The Case for Colorado: Why Is It So Hard to Write Contractors in Colorado?

Have you heard of the saying, "Every insurance agent has at least one contractor in their book"?

It's a well-known statement, and it holds true, especially considering that the industry employed 8 million people as of last year (AGC, 2024). For insurance agents working with contractors in Colorado, finding contractors' general liability (GL) coverage can be like searching for a needle in a haystack.

The unique challenges of the Colorado market have caused many insurance providers to limit their exposure, making it a real challenge for agents to find competitive and comprehensive coverage options for their contractor clients. But why is the Centennial State such a tough market for contractors' GL insurance? Let’s explore the reasons behind this and what agents can do to overcome these challenges.

High-Risk Nature of Construction Work

Insurers are responsible for compensating policyholders after a loss and safeguarding the public by providing security and stability. They also have a duty to protect their stakeholders and maintain profitability. Let’s face it: industries involving hazardous jobs that the general public would prefer to outsource, such as tree trimming, electrical work, or roofing, often pose high-severity risks. The potential for significant property damage, bodily injury claims, and other liabilities makes insurers cautious about offering general liability coverage, including reinsurance carriers.

The construction industry continues to attract a growing number of new, often inexperienced contractors. This, combined with the pressure to meet ongoing demand, increases the risk of accidents, defects, and claims. In Colorado, the thriving construction market further amplifies these risks, leading to even greater hesitancy from carriers.

Construction Defect Action Reform Act (CDARA)

In the age of nuclear verdicts, Colorado has experienced a surge in construction defect litigation, leading to significant financial settlements and increased contractor liability, causing insurers to be more cautious. The Construction Defect Action Reform Act (CDARA), enacted in 2001 and amended in 2003, was designed to combat rising claims. The main goal of CDARA was to reduce frivolous lawsuits, protect homeowners, and limit the liability of construction professionals by:

• Introducing a pre-litigation Notice of Claim process to encourage dispute resolution before court filings.
• Requiring construction defect claims to be filed within two years of discovering the defect and within six to eight years of property completion.

One side effect of CDARA is that it has discouraged condo development because it increases liability and insurance costs. The law distributes liability among all contractors and subcontractors, regardless of fault, which has contributed to the overall lack of housing affordability in the state, a challenge still impacting Colorado today.

To further fuel the flames, in Colorado, there is ongoing confusion in the courts over the definition of an "occurrence" in construction defect cases. The case TCD, Inc. v. American Family Mutual Insurance Company exemplifies the tension between the courts and the legislature regarding the interpretation of insurance policies. This uncertainty causes concern for insurers, who may encounter disputes over the coverage provided by their policies. The ongoing debates within the courts continue to impact the availability of GL markets in Colorado.

"We don't do E&S because it's easy; we do it because it's hard." — Alex Bargmann, CEO of Pathpoint

Enter Pathpoint, Your Colorado Contractors Solution

Pathpoint aims to unburden agents with the overly complicated processes within the Excess and Surplus (E&S) market. Understanding that the E&S market was too convoluted, Pathpoint's mission is to make the E&S experience faster and more transparent so that agents can easily place the business they need — including contractors' business.

We’ve developed a streamlined quoting and binding website that allows insurance agents to access a variety of AM-Best A-rated or higher contractor GL markets quickly and efficiently across all 50 states, including Colorado. Agents can bind general liability up to $1M/$2M with completed operations, blanket additional insured, waiver of subrogation, primary and non-contributory wording, and more for contractors with revenues up to $5M for hundreds of classes. In Colorado, agents can bind coverage for the listed class codes in our Colorado Contractor's Guide and complete payment and subjectivities with the game-changing End-to-End E-Signable Binding Experience and PathPay, the 100% digital payment option.

Place More Colorado Contractors Easily

We understand the challenges of finding contractor markets in the Centennial State. At Pathpoint, we've got you covered with our comprehensive contractor markets, offering coverage for over 43 class codes in Colorado alone. Our user-friendly website provides quick access to quotes from top-rated carriers, allowing you to secure the best coverage for your clients efficiently. Visit our Contractors' General Liability page to learn more and simplify your quoting journey today!

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(2012, April 12). TCD, Inc. V. Am. Family Mut. Ins. Co. CaseText. Retrieved August 21, 2024, from website

(2024, January 31). Number of construction firms in the United States in 2021, by segment. Statistica. Retrieved August 21, 2024, from website

The Associated General Contractors (AGC) of America, Inc (2024, January 1). Construction Data. The Associated General Contractors (AGC) of America. Retrieved August 21, 2024, from website

Ventrelli , M. (2024, January 11). Colorado's 'construction defects' law explained. Colorado Politics. Retrieved August 21, 2024, from website

Wood Smith Henning Berman (2013, March 8). Trending Now In Colorado - Additional Insured Obligations. WSHB. Retrieved August 21, 2024, from website