Colorado faces a high wildfire risk – about 75% higher than most states (1). But wildfires aren’t behind the rise in home insurance in the state.
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According to the data CBS Coloradothe state ranks second nationally in Hill Insurance claims (2).
The Colorado Department of Insurance found that hail accounts for 26% to 54% of homeowners’ premium costs — compared with 1% to 25% for wildfires — even in areas that don’t regularly see heavy rain.
A state bill last year would have added a fee to homeowner’s policies to finance state aid for hail-resistant roofs, but it failed. Now Colorado lawmakers are working on a new proposal to address the rate hike, but securing funding for the program remains a challenge.
Colorado homeowners are not alone. Across the United States, extreme weather is driving up the cost of home insurance, with rates expected to rise 33.8% between 2018 and 2023, according to S&P Global Market Intelligence.
According to Bankrate (3), the average homeowner pays $2,181 per year for a $300,000 home policy. By 2053, climate-exposed households will pay $700 more, according to the National Bureau of Economic Research (4).
While wildfires often grab the headlines, there are other natural disasters that drive up insurance claims and premiums:
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Hail and severe storms: Common in Colorado and parts of the Midwest. Roof damage is expensive and frequent.
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Storms and windsCoastal states such as Florida and Texas suffer frequent hurricane damage.
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flood: Even underground flooding can cause expensive damage.
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storms: States along “Tornado Alley” are seeing regular claims from wind damage. (5)
On top of the weather, the costs of reconstruction have increased.
Labor and materials are more expensive than a few years ago.
When insurers pay more for repairs, those costs are often reflected in future premiums.
For homeowners, this means higher monthly bills or, in some cases, trouble finding coverage at all.
Read more: The average net worth of Americans is a staggering $620,654. But it makes almost no sense. Here’s the number that counts (and how to make it skyrocket)
While you can’t control the weather, you can take steps to reduce your risk and potential premiums. Here are a few strategies that may help.
