2 weeks Ago
At the beginning of this legislative session, we once again called on our leaders to address Colorado’s burgeoning homeowners’ insurance crisis. Now, as we approach the end of the session, two bills under consideration at the Capitol should help to lower costs and fortify the property insurance system — Colorado needs them to pass. Lest we forget, the Legislature opened its 2025 session while massive wildfires tore across California.
The string of fires killed 29 people, destroyed or damaged roughly 18,000 homes and decimated communities. With the devastation of the Marshall Fire still recent memory here in Boulder County, the California wildfires were a haunting reminder of just how at risk we all are. Those fires also unleashed an insurance disaster.
One study estimated that just two of the five fires may have caused $164 billion worth of damages, only $75 billion of which were insured losses. The fires were also a massive test for California’s insurer of last resort, which prior to the fire was already heavily exposed in the state. While rebuilding has begun, the fallout is still being assessed.
As Colorado approaches summer wildfire season, it is vital our elected officials learn from California’s misfortune and begin addressing our faltering homeowners’ insurance system before the next wildfire hits — because it is not a question of if it will hit, it is a question of when. Colorado already has the fourth-highest homeowners’ insurance costs in the country, averaging $4,600 annually, according to Insurify. And between 2018 and 2023, premiums in the state jumped 58%, according to Rocky Mountain Insurance Information Association data.
Worse still, a CU Boulder study of the Marshall Fire showed that nearly 75% of affected homeowners were underinsured, and 36% of homeowners were severely underinsured.This is a cyclical issue. As we all know, insurance premiums are going up as our climate becomes more volatile and extreme weather damages homes at a higher rate, draining insurers’ reserves.
In turn, as premiums increase, more and more people are likely to wind up underinsured. The economic fallout of a broad portion of a community being underinsured during a disaster would be calamitous. As risk to homes increases, an even worse outcome than increasing premiums exists: insurers simply ending coverage for high-risk homeowners.
This has already begun in Boulder County. In the wake of the Marshall Fire, property owners in Gold Hill, Sugarloaf and elsewhere in Boulder’s mountain communities found themselves unable to insure their homes. Some were quoted astronomical rates, up to $17,000 for an annual plan, but others were simply refused a policy altogether.
To address this, Colorado lawmakers created the FAIR Plan, an insurance plan of last resort, which will cover up to $750,000 for property owners who can’t get insurance elsewhere. The plan was finally launched earlier this month.But we cannot fool ourselves into thinking that an insurer of last resort is anything other than, well, a last resort.
That means lawmakers must move forward with efforts to fix the property insurance system in Colorado — and to further incentivize home hardening and fire mitigation. House Bill 1302 would add a 1% fee to home insurance policies sold statewide with the goal of actually making premiums cheaper. It sounds counterintuitive, adding a fee to decrease costs, but it should actually make a difference.
The 1% fee, which would add roughly $32 annually to the average insurance policy, would be split into two parts. The first would levy a 0.5% fee on insurance policy premiums to pay for a reinsurance program to help offset insurers’ wildfire losses.
The second 0.5% fee would manage a grant program to help homeowners buy hail-resistant roofs. (Wildfires might make headlines, but hail drives up costs on a more regular basis.
)The other important bill, House Bill 1182 — which recently passed both chambers and is awaiting Gov. Jared Polis’ signature — would regulate how insurance companies use computer models to predict risk and set rates. Regulators have claimed that insurers fail to take into account fire mitigation work done by homeowners.
When insurers fail to take home hardening efforts into account, they are doing two things: improperly assessing a home’s risk and failing to incentivize further home hardening. “What the majority of (insurance companies) don’t do at all is incorporate state-level or community mitigation,” state Insurance Commissioner Michael Conway told the Denver Post last year. “They have been telling homeowners they have to mitigate to keep insurance affordable and available.
But if they’re not going to take that into account, that’s a very big problem.”House Bill 1182 would require insurers to inform policyholders of their wildfire risk score and explain steps they could take to lower their costs. Both HB 1302 and HB 1182 are necessary steps toward fixing the glaring holes in our insurance system, but it is HB 1182 that could really help to drive change.
Protecting our communities from wildfires will require home hardening on a communitywide scale. In order to protect our homes, we must also protect our neighbors’ homes — and they must protect ours in return. Any effort to make our communities more resilient is more than worthwhile.
HB 1182 is also good news for Boulder. Boulder County has done a fantastic job of prioritizing wildfire mitigation, including passing a sales tax that collected $8.9 million in 2023 just for mitigation.
If homeowners and communities are putting in the work to harden their homes and businesses against fires, insurance companies need to recognize that and it needs to be reflected in rates. Lawmakers must pass HB 1302, and Polis must sign HB 1182. Finally, increasing insurance rates are just one of the many tangential symptoms of our collective lack of environmental stewardship.
We have to once again look at the bigger picture — as a community, as a state and as a nation. Climate change is having a real and tangible impact on Colorado — and on Boulder County. Extreme weather events are getting more common.
As the planet warms, the High Plains are getting drier. Colorado’s natural areas — more than ever before — are becoming kindling, and the climate is the furnace.That means our responsibilities today are twofold: address the symptoms and the causes.
Our elected leaders and regulatory bodies must tackle the shortcomings in the insurance industry in Colorado. And we all must get even more serious about confronting climate change. — Gary Garrison for the Editorial Board.
