The workaround the state closed

The advisory's HOA section contains a single line that answers the question boards ask as soon as they see the 100-foot rule:

“Governing Documents: Cannot be altered to subdivide the community into separate buildings to meet FAIR Plan requirements.”

That is the state pre-emptively refusing the obvious manoeuvre. If a community's buildings are less than 100 feet apart — which describes most Colorado condominium and townhome communities — it cannot re-carve itself on paper into qualifying “locations.”

And the Division does not hedge on the conclusion: “Due to these limitations, the FAIR Plan may not adequately meet the needs of larger or high value associations,” and “The FAIR Plan should be considered a last resort for coverage, and not a long-term solution.” Its closing advice is to speak to a licensed insurance professional about how the FAIR Plan can be used alongside additional layers of coverage.

Why the arithmetic does not work for most associations

Put two of the state's own numbers next to each other.

The Division of Insurance's HB24-1108 market study reported that in Colorado “few carriers have the capacity to write large properties, often exceeding $50 million in total insured value.” The FAIR Plan's commercial cap is $5 million — one tenth of the value at which the private market already gets thin.

Then add the basis. Actual cash value means replacement cost less depreciation. The same study identified aging properties as a core Colorado HOA risk, with “[m]any properties … over 40 years old.” An ACV settlement on a forty-year-old roof is a very different recovery from replacement cost, and the difference lands in a special assessment.

The gates before a board can treat it as an option

Compute the insured value per building, as the FAIR Plan defines a building. Single structure, 100 feet or more of separation. Most Colorado attached communities will fail that test, which changes what a “location” is before any cap applies.

Assemble the three declinations early. They are a precondition, and an offer at a bad price disqualifies you.

Plan a layered programme, because that is the state's own advice. FAIR Plan plus additional layers, not FAIR Plan alone.

Read the peril list against the actual exposure. Hail and windstorm are on it, which matters in Colorado. Water damage is not among the covered perils in the FAIR Plan's own base description, and its general exclusions include ordinance or law, earth movement, water damage, power failure and neglect.

What the FAIR Plan is, structurally

It is “a stand-alone not for profit organization funded by assessments on insurance carriers, not public dollars.” By statute, all admitted carriers writing personal and commercial property insurance in Colorado must pay an assessment, calculated on market share, if the plan's financial condition requires it. Applicants work through a licensed, registered agent.

HB25-1205, signed and effective April 17, 2025, clarified its legal status rather than its coverage. It provides that the association “is not a department, unit, agency, political subdivision, or instrumentality of the state” and “is not an insurance company or a person engaged in the business of insurance,” gives immunity to member insurers, staff, directors and the Commissioner for acts in performing their duties, and — the part a claimant should know — provides that “the only causes of action and remedies available to a policyholder” against the association are “for breach of contract or breach of the common law covenant of good faith and fair dealing.”

The plan's own published roadmap is three phases: 2025–2026 to build products, systems and structures; 2027–2028 for market stability readiness; 2029 onward for organisational and product excellence. It is deliberately small.

What to watch next

Two things. First, whether the commercial line's terms move — the caps, the ACV basis and the 100-foot definition are what make it a poor fit for a multi-building Colorado community, and all three are plan design rather than statute.

Second, the interaction with the wildfire-score regime. HB25-1182 applies to FAIR Plan coverage expressly, and Regulation 5-1-28 applies to “the Colorado FAIR Plan” alongside admitted insurers — so an association placed with the plan still has the score-disclosure and appeal rights, and the plan must post its discounts or post that it offers none. For a community with nowhere else to go, that is not nothing.