Colorado residents sound alarm as 'dual-catastrophe' threats cause home insurance rates to skyrocket: 'It's a major crisis'

Colorado has faced more frequent and costly natural disasters in recent years. As a result, insurers have been on the hook for increasing payouts, making the state a hotbed for skyrocketing insurance rates and nearly uninsurable areas. 

What's happening?

A report from CPR News detailed how Colorado's home insurance rates are continuing to increase due to elevated climate risks such as wildfires and severe hailstorms. As CPR noted, this "dual catastrophe" has led to massive premium hikes throughout the state. 

An Insurance Information Institute study revealed that average premiums have increased by more than 200% since 2007 for Colorado residents.  

Due to an increase in these natural disasters, insurer pullouts from high-risk areas have also been on the rise, leaving homeowners without reliable coverage unless they reach deep into their pockets.  

"There's a lot of insurance that won't cover this area," said Colorado resident Julie Jamison, per CPR. "We have to either stay with what we've got or there's a lot of people that can't afford the insurance."

Why is an increase in natural disasters in Colorado concerning?

According to CPR, Colorado has experienced more than 76 natural disasters that have caused at least $1 billion in damages since 1980. Perhaps more concerning is the fact that many of these disasters have occurred over the past decade. This includes a rise in wildfires in the state. 

Researchers with Colorado State University's Regional Economic Development Institute reported that eight of the 10 largest wildfires in the state have occurred since 2012. Some Colorado counties have seen as much as 15% of their land area completely burned in recent years. 

Rising temperatures and changing global climate patterns can significantly worsen wildfires by creating hotter, drier conditions for many vulnerable regions. This can effectively prolong fire seasons, leading to more frequent, intense, and widespread blazes, especially in Western states like Colorado. 

"Every year we have more and more interest from our residents as wildfire risk increases and people see on the news in Los Angeles or other fires from across the country. They recognize that with climate change and our new era of climate-driven wildfires, they need to take action," said Wildfire Partners program manager Jim Webster, per CPR.

On the flip side, this has led to many insurance companies pulling their policies in more natural disaster-prone communities. 

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"It's a major crisis in Colorado and a number of other states, in that insurance costs for homeowners has gone up far above the rate of inflation," said Colorado Governor Jared Polis. 

What's being done about skyrocketing insurance rates in Colorado?

With Colorado residents scrambling to find affordable coverage for their homes, state lawmakers have made a concerted effort to develop solutions. This includes bills aimed at stabilizing the market and keeping coverage affordable for homeowners facing rising costs and potential foreclosure risks.  

In 2023, Colorado legislators passed HB23-1174, which requires insurers to provide reports on the estimated cost to reconstruct a home, helping homeowners understand their coverage needs in the wake of a natural disaster. 

Two years later, Colorado officials once again attempted to tackle the insurance issues that have plagued the state. The passage of HB25-1182 requires property insurers to be more transparent about wildfire risk and to disclose risk scores to homeowners. Insurance companies must also consider homeowner wildfire mitigation efforts. 

"We also have many homeowners who have a lot less choices, even some down to one choice, and to insure with less competition also means higher rates. So it's become a major problem," added Governor Polis.

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