Insurance companies asked to extend coverage for Marshall fire victims

Insurance companies with clients who lost homes in the Marshall fire had until Friday, the one-year anniversary of Colorado's most destructive fire, to let Colorado's Division of Insurance know if they're going to extend coverage of those clients' additional living expenses to 24 months.

Commissioner Michael Conway sent the companies notice in early December.

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"It's not realistic for people to be able to rebuild in 12 months in the best of circumstances, and we're certainly not in the best of circumstances right now," Conway said in an interview with the Denver Gazette. "We thought it would be another opportunity for the companies to be able to step up for the community and be able to show that they're committed to helping the community recover."

The Marshall fire destroyed more than 1,100 homes and businesses, charred more than 6,000 acres and killed two people. Conway estimated total losses could top $2 billion when all is accounted for.

Though the commission can't require insurance companies to extend coverage, officials plan to publish a list of the companies that agreed to the request, and those that didn't.

"It has been extremely helpful for the Marshall fire survivors and all of the people in Boulder County, Louisville and Superior when the Division has informed them about how all of the insurance companies respond to our requests," according to the notification letter sent to insurance companies.

Additional living expenses for those who lost their homes include things like transportation, temporary housing, pet boarding, storage unit rental, food, etc.

Colorado legislators in 2022 passed HB 22-1111, Insurance Coverage For Loss Declared Fire Disaster. On all future policies sold in the state, the law requires insurance companies to provide 24 months of additional living expense for homeowners who experience a total loss.

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Gov. Jared Polis pointed to that legislation, as well at SB 22-206, Disaster Preparedness and Recover Resources, which created an Office of Climate Preparedness, and HB 22-1012 Wildfire Mitigation Recovery as key parts of the state's response to the Marshall fire.

"As we reflect on the devastation this fire caused and look towards the future, my administration is committed to continuing to help communities rebuild stronger and more resiliently and ensure Colorado is prepared for future natural disasters," Polis said in a news release.

Conway said the Marshall fire also exposed the huge under-insurance problem many homeowners discovered only after they lost everything.

Studies after Marshall fire-type catastrophes show almost two-thirds of the homeowners "are underinsured to some extent," he said.

Insurance companies lower premiums to compete and often policy holders don't understand what that does to coverage amounts.

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"We have situations where those homeowners just aren't getting good information from their insurance companies," Conway said. "So we have to build out the authority to make sure that we've got an even playing field out there and so that insurance companies are required to tell people, to tell homeowners, to give them information about the amount of coverage they need so they can make an informed choice."

Division officials "don't want to go to the point of mandating that there are minimum levels of coverage because that might not work for a whole host of people," Conway said.

"We've got to figure out the best way to get that good information to homeowners," he said. "That's going to be the north star we're working towards in the next legislative session."