#1 What is happening?

Homeowner’s Insurance in Colorado

#1 What is happening?

My homeowners’ insurance just jumped astronomically, and my neighbor was dropped entirely. 

The insurance market in Colorado is under stress as the incidence and severity of hailstorms and wildfires has increased. The primary driver of insurance cost is hailstorms; the primary driver of non-availability of insurance is wildfires.

More Details: Colorado average insurance premiums rose 60 percent from 2018 to 2023.  In June, 2025, the Colorado Insurance Commissioner reported that Colorado insurance rates were 57% higher than the national average. Of course, costs will increase as the property values increase. However, there are factors at play including: 

  • The cost of major claims has jumped. Wildfires and hailstorms can result in billions of dollars in claims.
  • Home repair and reconstruction costs are climbing.
  • The cost insurers pay for reinsurance is rising. Reinsurance companies are a safety net for insurers -- they cover catastrophic losses that the insurance company would be unable to pay on their own. Not only has the cost of reinsurance increased, but reinsurers are limiting the number of homes insured in a high-risk area. This is what is driving non-renewal notices and the difficulty people have in finding new insurance.
  • Some of the legislation recently enacted in Colorado to protect homeowners who make claims is costing the insurers more.
  • In 2025, Colorado adopted a Wildfire Resiliency Building Code that will increase the cost of rebuilding in areas located in high- or medium-risk fire intensity areas.
  • On an individual basis, a lower credit score can result in higher premiums.

Despite these price increases, property insurers lost money in Colorado in 8 of the 11 years through 2023, due to the amount paid in claims, according to the Colorado Division of Insurance. 

The incidence a severity of wildfires in Colorado is increasing.  As insurers assume the increased risk, their costs are passed on to consumers. Additionally, the cost of rebuilding jumped nearly 40% between 2019 and 2024, according to RMIIA, and the newly enacted Colorado Wildfire Resiliency Building Code will likely add additional rebuilding cost.

After the Marshall Fire, the state legislature passed a consumer protection law (HB 22-1111). In the event of a declared wildfire disaster, it increases the amount of time that insurers must offer to pay for alternate living expenses from 12 to 24 months, and provides up to two six-month extensions of coverage. It also increases the amount of money that insurers must pay for the personal property (i.e., contents) lost without requiring a detailed inventory from 30% to 65% of the policy’s coverage for contents coverage, in cases of a governor-declared wildfire. These legislative-mandated policy changes likely will increase the cost of insurance for those consumers selecting the longer alternate living expense coverage. 

Reinsurers are very sensitive to the possibility of catastrophic losses in a wildfire. The risk of conflagration (wildfire spreading from one house to another, especially when houses are close together and/or there are connecting fuels like vegetation and wooden fences) has become a recent focus of wildfire science. It was conflagration that resulted in the massive losses in Los Angeles in 2025 and in the Marshall Fire in suburban Boulder County in 2021. In response to the risk of catastrophic loss, reinsurers are limiting the number of homes an insurer can cover in a high-risk area. When attrition alone doesn’t result in the necessary limitation on the number of homes in an area, policyholders get non-renewal notices. These same limitations in the ability of insurers to get reinsurance policies make it difficult to find an insurer who will insure a property in a high-risk area.