As wildfires impact communities all over Colorado, the Division of Insurance has issued a new bulletin concerning claim handling for policyholders displaced by wildfires, including claims involving Additional Living Expenses (ALE), Loss of Use, and similar policy coverages.
The bulletin applies to all admitted and non-admitted insurers issuing homeowners, renters, condominium unit owners, mobile or manufactured home, dwelling fire, landlord, farm and ranch, and other residential property insurance policies in Colorado.
The Division expects insurers to provide prompt, practical, and compassionate claim handling to displaced policyholders. Specifically, the bulletin provides:
- When a policyholder is displaced because of a mandatory evacuation order, civil authority order, emergency access restriction, road closure, utility outage, or other wildfire-related condition that prevents safe access to or occupancy of the insured residence, insurers should promptly evaluate all potentially applicable ALE, Loss of Use, and similar coverages.
- All insurers, regardless of ALE or Loss of Use policy provisions, should make coverage available for policyholders that are subject to mandatory evacuation orders.
- Insurers should not deny, delay, suspend, or close an evacuation-related claim solely because the insurer has not yet been able to inspect the property or confirm the full extent of physical damage.
In addition, the Division suggests or encourages insurers to approach claim handling for displaced policyholders with the following considerations:
- Consider the totality of the circumstances for individual policyholders when evaluating claims involving voluntary evacuations, pre-evacuation notices, and other public-safety advisories.
- Waive any ALE or Loss of Use waiting period for policyholders displaced by evacuation orders, access restrictions, or wildfire-related conditions that prevent safe occupancy.
- Consider all reasonable short-term and longer-term housing options, including hotels, motels, short-term rentals, apartments, Airbnb, VRBO, individual rooms for rent, RV or temporary housing arrangements where appropriate, and agreed-upon monthly housing allowances for policyholders who stay with relatives or friends during the claim, remediation, repair, or rebuilding period.
In the period following the 2021 Marshall Fire, which destroyed over 1,000 homes, the Division is understandably sensitive to claims handling for policyholders who have been negatively impacted by wildfires in Colorado. As Colorado’s regulatory landscape continues to evolve, Hall & Evans’ Regulatory Practice Group is available to help insurers navigate new requirements with practical compliance advice rooted in experience and longstanding relationships with regulators.