This blog post is based on an article posted by Westword. Click on the link at the end of the post to read the full article.
Colorado homeowner’s are facing a “new normal” when it comes to massive insurance rate hikes. Colorado wildfires have definitely contributed to the ongoing, disparaging insurance situation, but it’s not the only reason so many people are struggling with rising premiums.
Carole Walker, who’s an executive for the Rocky Mountain Insurance Association says that the rising costs are the result of a “‘perfect storm’ of national and local factors” which has made this the “hardest insurance market in a generation.”
Colorado is the 5th (or 6th, depending on who you ask) most expensive insurance market in the U.S. The average cost of homeowner’s insurance for $300,000 in coverage is about $4,000, compared to the national average between $2,300 and $2,600.
Why are Colorado Insurance Premiums So High?
Colorado faces many environmental factors that are contributing to its high insurance premiums. As of 2020, Colorado has been rated to have the 2nd highest number of hail claims in the country and the second highest number of homes that are at-risk for wildfire damage.
At the end of May, a hailstorm out east caused nearly $1.9 billion in property damage. The Marshall Fire in Superior and Louisville resulted in $2 billion in damages.
What insurance companies want everyone to remember is that they aren’t the ones driving the costs of insurance, but are instead absorbing the costs. If there continues to be wildfires and damaging hailstorms, insurance prices will continue to rise.
Outside of these environmental factors, the majority of increases are just due to inflation and the rising costs of repairing and rebuilding homes, litigation, and the prices of insurance for the companies themselves. These trends indicate that high home insurance premiums are the new normal and they’re not likely to change any time soon.
In the same vein, because of these risks, a study was commissioned by Colorado lawmakers to find out what percentage of insurers have been cutting back on writing business in the state. They found that in 2022, a whopping 76% of insurers had cut back on writing business in Colorado, and many of them still have yet to get back to normal.
What Can Homeowners Do?
Insurers say that homeowner’s can expect at least a 30% increase on their policies each year. If your premium comes in at less than a 30% increase, it’s probably best to stay with your current insurer as you’re unlikely to find anything better. If your premium skyrockets, 50%, it probably makes sense to ask us to look at your policies to see if we can find anything better.
You’ll want to look at increasing your deductibles–especially for wind and hail. Additionally, if you’re not already, you’ll want to look at bundling your policies together to cash in on those bundling discounts.
