Commentary and Analysis Regarding Colorado Law

The Marshall Fire of December, 2021 is a tragedy that has impacted thousands in Boulder County. In its aftermath, we all – those impacted and those not impacted – need to revisit our homeowners and property insurance policies to ensure we have adequate coverage. Merely clicking “renew” each year is far from adequate, and it could leave you drastically uninsured. Here’s what everyone should do:

1. Get a copy of your declarations page from your homeowners insurance carrier. Most homeowners policies have four types of coverages: dwelling or home coverage (covering your house); ‘other structures’ or ‘detached structures’ coverage (covering things like decks, sheds, detached garages, and sometimes accessory dwelling units); contents or personal property coverage (covering your clothes, furniture, pots, pans, etc…); and additional living expense coverage (covering a rental property or hotel if you need to be out of the house during repair/rebuild).
2. Try to approximate the value of each of these categories of coverages. For the house, remember, it’s the cost to rebuild or replace the home structure, not the value of the land or landscaping. For other structures, it’s the cost to replace your deck, shed, and detached garage. For contents, it covers everything from your TV to your blue jeans. Additional living expenses would be the cost to rent a similar property for up to two years. The best thing to do is to get an appraisal of the home that separates the value of the house from the land, then separately appraises each other structure. Most people don’t want to pay over $1,000 for an appraisal like this. There are alternatives, such as looking at Zillow’s “Zestimate,” looking at comparable home sales prices, and talking to friends or colleagues in the construction industry. Whatever you do, try to get the best information you can on what it would take to replace your home, replace your belongings, and replace the other structures. Look up the cost to rent a similar property.
3. Look at your policy’s coverage terms. For your home dwelling coverage, look for terms such as “refundable depreciation” or “non-refundable depreciation.” This has a big impact on how much you get from the insurance carrier if you decide you want to rebuild versus start anew somewhere else. Read the personal property coverage section to see what types of personal property, such as jewelry, art, collectibles, or musical instruments need special endorsements or riders, and make sure you get those endorsements or riders for your valuables. If you don’t, they probably won’t be covered.
4. Increase your policy limits to at least match what it will cost to rebuild your home, rebuild your other structures, replace your personal property, and cover your rental income. Yes, this probably will make your rates go up. Do it anyway.
5. Do this at least every other year, and while you’re at it, check your auto policy, and look into an umbrella policy.

Homeowners insurance often doesn’t provide the type or level of coverage most people need in the time of a catastrophic loss. Even when your house burns down, you’re still obligated to pay your mortgage and pay your property tax. When your coverage kicks in, it’s usually to replace the structure on the same piece of land. For people with mortgages, this often leaves them with little choice but to rebuild in the same location, even if it looks like the surface of Mars.

Thank you, Jeff Rose, for this discussion regarding fire insurance claims in the wake of the Marshall Fire in Colorado.

Some of the most contested lawsuits pit neighbor against neighbor, arguing over who owns what small strip of seemingly valueless land. Sometimes one neighbor argues the fence is a foot over the lot line; other times, a neighbor puts up a fence in the middle of the night. Tensions flare, and weeks later, everyone is at the lawyers’ offices armed for bear.  Many months and thousands of dollars later, a District Court Judge decrees where the true lot line rests.  Maybe a fence moves, maybe it doesn’t, maybe a deed gets recorded.  Whether you win or lose, everyone spent a fortune and no one is happy.  

From the outside, boundary disputes seem like the most petty, unreasonable lawsuits you could imagine. However, sometimes they’re legitimate. Most Colorado towns were founded in the 1800’s.  Original surveys were often made using large, heavy chains to measure distances. Old surveys frequently marked boundaries as starting at the “large cottonwood tree” or “the stone fence post,” features that have long-since vanished. Survey chains were particularly bad at measuring over uneven  terrain, let alone foothills or mountains. Further uncertainty comes with modern surveying tools, such as GPS and laser scanning, called lidar.  Applying such accurate modern techniques to the verbiage of legal descriptions from the 1800’s is sometimes comical. Some towns, such as Leadville, find errors so great that one person’s house might be located on another person’s lot.  

Almost every contract we sign, in business or for our personal lives, has a clause that awards attorneys’ fees to the prevailing party in any lawsuit or arbitration.  This means that if you end up in a dispute - with your cell phone provider, for example - if you win, they pay your attorneys’ fees, but if they win, you pay theirs.  

These contractual provisions are intended to deter people from filing a lawsuit unless they’re absolutely certain that they’ll win.  The idea is that, if you have a chance of paying the other side’s attorneys’ fees, you’ll give serious pause before filing a lawsuit.