The Colorado Fair Plan has started issuing policies, two years after the state enacted legislation establishing the insurer of last resort, according to a report from AM Best.
The program is intended to provide basic property coverage for homeowners and businesses unable to secure insurance through private market.
Kelly Campbell, executive director of the Colorado Fair Plan, said the program was developed through input from other states operating similar plans.
“So many have been willing to bring those lessons learned – the good and the bad – to the table to really allow us to benefit,” Campbell said, noting the California Fair Plan in particular has shared insights into challenges and operational approaches.
Eligibility for a policy requires applicants to have been declined by three admitted insurers. Coverage includes essential perils such as fire and lightning, with limits of up to $750,000 for residential properties and $5 million for commercial buildings. Some additional coverages, including wind and hail, may be purchased. All policies are issued on an actual cash value basis, according to the report.
Campbell said the plan is designed to fill gaps in availability, not affordability. “We are here to be a safety net, but it’s certainty not our goal to be the market of choice,” she said. “We are a basic coverage option with higher costs that reflect the higher risks of the properties we insure.”
As of December 2024, the state estimated that approximately 1% of properties, or about 29,000 structures, could be eligible for coverage under the plan.
Campbell emphasized that current policyholders do not qualify. “If you currently have coverage, you don’t qualify for the Fair Plan,” she said. “We are really trying to make sure that the Fair Plan is built as the market of last resort — that safety net for consumers when they really can’t find coverage anywhere else.”
She also said insurance agents have contributed to the program’s development by providing feedback on the difficulties some clients face in securing coverage.
Colorado is the first state to implement a new Fair Plan since Hawaii launched a similar program in 1991. According to the Insurance Information Institute, 33 states and Washington, D.C., currently operate Fair Plans.
The Colorado Division of Insurance did not respond to requests for comment, according to the report.
