Recent research shows that the average homeowner’s premium rate increased nationwide from 2018 to 2023 by 33.8 percent. During that same period, homeowners in Colorado have seen an average 57.9 percent increase, according to the Rocky Mountain Insurance Association.
Many homeowners have seen their premiums double, or even been issued a notice that the insurance company they have used for years is no longer willing to insure their home.
What is to blame? A combination of inflation, market pressures, severe weather events, and catastrophic losses. Primary drivers include:
Escalating Wildfire Risks
Colorado has experienced a significant increase in wildfire activity, with over 321,000 homes now situated in moderate to high-risk zones. This heightened risk has led to insurers raising premiums to cover potential losses.
Frequent and Severe Hailstorms
Colorado is notorious for its hailstorms, particularly in the Front Range region. These storms can cause substantial damage to homes, leading to increased insurance claims and higher premiums. In 2023 alone, a single hailstorm in the Denver metro area resulted in nearly $2 billion in insured losses.
Rising Construction and Repair Costs
The cost of building materials and labor has escalated, making repairs and rebuilding more expensive. From October 2021 to October 2023, residential construction prices increased by 13.8 percent according to some insurance companies. This surge in costs means that insurers must adjust premiums to account for the higher expenses associated with home repairs and replacement.
Market Conditions and Insurer Losses
Insurance companies in Colorado have faced profitability challenges, with the state being unprofitable for insurers in eight of the past 11 years, according to a report by The Colorado Sun. This has led some insurers to reduce their presence in the state, further limiting competition and driving up premiums for homeowners.
Legislative Changes
Recent legislative actions in Colorado have introduced new requirements for insurers, such as mandatory coverage for certain types of property and restrictions on policy exclusions. While these measures aim to protect consumers, they have also led to higher insurance premiums as insurers adjust to comply with the new regulations.
Average Homeowners Insurance Costs in Colorado
-
Statewide Average: As of 2024, the average annual homeowners insurance premium in Colorado is approximately $3,320 for a dwelling coverage limit of $250,000, which is about $897 higher than the national average of $2,423, according to bankrate.com.
-
Colorado Springs: Residents pay an average of $4,903 per year for similar coverage, which is $2,321 more than the national average, according to insure.com
