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Catastrophic floods and wildfires test Colorado's disaster resilience


Public-private partnerships helped many businesses, homeowners and public entities rebuild after catastrophic floods and wildfires ravaged much of the Front Range of Colorado in 2012 and 2013, but it will take years to recover from these unprecedented losses, according to those involved in the recovery efforts.

Although 200 building permits were issued and 78 homes were finished by the one-year anniversary of the 2012 Waldo Canyon fire, recovery and rebuilding efforts were stymied when a second, more destructive fire erupted in the Black Forest area north of Colorado Springs on June 11, 2013, said Robert Cutter, president of Colorado Springs Together, a public-private partnership formed to help homeowners and businesses affected by the wildfires.

The organization provided one-stop personal services to fire victims in a shuttered Blockbuster video store as well as virtually via a website as well as social media sites such as Facebook and Twitter, he said during the recent Risk & Insurance Management Society Inc. conference in Denver.

A third disaster, the September 2013 floods, occurred in areas outside of designated flood plains, and most homes and businesses that were damaged or destroyed were not covered by insurance, said Julie Van Domelen, the former mayor of Lyons, Colorado, which was nearly destroyed when the St. Vrain River overflowed its banks.

Fortunately, the town had $7 million in property coverage from the Colorado Intergovernmental Risk-Sharing Association that was formed in 1982 to provide property/casualty insurance to public entities, she said. The flood affected more than 20 pool members and resulting in nearly $20 million in damage.


The September 2013 floods were the worst natural disaster in Colorado history, causing $3 billion in damage to public and private property and infrastructure, said Kerri Nelson, deputy chief recovery officer for the state of Colorado.

Varying interpretations of “replacement cost value” in homeowners' insurance policies delayed resolution of many of the claims stemming from the 2012 and 2013 wildfires, said John Putnam, general manager of Putnam Assurance & Risk Services, who served as the insurance consultant to Colorado Springs Together.

In many cases, the homes were insured only at market value, which was significantly less than their replacement cost. In other cases, foundations crumbled when the 2,500-degree flames melted the rebar used to reinforce the concrete, a cost not normally considered in calculating insured replacement cost values.

As a result of the fires, the Colorado enacted the Colorado Homeowners Insurance Reform Act of 2013 that, among other things, requires insurers to provide policyholders a specific disclosure, at least annually, regarding policy limits, replacement value, and the importance of preparing an inventory of the contents of the home.