When it comes to insurance disputes, what matters is not just whether a safety system worked, but whether the policy clearly required it to work. A recent decision out of the United States District Court in Colorado shows how a lack of clarity can ultimately decide the outcome of a claim.  

At issue was a familiar loss dispute. Following two separate fires at a large condominium complex, the plaintiff and cross-defendant insurer denied coverage to the condominium owners association and filed the action, pointing to a protective endorsement requiring maintenance of safeguards “over which you have control in complete working order…”  

The defendant homeowners association (HOA) filed a motion for partial summary judgment against the plaintiff insurance company and the plaintiff (counter-defendant) filed a motion for summary judgment against the homeowner’s association.   

On its face, the requirement seemed simple enough, but, as the court’s analysis made clear, the key question is not just what the policy says, but whether an “ordinary, objectively reasonable person” would understand what it actually requires.  

In the case of the two fires, the insurer denied coverage alleging that the defendant HOA failed to comply with the endorsement because individual condominium units contained battery-operated individual smoke detectors, rather than hardwired devices. It further argued that the absence of hardwired systems meant the safeguards were not maintained in accordance with the agreement.  

The defendant argued that the qualifying phrase, “…and over which you have control,” was the central issue. They argued that while they controlled common areas, they did not own individual units and therefore did not have control over them. The plaintiff countered that the defendant could still enforce control through its governing documents. The court disagreed, noting that such an interpretation would render the limiting language meaningless.    

Instead, the court adopted a more practical reading that “control” in this context means responsibility. This distinction mattered. While the defendant clearly controlled the common areas, which had hardwired detectors, it did not control individually owned units. The court reasoned that if the association were deemed to control every unit simply because it could impose rules, the policy’s limiting language would serve no meaningful purpose. Therefore, the policy itself implicitly recognized that not all safeguards would fall within the insured’s control.  

In other words, the endorsement did not impose a blanket obligation to retrofit every unit.  

The plaintiff further contended that the absence of hardwired detectors violated a separate requirement to maintain “…any automatic fire alarm or other automatic system.” This argument ran into a definitional firewall. 

The policy expressly defined an “automatic fire alarm” as a system connected to a central station or reporting service, something far more sophisticated than standalone smoke detectors. Because the policy did not require such a system in the first place, the court found that the provision simply did not apply. 

The court granted partial summary judgment in favor of the insured, holding that the protective safeguards endorsement did not bar coverage for the fires. Just as notably, it allowed the insured’s bad faith claims to proceed, rejecting the insurer’s argument that the dispute was purely legal and therefore reasonable as a matter of law.  

The decision underscores a practical but often overlooked point: policy conditions tied to safety systems are only as enforceable as they are clear, realistic and aligned with who actually controls the risk.

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