedule a review.