Colorado has been in the news for recent massive flooding that has ravaged many communities in the beautiful state. By some estimates, over 20,000 homes have been damaged or destroyed. I have clients who live in one of the flood affected areas, but thankfully they are okay and their home was spared heavy damage.
In continuing with the state-by-state series on total loss standards, this week I turn to Colorado. In my research of Colorado law, I did not come across any cases where courts have offered a clear definition of total loss, at least in the context of property damage. If you have read other blogs on total loss, you will recall that most states have adopted the “identity” test (building after the loss has lost its identity or special character) or the “prudent person” test (key consideration is the reasonableness or practicality of the repair).
I did find one Colorado Court of Appeals case which touches on total loss, at least in some respect. 1 In this case the homeowner whose house was damaged (not completed destroyed) by fire was required to comply with building code upgrades in rebuilding the home. The homeowner contended that because she was not permitted to rebuild her house to its prior specifications, that rendered her home a "total loss" and therefore, entitling her to the policy limits. In this instance, the court disagreed with the homeowner and held that because she was not prohibited by the county from rebuilding her house, but only had to bring her home up to current code, then it was not impossible to repair. So, it appears that the court focused on whether the actual structure could be repaired or restored. Since the house was not damaged to the point of being condemned, then it could still be repaired albeit at a higher cost due to the code upgrades. The court did not address the situation where the cost of repair to conform with building codes exceeds the policy limits. In reading the decision as a whole, the court, in essence, telegraphs they would consider this particular scenario a total loss.