Colorado Democrats eye new fee on home insurance companies

Colorado Democrats are reviving a proposal to levy a new fee on home insurance companies, with the aim of distributing grants to fund "resilient" roofing.

Introduced by Sen. Kyle Mullica, D-Thornton, Senate Bill 155 creates a government "enterprise," which would collect a 0.5% fee of the total premium collected by an insurer on what's called "multiperil" homeowners' insurance policies.

Multiperil policies bundle various forms of coverages that offer protection from losses — a kind of all-in-one package that is often less expensive than buying individual policies separately.

"This bill is about saving the people of Colorado money," Mullica said. "I've heard at town halls and at all the doors that homeowners' insurance is unaffordable. This bill will start turning that tide."

As envisioned, the grants would go toward defraying the cost of retrofitting homes with "resilient" roof systems. Among the factors to be considered for the grants is whether the home is located in an area that is historically susceptible to extreme weather events.

Cosponsoring the bill are Rep. Kyle Brown, D-Louisville, and House Speaker Julie McCluskie, D-Dillo. The measure has been assigned to the Senate Finance Committee.

Colorado has some of the highest homeowners' insurance rates in the country, according to the National Association of Realtors.

Brown — whose district was hit by the Marshall Fire in 2021 — said the bill aims to ensure homes are more resilient to damage.

"It has to be about prevention," Brown said. "It has to be about hardening of homes, because when we harden our homes, that is how we prevent massive claims and losses that affect the insurance industry and affect homeowners."

The home insurance industry's position on the legislation is not immediately known. Critics are likely to view the measure as another attempt by the legislature to extract money from businesses in order to fund a spending idea — but without calling it a "tax."

A recent report from the Colorado Division of Insurance found that hail is the largest cost driver of homeowners' insurance spikes in the state, accounting for up to 54% of a premium's cost in some areas.

Mullica himself opposed a similar measure last year, which failed to pass through the Senate.

That bill proposed creating two enterprises: one for roofing grants and for providing reinsurance to insurers to partially mitigate wildfire impacts.

Both enterprises would have been funded through homeowner fees, which Mullica opposed.

This year's bill imposes the fee on the insurance companies and prohibits them from passing the cost on to policyholders as a surcharge. Senate Bill 155 also establishes a code of conduct for roofers to prohibit them from defrauding grant recipients.