Colorado Lawmakers Propose Innovative Solution to Rising Home Insurance Costs
Colorado homeowners may soon benefit from a new bill aimed at making home insurance more affordable and stable. Introduced this spring, House Bill 1302 takes a unique approach by focusing on reducing the risks that drive up insurance premiums. Between January 2019 and October 2022, the average premium for homeowners in Colorado surged by nearly 52%, according to a report by the Colorado Division of Insurance.
The proposed bill would establish two new programs funded by small fees on insurance policies, totaling around 1%, which may vary based on roof type. One program would provide grants to homeowners looking to upgrade their roofs, windows, or siding to better withstand hailstorms and wildfires. The other would offer backing to insurance companies following major disasters, helping them avoid significant price hikes.
The goal is to make home insurance more affordable in the long term and help more people maintain coverage in high-risk areas. An added benefit is that stronger, safer homes would result in fewer rebuilding projects after natural disasters, reducing pollution and contributing to a cooler planet. This approach aligns with the thinking behind policies like the Inflation Reduction Act, which offers rebates and funding for practical upgrades that help people save money while protecting the environment.
Michael Conway, the state’s insurance commissioner, explained that by transferring a portion of risk to the enterprise, insurers would be incentivized to return to high-risk areas, leading to increased competition and lower premiums. “By transferring a portion of risk to the enterprise, we incentivize insurers to return to high-risk areas, and with competition, premiums will go down. … That will ensure continued availability of coverage in wildfire-prone areas of Colorado and reduce volatility in our homeowners’ insurance market.”
Rep. Kyle Brown noted that “fewer losses means fewer claims, which benefit insurers and homeowners alike.” While not everyone is supportive of the bill, particularly those in the insurance industry, the approval process appears promising. If successful, Colorado’s approach could serve as a model for other states seeking practical ways to enhance safety and mitigate climate change.
The bill’s innovative approach addresses the root causes of rising insurance costs while promoting sustainability and resilience in the face of natural disasters.
