"At a tipping point": Colorado's home insurance market faces uncertain future
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Wildfires raging in California are amplifying concerns surrounding Colorado's already fragile home insurance market.
Why it matters: Colorado homeowners face some of the steepest home insurance rates in the nation — and growing threats of wildfires and other extreme weather could trigger higher costs or coverage loss altogether.
By the numbers: Colorado homeowners face the fourth-highest insurance price tags nationwide, averaging about $4,600 annually, per Insurify, an insurance shopping and comparison website.
- Premiums jumped 58% from 2018 to 2023, data from the Rocky Mountain Insurance Information Association shows.
- Meanwhile, more than 321,000 Colorado homes face moderate or higher wildfire risk, with potential reconstruction costs of $141 billion, according to analytics firm CoreLogic.
Driving the news: A new University of Colorado Boulder study on the 2021 Marshall Fire revealed 74% of affected homeowners were underinsured, with 36% severely underinsured — covering less than 75% of replacement costs.
- Researchers attribute widespread coverage gaps to cost-cutting by insurers.
- "When consumers focus on premiums rather than coverage limits, insurers have a very natural incentive to cut prices by offering less insurance," study co-author Tony Cookson said in a statement.
Between the lines: Insurance companies have long been losing money in Colorado. A 2024 New York Times analysis shows the state was unprofitable for insurers in eight of the past 11 years from 2013 through 2023.
What they're saying: Colorado is on the brink of an insurance crisis, Carole Walker, executive director of Rocky Mountain Insurance Information Association, told CBS4.
- "We really are at a tipping point," she said. "We're a few bad decisions away from being where California is."
State of play: In his annual State of the State address this month, Colorado Democratic Gov. Jared Polis called for reforms to lower insurance costs and expand access.
- State lawmakers plan to introduce two major bills to tackle the issue, CPR reports.
What's next: The state will soon begin selling coverage for high-risk homeowners dropped by private insurers. Those insurance plans are likely to launch in the first few months of this year, per Colorado's Division of Insurance.
Go deeper: Extreme weather is driving up insurance costs in Colorado