Short answer
When insurance replaces roofs, the roofs restart at a full useful life, so the study should reset their ages, move the next replacement out and lower the contribution it asks for. Partial repairs and unrepaired bruising call for a condition check instead.
Every summer, somewhere on the Front Range, a board meets after a storm to talk about roofs. The Rocky Mountain Insurance Information Association says residents along the Front Range can expect three or four hailstorms a year that each cause at least $25 million in insured damage, and its list of the costliest Colorado storms is dominated by metro Denver. The insurance side of that meeting gets plenty of attention. The reserve study side often gets none, and that is where the budget drifts out of step with the buildings.
Why a claim changes the study
A reserve study is built on two numbers for every component: how long it normally lasts, and how much of that life is left. Asphalt shingles, for example, are usually given 20 years for a three-tab roof and about 30 for an architectural one in InterNACHI’s life expectancy chart. If the study was prepared four years ago, it may show your roofs with a decade left and a contribution set aside each year to pay for them.
A full replacement paid by the insurer breaks that schedule. The roofs are now new. Their remaining life jumps back to the full figure, the replacement year moves twenty or more years out, and the money the study asked the association to put away for roofs over the next ten years is no longer needed on that timetable.
If nobody tells the preparer, the next update may carry on funding roofs that no longer exist in the condition the study describes. Owners pay more than they need to, and the board ends up explaining a reserve balance that looks oddly high against the plan.
Three situations, three different updates
The insurer replaced every roof
This is the simplest case. Give the preparer the completion date, the roofing product and the contractor’s scope, including any gutters, flashing or vents that were replaced at the same time. The update resets those components and reruns the funding plan. If the study is due anyway, it is a good moment for an update with a site visit, so the preparer can confirm what was actually installed.
Only some buildings or slopes were replaced
Partial claims are common, because adjusters approve slopes or buildings where damage meets their threshold. The study then needs to split the roof component, so new sections and old sections carry their own ages. Lumping them together hides a replacement that is still coming for the older slopes.
The claim was denied or never filed
Bruised shingles that were not replaced still lose granules and age faster. Here the study needs a condition check rather than a reset. A preparer on site can judge whether the remaining life should come down, and the board may want a roofer’s opinion to go with it.
The deductible question
A reserve study plans for wear, not for insured events. It does not usually budget for deductibles. Yet a deductible on a large claim can be a serious sum, and boards sometimes reach for the reserve account to pay it.
Whether that is allowed depends on your governing documents and the board’s own policies. The Colorado Division of Real Estate notes that the use of reserve funds is generally at the board’s discretion unless the governing documents require owner approval. If the board does draw on reserves for a deductible, tell the preparer, because the starting balance in the next update will be lower than the plan assumed, and the funding plan should show how the account recovers.
What to send the preparer
A short packet saves time and usually saves fees, because the firm is not rebuilding history from scratch:
- the date of the storm and the claim number,
- the adjuster’s scope and the final settlement,
- the contractor’s invoice with products and quantities,
- a list of buildings or slopes replaced and any that were not,
- whether reserves paid any part of the work or the deductible,
- photos of anything left unrepaired.
Putting it in the policy
CCIOA asks every association to adopt a written policy on reserve studies, including when the association has a study prepared (C.R.S. 38-33.3-209.5). Many Colorado policies set a regular interval. It is worth adding a trigger as well: a line saying the board will commission an update after any insurance event that replaces a major component. That one sentence keeps the study in step with the property, and it shows owners at the yearly disclosure that the board has thought about hail rather than hoping for a quiet summer.
The policy sentence on our homepage drafts a starting paragraph for the interval and the funding goal; a hail trigger can be added at the end. Have the association’s attorney review the final wording.
A quick check before your next budget
Pull out the current study and find the roof lines. If the dates and ages match the roofs on your buildings today, you are in good shape. If they show roofs that were replaced after a storm, an update is overdue, and the next budget is likely asking owners for more than the buildings need.
If you would like a firm to look at it, tell us the community’s ZIP code and we will name one that works in your part of Colorado.