Colorado Homeowners Struggle with Rising Insurance Bills
Homeowners across Colorado are staring down the barrel of significantly higher insurance bills, and some are even losing their coverage. Karen Murray Boston, a Fruita resident, found herself dropped by her insurer after a premium doubling in 2024. The situation isn’t unique.
Insurance costs in Colorado have become a major household expense, with premiums increasing an average of 57.9% between 2018 and 2023, according to the Rocky Mountain Insurance Association.
The reasons? It’s a multifaceted problem.
Key Issues
- Hail Damage: Colorado is in “Hail Alley,” and hail damage accounts for a significant portion of claims.
- Climate Change: Increasing severe weather events, including wildfires, drive up costs.
- Inflation: The rising cost of materials and labor for home repairs impacts insurance premiums.
- Non-Renewals: Insurers are canceling policies in high-risk areas.
Boston had to find new coverage, and while the cost was lower, she worries about the pattern of escalating premiums and the potential for some homeowners to forgo insurance altogether.
The Impact
Colorado’s Division of Insurance confirms a trend of policy cancellations in areas facing high wildfire risks. Additionally, a report from the U.S. Senate Budget Committee highlights decreasing policy renewals nationwide, with Colorado seeing a higher nonrenewal rate than Texas.
The insurance industry points to inflation, regulations driving up rebuilding costs, and increased fraud and litigation as contributing factors. The climate is not the only cause.
Between 2013 and 2022, Colorado homeowners insurers had an underwriting loss of 18.6%, as the American Property Casualty Insurance Association reports, meaning that for every dollar of premium, the companies paid out $1.18 in claims and expenses.
In 2023, Colorado had a record number of hail reports, further exacerbating the problem, and in the past ten years, hail storms have caused more than $5 billion in insured damage in Colorado, according to the Rocky Mountain Insurance Information Association.
State Actions and Solutions
Colorado is launching its own insurance “Fair Access to Insurance Requirements,” or FAIR Plan, planned for homeowners who can’t obtain coverage elsewhere. Prices will be higher than standard insurance.
The state is also trying to facilitate town halls to assist with the rising cost of homeowners’ insurance.
Colorado Insurance Commissioner Michael Conway noted that while companies haven’t completely left the state, they’ve adjusted what areas they offer policies.
Conway is preparing for potential scenarios similar to states such as Florida and California, where major insurers have paused their business, citing wildfires, inflation, and reinsurance.
Rural Areas Hit Hardest
Rural counties are experiencing some of the most substantial premium increases. From 2020 to 2023, in sparsely populated Conejos County, the median cost of premiums jumped 102.8%. Additionally, nonrenewal rates are also climbing in rural areas.
With insurance costs rising faster than inflation, homeowners across Colorado face difficult financial decisions regarding protecting their properties.
