What's Working: Colorado homeowners insurance increased nearly 60% in five years

Tamara Chuang

Business/Technology Reporter

This may come as no surprise to homeowners, but the cost of Colorado's homeowners insurance is the eighth highest in the nation, according to Bankrate, a financial services company that tracks all sorts of monthly bills.

At an average of $266 per month or nearly $3,200 a year, premiums are higher here than in states such as California ($121) and New York (144), as well as neighbors Arizona ($172), Utah ($104), New Mexico ($169) and Wyoming ($131).

Blame extreme weather, hail damage and wildfires for our lofty rank, said Shannon Martin, Bankrate's insurance analyst and a licensed insurance agent. But diving a little deeper, Martin also cited how policies are structured by states, the rising cost of homes, and something called "social inflation," a term used by the insurance industry to describe the impact beyond regular economic inflation.

"That's the increase in lawsuits and the amount of payouts from the lawsuits," Martin said. "Public opinion has changed on who's really liable for these actions and how much money you should get in a lawsuit. … It's impacting how policies are rated and how much they cost."

A 2023 analysis by the Colorado Division of Insurance found payouts have increased in recent years causing insurers in Colorado to lose money on the premiums collected. And premiums for the average homeowner increased 51.7% between January 2019 and October 2022. The report also touched on wildfire risks near densely populated areas of Fort Collins, Denver and Colorado Springs where "insurance carriers would be reassessing their appetite for wildfire risk (and) could have an impact on a material group of Colorado homeowners."

Colorado is ranked second in the nation for hail-damage claims and has a "highly litigious climate," said Carole Walker, executive director of the Rocky Mountain Insurance Association, a trade group that represents insurers. And nearly half of the state's population lives in wildland-urban areas that include another one million people living in areas with "moderate to very high risk of wildfire," according to the Colorado State Forest Service. Combined with a growing population and pricier homes that cost more to rebuild, there are a number of reasons for higher prices.

"We truly are at a tipping point in Colorado," Walker said. "(Colorado) ranks second after California for risk of wildfire. … I think fears of what we've seen happen in California in recent years of an exodus of insurers, a lot of the reasons that insurers were reducing the number or policies or leaving California was because of man-made catastrophes."

According to the state's insurance division, the agency has asked homeowners and insurers about renewals and nonrenewals. The results are expected next year, a spokesperson said.

Walker, who sits on many local government boards, doesn't recall any insurers exiting Colorado yet but are reducing the number of policies on risky properties they no longer can afford to cover. She's trying to make sure government restrictions and outdated regulations better balance insurer risk with availability of insurance for all Colorado households.

"If we stabilize the market, that's what we've all been working toward," she said. "Put in more hail-resistant roofs. If we scale up our mitigation for wildfire and make it measurable, those are all things we can do to reduce the risk of hail and wildfire. That's going to have a long-term impact on keeping insurers here (and) keeping those homes insurable."

According to RMIA, the average increase in homeowners' premiums in Colorado grew 57.9% from 2018 to 2023.

Lawmakers passed legislation last year after there were concerns about households losing their insurance due to cancellations and nonrenewals. The Fair Access to Insurance Requirements, or FAIR plan, is an "insurer of last resort" and designed to provide property coverage to homeowners and businesses in the highest-risk areas who are unable to get coverage.

FAIR coverage is funded by insurance assessments based on an insurer's market share. The policies should be available to homeowners and businesses in early 2025. But it's just one "tool in the toolbox," said Walker, who is on the state's FAIR board.

"At the same time, I do think that people have to understand that insurance has been underpriced for homeowners when people haven't had to use it," she said. "Now that we're using insurance more, it's got to be balanced with what it costs to pay out claims."

As for the cost by state, Bankrate's Martin pointed out that states like Florida, ranked second-most expensive, must include wind coverage from storm damage while nearby states like Louisiana, also hurricane prone, do not. In California, ranked in the bottom half of insurance costs, fire coverage is excluded so buyers must pay extra for it.

"In Colorado, fire is still included, which is actually a really good thing because the cost of having two policies is just so much more than having everything packaged in one policy," Martin said. "People in California now need home, fire, flood and earthquake insurance policies. It's very expensive."

➔ Lots of insurance tips. The Rocky Mountain Insurance Information Association trade group has guides on homeowners insurance (and renter's insurance), avoiding a nonrenewal, and more.

➔ Problem with your insurance? The Colorado Division of Insurance can help with unresolved claims or issues like nonrenewals. File a complaint

➔ ICYMI: Climate change hits home. In July, the Colorado Sun hosted a panel of experts about how wildfires, hail, floods and more are costing Coloradans billions in higher insurance rates. And that's if they can get insured at all. It will only get worse as a warming planet creates more disasters. How bad will it get, and what can state policymakers do about it? Watch

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Readers share inflation stories

The majority of the 120 What's Working readers who took our recent inflation poll are right in line with U.S. data: They agree, in various degrees, that inflation has slowed. A solid 32.5% agreed that while slowing, prices aren't going down. And it's still quite noticeable.

"Dining out costs more, even at Subway," wrote Mary Russell, a reader from Boulder.

(I let her know that Subway is running a sale on its footlong sandwiches through Sept. 8 — $6.99 each! The catch? You must buy the sandwiches through the Subway app or its website and use the promo code "699FL," according to the company.)

As reported earlier, Denver-area inflation increased 1.9% in July, the lowest year-over-year increase since prices began ticking up rapidly in spring of 2021. Bureau of Labor Statistics data also calculated that grocery prices are unchanged from a year ago, but dining out is up 5.9%.

The nation's July inflation rate also fell to 2.9% so we're getting closer to where it normally is.

When prices increase around 2.5% annually, that's considered healthy because otherwise a deflated economy could suffer from a decline in jobs and paychecks. That 2%-ish range is also what the Federal Reserve has been waiting for and Fed Chair Jerome Powell told bankers last week, "The time has come for policy to adjust." They meet again Sept. 17 and 18.

But that doesn't mean folks are doing better. Another 11.1% said they still feel financial pain from inflation spiking in the last three years. Shoppers have changed their ways.

"I don't buy flowers anymore," shared Laura Cary, from Denver.

The poll was random, not scientific but did receive 120 responses. What's Working readers, I must say, are the best! Thank you for participating and keeping this newsletter going.

A few more tidbits: The specifics!

Folks had all sorts of responses, including one anonymous retired person who said they're financially secure so it really doesn't matter if inflation goes up or down. "Groceries," they said. "But we have to eat, so it's no big deal."

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Take it: New reader poll

The Fed is likely to lower interest rates this month. What's that mean to you? Take the latest reader poll so we can hear Coloradans plan to do next. cosun.co/WWinterest-ratesthink

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Sun economy stories you may have missed

➔ More than 15,500 business filings in Colorado deemed fraudulent were made by one guy. The Attorney General's Office said the filings linked to one Northglenn address were made when filing fees were reduced to $1, at a cost of $765,919 to taxpayers. There could be more. Read story

➔ 3 Colorado utilities are getting $1.1B from the feds to accelerate the move to renewable energy. Tri-State received the largest Inflation Reduction Act award and says $679M will help it exceed Colorado greenhouse gas reduction goals Read story

➔ Revival of fabled, decades-old whitewater race bodes well for contests rebuffed by insurers. An innovative paddler with a unique Class V insurance policy revived the contest on the Colorado River Read story

➔ How rebates, tax credits cut the cost of solar by $5,000 for one Colorado couple. Interest rates have driven rooftop solar costs sky high, but tax credits and rebates bring arrays back within reach Read story

➔ Colorado governor signs special session property tax bill; conservatives remove measures from November ballot. The bipartisan measure, House Bill 1001, cuts property taxes modestly for residents and some businesses and puts limits on how fast they can grow in the future Read story

➔ Six more Colorado communities consider raising their minimum wage. A 2019 state law allows local governments to set their own starting point higher than the state's current $14.40 hourly minimum. Read story

Want a better Colorado? Let's talk at SunFest 2024. It's going to be awesome!

Other working bits

➔ Overtime pay required if workweek is more than 40 hours. That's federal law, which resulted in the U.S. Department of Labor ruling that JRM Landscape & Design in Littleton must pay employees who worked beyond 40 hours a week 150% of their hourly wage for the extra labor for a total of $91,074, split equally for back wages and liquidated damages. File a complaint

➔ Denver launches workforce initiative for hospitality industry. It's been a rough few years for businesses and workers in the hotel and restaurant industry. Earlier this week, the city of Denver along with booster organization Visit Denver declared "Boredom is Fired," to spark interest among high schoolers and young adults in tourism jobs. Part of it is marketing but another piece includes linking schools and career programs to organization representatives and "ambassadors," including Andrew Jackson, a sales manager at the Hyatt Regency at Colorado Convention Center, quoted in the news release as having "traveled the world" and "making a great living." Check it out

➔ RTD starts police cadet program. Finding enough drivers continues to be a challenge for the Denver-area Regional Transportation District, but now with safety in mind, the transportation agency launched the Transit Police (RTD-PD) cadet program. Aimed at criminal-justice-degree minded college students, participants work with transit police and may be able to earn three-hours of credit for school. Its first cadet started July 22 for the six-month program. The agency also needs two more detectives and is still working on adding enough staff to meet the 96-officer minimum requirement, according to an RTD news release. New hires are eligible for a $4,000 signing bonus. Apply to cadet program, RTD jobs

Got some economic news or business bits Coloradans should know? Tell us: cosun.co/heyww

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September's a busy month for economic events and news, like the upcoming Federal Reserve meeting. Thanks for paying attention and please share this with a friend to keep What's Working growing. ~ tamara

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