What happens if my Colorado Springs home is damaged and I have to move out?

The first few days

• Make sure everyone is safe, then call your insurance company or agent to start the claim.
• Stop further damage. Cover a damaged roof or windows, shut off water, and get standing water out. The Colorado Division of Insurance recommends keeping every receipt for emergency repairs, and waiting to make permanent repairs until you've talked with your insurer.
• Document everything with photos and video before you clean up or throw anything away, and keep a log of every call: who you spoke with, when, and what comes next.
• With water, move quickly. A water damage restoration company can dry the home out and address mold. The EPA recommends drying water-damaged areas within 24 to 48 hours. Drainage around Colorado Springs homes includes an example of a basement that flooded during a storm.

Where you'll live: additional living expense coverage

Most homeowners policies include additional living expense coverage, sometimes called loss of use. According to the Division of Insurance:

• It pays expenses beyond your normal costs, such as a hotel or rental, while you can't live in your home.
• It won't make your mortgage payment.
• Keep all receipts for the extra costs.
• Many policies have a dollar limit, a time limit, or both, separate from your dwelling and contents coverage. Ask your adjuster what applies to you.

We had a client whose home had smoke and fire damage. They needed recommendations for general contractors, and they needed somewhere to stay. My brokerage is a group of problem solvers with great resources, and our network helped find them temporary housing. They still paid for it, between them and their insurance, but they didn't have to figure it out alone.

If a wildfire destroys your home

Colorado added protections after the 2021 Marshall Fire. Under HB22-1111, when an owner-occupied home is a total loss in a declared wildfire disaster, insurers generally must provide at least 24 months of additional living expense coverage, with up to two 6-month extensions, and pay at least 65% of your contents coverage without requiring an itemized inventory. You also get at least 36 months to collect the full replacement cost. Wildfire risk and Colorado Springs homes covers the rebuilding rules that can apply.

Getting it repaired

• Your lender is usually on the check. If you have a mortgage, the insurer typically names your lender on payments for major repairs, so you'll work with the lender to release the money.
• Choose contractors carefully. Get several written estimates for the same work, avoid paying a large amount up front, never pay in full before the work is done, and be cautious about signing an assignment of benefits that hands your claim to a contractor.
• Permits matter. Repairs in Colorado Springs and El Paso County are permitted through the Pikes Peak Regional Building Department. Permitted, documented repairs also help you when you sell later.
• Ask about code upgrades. If repairs must meet current code, such as Colorado's wildfire building code for roofs and exterior walls, the cost can rise. Ask your agent whether your policy includes ordinance or law coverage.

Repair and move back, or sell?

It really depends on your goals. That's why I use the Life → Wealth → Real Estate™ sequence: what do you want? If you want to get back into the home, then of course you'll repair it. If you'd rather move on, perhaps because the insurance situation leaves you stuck, selling may make more sense. Then we price both paths out.

• Repair and stay: work the claim, oversee the repairs, and return. This fits when you love the home and the coverage is enough.
• Repair, then sell: you'll likely get a stronger price, but it takes the longest and you carry the home in the meantime.
• Sell as-is: faster, and the buyer takes on the repairs, usually for a lower price. Selling as-is or making repairs first and cash buyers versus listing compare those options.

If you sell before the claim is settled, how the insurance money is handled depends on your policy and your contract, so bring your insurer and a real estate attorney into that decision early. Known damage and repairs also belong on the seller's disclosure. What Colorado Springs sellers disclose explains how that works.

What could change the answer

• Your policy's limits for additional living expenses, dwelling, and contents.
• What caused the damage, and whether it's covered.
• Whether it's a total loss in a declared disaster.
• How much code upgrades add to the repair.
• Your mortgage balance and what your lender requires.

When to talk with a professional

Your insurance agent and adjuster come first. For water or smoke, call a restoration company quickly. A licensed general contractor can price the repairs, and a licensed public adjuster can represent you on a large or complicated claim. If you're thinking about selling before the claim is settled, talk with a real estate attorney. The Colorado Division of Insurance (303-894-7490) answers claim questions free of charge.