Colorado does not require homeowners to carry insurance, but most lenders require it as long as there is a mortgage on the house.
The majority of insurance companies will issue a policy based on replacement cost of the house, contents and outbuildings with some limitations. This may not cover items of high value that are unique to the homeowner such as personal collections, jeweilry, antiques, firearms, etc. The policy will usually include the cost of clean up after a fire or disaster.
Policies usually base their limitations depending on cost of materials and construction for the area in which the home is located. The cost replacement is not equal to the market value of the property as this would include the lot on which the home is built. Lots vary in value depending on many things such as location and view.
Most policies also cover liability in the event someone is injured on the property. There are often maximum limits as to what the policy will pay for medical treatments, loss of work and other related expenses.
There are cash policies that cover only the cost minus depreciation of an item, or value at the time of loss, but these types of policies are not usually recommended. They may not give the insured enough money in a claim to have what they need to live or to rebuild.
Some policies may have a deductible and by this type of policy may have a lower premium. The consumer must decide whether they are more comfortable with this or a full coverage policy.
The coverage of a home policy is often limited to damage caused by fire, wind storm, hail, vandalism and theft. It does not usually cover flood or earthquake. These usually require a separate policy.
Most homeowners do not realize that insurance companies do not cover damage caused by a lack of maintenance or long term damage.
The state of Colorado Division of Insurance provides an inventory sheet that can be used to record home contents. Many consumer protection sites recommend that you keep receipts for valuable items stapled to this once the inventory is complete. Photographs and videos are a good way to document ownership of valuable items as well. Expensive jewelry or antiques may require appraisals before they can be covered in a special policy.
