2.2 Colorado Commercial Property Insurance
Key Takeaways
- Colorado commercial property insurance operates under the file-and-use rating system
- Commercial policies require specific disclosure of terrorism coverage options under TRIA
- Surplus lines brokers must follow specific placement procedures including diligent search
- Commercial properties in high-risk areas may need Colorado FAIR Plan commercial coverage
- Business interruption and extra expense coverage are important for Colorado businesses
Last updated: January 2026
Colorado regulates commercial property insurance with specific requirements for rates, disclosures, and coverage availability.
Rate Regulation
Under Colorado's file and use system, commercial property insurance rates:
- Are filed with DOI before or upon use
- Do not require prior approval for most lines
- Can be disapproved if excessive, inadequate, or unfairly discriminatory
- Are subject to market competition
Commercial Lines Rate Filing
| Line | Filing Requirement |
|---|---|
| Commercial Property | File and use |
| Commercial Auto | File and use |
| Workers' Compensation | Separate requirements |
| Commercial Liability | File and use |
Terrorism Insurance
TRIA (Terrorism Risk Insurance Act)
- Federal program providing terrorism insurance backstop
- Colorado insurers must offer terrorism coverage
- Policyholder can accept or reject terrorism coverage
- Disclosure of coverage terms required
Required Disclosures
- Coverage limits for terrorism
- Premium for terrorism coverage
- Right to accept or reject
- Exclusions and limitations
- Definition of certified act of terrorism
Commercial FAIR Plan
The Colorado FAIR Plan also serves commercial properties:
Commercial Coverage
- Basic fire and extended coverage
- Building and business personal property
- Higher limits available than residential
- Requires evidence of voluntary market declination
- Coverage for businesses in high-risk areas
Surplus Lines Insurance
Colorado allows surplus lines insurance for risks not available in the admitted market:
Surplus Lines Requirements
| Requirement | Details |
|---|---|
| Diligent Search | Must attempt placement with admitted insurers |
| Surplus Lines Broker | Must use licensed SL broker |
| Surplus Lines Tax | 3% of premium |
| Disclosure | Must disclose SL status to insured |
| Eligible Insurers | Must be on DOI eligible list |
When Surplus Lines Are Appropriate
- Unique or unusual risks
- High-value properties
- Hard-to-place commercial risks
- Risks declined by admitted market
- Specialized coverage needs
Business Interruption Insurance
Colorado businesses should understand business interruption coverage:
Key Provisions
- Must clearly define covered perils
- Waiting/deductible period disclosed
- Period of restoration defined
- Extended period of indemnity options
- Civil authority coverage requirements
Coverage Elements
| Coverage | Purpose |
|---|---|
| Lost Income | Replaces lost profits during restoration |
| Continuing Expenses | Covers ongoing fixed costs |
| Extra Expense | Additional costs to stay operational |
| Civil Authority | Coverage when access is prohibited |
Extra Expense Coverage
- Covers costs to continue operations during restoration
- Separate limit from business interruption
- Important for businesses that cannot afford downtime
- Colorado requires clear disclosure of coverage terms
Test Your Knowledge
What is the Colorado surplus lines tax rate?
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Test Your Knowledge
Under TRIA, what must Colorado insurers do regarding terrorism coverage?
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