Colorado Homeowners Struggle with Rising Insurance Costs
Karen Murray Boston had been eagerly anticipating December, hoping to shop around for new homeowners insurance for her 1918 farmhouse in Fruita. However, instead of finding better deals, she faced the disheartening news that her current insurer, American National Group, was dropping her coverage and exiting the Colorado market entirely. This came as a surprise, discovered only after she contacted her local agent in September, seeking clarification on the potential increase in her annual premiums, which had already doubled in 2024 to $2,000.
“And when I called, I got the office manager on the phone and I said, ‘I want to talk about our insurance for next year. Are we going to see our rates go up again?’” Boston recounted. “And she goes, ‘Well, you’re on the list to be canceled,’ and I went, I think I screamed, ‘What?’ She goes, ‘Yeah, you didn’t get a note yet?’ I said, ‘No, I didn’t get a note.’”
The Rising Cost of Coverage
The cost of property insurance in Colorado has become one of the fastest-growing household expenses. According to the Rocky Mountain Insurance Association, premiums increased by an average of 57.9% between 2018 and 2023. While hail storm damage is a significant factor, the growing threat of wildfires, like those in Los Angeles, is raising concerns about the impact on insurance premiums, even thousands of miles away. Homeowners now face potential cancellations or non-renewal notices, and prospective homebuyers are finding it difficult to secure coverage in areas deemed too risky by insurers.
After months of anxiety, Boston eventually found a new insurer on the Western Slope, though she had to wait until just a month remained on her previous policy due to quote validity restrictions. While the new policy’s cost was lower than her previous one, Boston felt that her experience might not be typical. “I have not heard that people are losing their insurance … but I have heard the stories of significant increases. What are we going to have to pay now?” she questioned. “You wonder if people out there who don’t have a mortgage and are not required to have (insurance) will even choose to have homeowners insurance. What are those consequences?”
Industry and State Responses
Colorado Insurance Commissioner Michael Conway acknowledged the trend of companies adjusting their underwriting practices in certain areas, leading to coverage challenges for consumers. He cited Evergreen and Conifer, communities near the Front Range, as examples. This situation has prompted Colorado to initiate its own insurance program for homeowners who cannot obtain coverage elsewhere.
“We haven’t had companies wholesale leave, but we’ve had companies that have made underwriting changes” to areas where policies are offered, Colorado Insurance Commissioner Michael Conway said.
In a recent report, the U.S. Senate Budget committee highlighted the trend of insurance companies declining to renew homeowners’ policies, particularly in hurricane- and wildfire-prone states. The report also noted severe weather patterns in non-coastal states like Colorado, which had a higher nonrenewal rate than Texas last year.
Climate, Weather, and the Insurance Industry
The insurance industry has pointed to multiple factors behind the non-renewal trends, as extreme weather events are becoming more common. Climate change is a growing cause, and industry officials also cite inflation and regulations, which contribute to the rising cost of rebuilding homes, as well as an increase in insurance fraud and litigation. Data from the Colorado Climate Center at Colorado State University indicates that 2023 saw nearly 800 reports of 1-inch-sized hail or larger, surpassing the previous record set in 2018. The industry is also seeing higher losses due to hail-related claims. Conway said that hail is the most signiifcant factor regarding insurance premiums in Colorado, with 50% to 60% of premiums on average going towards hail-related claims.
Ethan Aumann, senior director of environmental issues and resiliency at the American Property Casualty Insurance Association, noted that “for every dollar of premium that insurers have earned, claims and expense costs were actually $1.18.”
The Human Impact
The impact of these rising costs is multifaceted. In October, Conway and other officials hosted town halls across the state, hearing firsthand the struggles faced by homeowners. A homeowner association in Denver faced a 275% premium hike, with residents having to take drastic measures to cover the added costs. Rural counties have also been disproportionately affected. From 2020 to 2023, median insurance costs jumped significantly in several counties, with some rates rising over 100%.
Sue Breininger, a homeowner in Crowley County, witnessed her premium increase to $3,000 from $1,200 in a short period. Facing challenges in securing necessary repairs, she was forced to find new coverage again. “It could go up again,” she said. “I don’t know, I’m scared to death.”
Looking Ahead
As Colorado navigates this dynamic insurance landscape, the state is implementing measures like the FAIR Plan, the insurance of last resort. However, the rising premiums and limited options are expected to persist, underscoring the need for innovative solutions and strategies to protect homeowners. The convergence of climate change impacts, economic shifts, and industry adjustments is creating a challenging environment for both insurers and those seeking coverage.
