Colorado’s construction insurance market is buckling—fewer carriers, rising premiums, and stripped-down coverage are leaving builders with little protection and even less clarity.
“I think Colorado has been on the brink of an insurance crisis since 2010,” said independent broker Stephanie Beninati.
That’s when lawmakers passed House Bill 1394—an effort to protect contractors that, according to Beninati, ended up pushing insurers out of the state.
The bill came in response to a 2009 court ruling that allowed insurance companies to deny coverage for certain construction defect claims. To fix that, HB 1394 reclassified construction defects—even those caused by faulty workmanship—as accidental. That meant insurers were once again required to defend builders when something went wrong on the job site.
But the fix came with unintended consequences.
“If somebody built a house in 2010 and then changed carriers in 2011 or 2012, all the carriers could be forced to respond to a single defect claim,” Beninati said. “Of course, insurance carriers didn’t like that; we saw a complete pullback.”
The law essentially turned general liability policies into backdoor warranties for contractors’ work—something critics warned could inflate premiums and limit carrier participation. What made matters worse, some argue, was that the bill applied retroactively, opening the door to legal challenges and making insurers even more skittish.
More than a decade later, the effects are still being felt. Many carriers scaled back or pulled out altogether, making it harder—and more expensive—for builders to find coverage. And while the bill was meant to protect the industry, brokers like Beninati say it also added uncertainty to an already complex market.
The result is an overreliance on the excess and surplus (E&S) market, where coverage is stripped back, and costs have soared. These policies are typically monoline, offering fewer protections and little flexibility.
“Technically, excess and surplus is more money, less coverages,” Beninati said. “And now it’s getting worse.”
“Maybe there’s a small percentage of them that fully understand what’s happening. I know my clients do, because I’m constantly talking to them about it. But in general? That’s the problem,” she said.
Even insurance agents aren’t always equipped to respond. Beninati frequently sees certificate paperwork sent back with basic mistakes.
“Almost 90% of the time, they don’t know what’s going on,” she said. “I have to work with the agent to explain it.”
To fill that gap, Beninati’s firm built a custom certificate verification program. It tracks subcontractor insurance policies, helping ensure coverage aligns with the work performed. She’s also created specialized tools for clients—subcontractor agreements and builder-homeowner forms that align with insurer expectations and set a clear path forward during a build.
“I feel like if I can create a more dynamic risk management plan for them, then I can go to the carriers and strike a bargain,” she said.
While the reception so far has been lukewarm, Beninati sees it as a long game.
“They don’t seem to understand, but I know it will change, and that’s why I’m doing all this work ahead of time,” she said.
“I feel like it’s our job to protect our clients,” she said. “We can’t expect the wholesale brokers and the carriers to protect us. It’s not going to happen; the system isn’t set up for that.”
That’s what made it so striking when she recently found a wholesale partner who did things differently.
“I’ve never seen anybody read my policies from coverage to coverage,” Beninati said. “It’s a unique situation, [which was] very exciting for me.”
But she doubts that kind of attentiveness can scale—at least not without help from technology. Since early 2023, Beninati has been building AI tools into her firm’s back-end operations. Automation has allowed her to absorb staff turnover without hiring replacements, which has had a direct effect on her bottom line.
Still, she’s watching the AI rollout with a risk manager’s lens—especially as it begins to creep into underwriting and claims processing.
“There were guardrails on AI and its rollout, and in this administration, there are none,” Beninati said. “My concern is that companies could implement it faster than anyone’s ready for.”
