Colorado Home Insurance Crisis: Why Premiums Are Soaring and What Homeowners Can Do
Homeowners across Colorado are facing a harsh reality: insurance premiums are skyrocketing. A recent report analyzing over 70 million mortgage payments revealed a roughly 25% nationwide increase in insurance premiums since 2020, but Colorado is experiencing even faster growth, with average premiums more than doubling between 2014 and 2024. This places the state among the top five most expensive for home insurance in the US, alongside Florida and Louisiana.
The Rising Cost of Everything
Inflation is a major driver of these increases. Higher costs for construction materials and labor mean homes are more expensive to rebuild after damage. But in Colorado, the story is more complex. Weather, specifically the increasing frequency and severity of hailstorms, is playing a significant role.
“A surprisingly large and disproportionate share of those expected losses in a state like Colorado are, in fact, coming from hailstorms, which are becoming more frequent and more severe,” explained Benjamin Keys, a professor at the University of Pennsylvania’s Wharton School and coauthor of the report.
Hail’s Disproportionate Impact
Recent data from the Colorado Division of Insurance confirms this trend, identifying hail risk as the biggest contributor to home insurance spikes. Interestingly, the risk isn’t limited to mountain communities prone to wildfires. Insurance companies are spreading hail risk across the state, meaning costs are climbing almost everywhere.
In Jefferson County, hail accounts for approximately half of the average annual premium, although wildfire risk contributes only 6%. This highlights the outsized impact of hail damage on insurance costs.
What Homeowners Are Experiencing
Eric Shannon of Jefferson County experienced a nearly 50% premium increase upon renewal with Allstate, jumping from around $4,500 to $6,600. Stories like Shannon’s are becoming increasingly common, with homeowners like Morgan Lloyd, an agent at Trailstone Insurance, reporting that people are “looking for better value” as policies become “completely unaffordable.”
Strategies for Mitigating Risk and Costs
Homeowners are exploring various strategies to manage these rising costs. Shannon secured a cheaper policy with Auto Owners by bundling his home and car insurance. Carole Walker, executive director of the Rocky Mountain Insurance Information Association, suggests proactive measures like upgrading to hail-resistant roofing.
“Just putting on a hail resistant roof could qualify you for a discount with your individual insurance company and put you at less risk for having a hail damaged roof,” Walker said.
While these upgrades can cost between $1,000 and several thousand dollars, they could potentially save homeowners a few hundred dollars per year.
The Future of Colorado Home Insurance
Experts anticipate that insurance costs will continue to rise. Insurance companies are facing a higher volume of claims, and those claims are becoming more expensive to settle. Homeowners should prepare for insurance to represent a larger portion of their monthly housing budget.
Historically, homeowners haven’t focused intensely on insurance costs, often prioritizing mortgage interest rates. However, with insurance payments now constituting a more significant portion of monthly homeownership expenses, this is changing.
FAQ
- Why are home insurance premiums increasing in Colorado? Inflation, rising construction costs, and increasingly frequent and severe hailstorms are the primary drivers.
- What can I do to lower my home insurance costs? Consider upgrading to hail-resistant roofing, bundling your home and auto insurance, and documenting your home’s construction materials.
- Is wildfire risk the biggest factor in Colorado insurance increases? While wildfire risk is a concern, hail risk is currently the biggest contributor to premium spikes.
- Are insurance companies raising rates statewide? Yes, insurance companies are spreading hail risk across the state, leading to increased costs in most areas.
Pro Tip: Shop around and compare quotes from multiple insurance providers. Independent insurance agents, like those at Trailstone Insurance, can help you explore various options and find the best coverage for your needs.
Have you been impacted by rising home insurance costs in Colorado? Share your experience in the comments below!
