Denver resident Frankie, who asked not to use his last name, says his home insurance premium rose to nearly $2,600 this month, from its original $1,600, a 62 percent increase. The year before, his rate went up by 23 percent, from $1,300 to $1,600.
"I'm incredibly upset and angry," Frankie says. "I understand increasing by a small percentage each year to keep ahead of rising costs, but...this is simply unchecked greed."
Carole Walker, executive director of the Rocky Mountain Insurance Association, says a "perfect storm" of national and local factors has resulted in "the hardest insurance market in a generation." She doesn't expect it to get better any time soon, either, suggesting that Colorado homeowners start budgeting for higher insurance premiums long-term.
"Between property tax increases and insurance increases, affordability is of great concern," LaRue says. "My concern is Colorado providers are going the way of Florida: High premiums and limited providers."
"It’s tough because it’s not just that — it’s everything: insurance, property taxes, groceries, health care, entertainment and fees. Everything feels more expensive," Frankie adds. "I recently got a 5 percent raise at my job, but somehow I feel worse off than a few years ago."
Colorado is already the fifth or sixth most expensive state in the nation for home insurance, depending on the metrics, with the average cost of homeowner's insurance reaching over $4,000 for $300,000 in dwelling coverage — compared to the national average of between $2,300 and $2,600 — according to reports from Insurify and insurance.com.
Why Are Colorado Insurance Premiums Increasing?
Colorado faces unique environmental challenges that contribute to the state's expensive home insurance rates. Colorado had the second-highest number of hail damage insurance claims in the country as of 2020, according to the National Insurance Crime Bureau, and the second-highest number of homes at high risk of wildfires (behind California), according to financial and property analytics firm CoreLogic.An eastern Colorado hailstorm in May caused $1.9 billion in property damages, according to the National Oceanic and Atmospheric Administration. The Marshall fire, which decimated Boulder County in December 2021, caused over $2 billion in damages, said Colorado Insurance Commissioner Michael Conway.
Although the state's overall disaster risk helps lead to higher premiums, experts attribute recently increasing rates to worsening national conditions rather than specific catastrophes.
"It's not an immediate 'We had this wildfire last year and now everybody's insurance prices are going up,'" says Janet Ruiz of the Insurance Information Institute. "They would have gone up anyway, just due to the climate of the economy right now. It's reactive to what's going on in the economy. We're not driving the costs; we're absorbing the costs."
Ruiz and other insurance experts say the largest contributing factors to rising premiums are inflation and the increasing costs of repairing and rebuilding homes, labor, litigation and reinsurance, or insurance for insurance companies.
While inflation is improving, those costs have not gone down, Ruiz says, so "insurance companies probably won't be lowering their prices any time soon."
"Unfortunately, if you're seeing your premiums going up, that's probably an adjustment we're going to have to adjust to," Walker adds. "The trends we're seeing right now indicate that higher premiums are a new normal. ... We don't see the cost to repair and rebuild homes when it comes to property insurance coming down. Those trends, I think, are going to stabilize at a higher rate."
At the same time, insurance companies are writing fewer policies in Colorado because of disaster risks. A study commissioned by state lawmakers found that 76 percent of insurance carriers decreased their exposures in Colorado in 2022, KDVR reported, which has allowed a handful of companies to dominate the market.
Less competition means it's harder for homeowners to shop around for cheaper prices, says Morgan Lloyd, an independent insurance agent based in Broomfield.
Lloyd helps clients find and compare different insurance policies. While he used to be able to find better policy deals for his clients in around 60 percent of cases, he says that has fallen to 40 percent lately. "It's been harder for us," Lloyd says. "The carrier constraints, not having as many carriers in the market."
However, demand for his services is higher than ever, with homeowners facing 80 to 100 percent premium increases coming to him to try to find something more affordable.
"It's been pretty extraordinary the last year," Lloyd says. "I can't keep up with the number of people reaching out for quotes. I try to help as many as I can, but I can't get to everybody. ... It's two to three times what I can actually handle."
What Can Homeowners Do?
Lloyd says Colorado homeowners renewing their insurance policies should expect a year-over-year rate increase of at least 30 percent.If their premiums rise by over 50 percent, he recommends shopping for a new insurer, but if premiums increase by 25 percent or less, "almost certainly your best bet is to stay with your current carrier."
To help keep costs down, Ruiz suggests taking a higher deductible or checking with insurers about what discounts they offer for bundling policies — or taking preventative measures such as updating electrical, installing security systems or getting water leak detection devices.
Walker advises homeowners in high-risk areas for wildfires and hail to take steps to mitigate their properties from weather damage, like clearing vegetation or installing a hail-resistant roof. She says she's been working with state legislators and the Division of Insurance on community-wide mitigation efforts, as well.
"Colorado is really at a tipping point," she explains. "Right now, we're just trying to look at stabilizing the market [and] make sure that we're not going down the path of California, where they're trying to keep insurance companies in the market."
In the meantime, Walker supports shopping around for cheaper policies but emphasizes the importance of being adequately insured.
"Make sure that you're keeping your insurance and making smart decisions knowing that, across the board, all of those costs are going up," Walker says. "This isn't a one-company issue or a two-company issue. This is a marketplace issue. ... Cutting corners on insurance is the last thing you want."
