As wildfires burn across Colorado, here’s an updated insurance breakdown for homeowners

With wildfires burning in western and southern Colorado, insurance agents like Emily Trujillo in Silver Cliff have seen an uptick in customer calls about their policies. The big question: “Will it cover fire?” So far, she hasn’t had to deal with a customer losing their home.

But with Aspen Acres wildfire burning just 15 miles away from her office, Trujillo had to turn down a handful of folks hoping to buy new coverage. There are moratoriums due to the nearby wildfires for new policies from many insurers, including Colorado’s FAIR plan, also known as the insurance of last resort. But even without a fire raging, many areas are considered high risk by insurance companies so it’s a challenge, though not impossible.

“A lot of them go by zip code, some of them go by the fireline and if you’re X number of miles from a fire, they won’t write it. Insurance has gotten really advanced in that they use aerial imagery so they can tell exactly where your house is,” said Trujillo, an independent agent who dutifully checks all options for clients. “We have three substations and the main fire station here in Custer County, and some companies are pretty good if you’re closer to one of those.” 

Wildfire season tends to remind homeowners to check on their coverage even if they’re nowhere near a live blaze. And it’s a good time for folks to get updated on policy changes, new regulations and even possible discounts, because Colorado insurance laws have changed a bit since the devastating Marshall fire in late 2021. Some insurers are also proactive at sending customers an email or letter informing them of what they can do if they’re at risk.

“I’m not even in the fire zone and I got one from my insurance company and agent, ‘Hey, if you’re affected by the wildfires, here’s what you need to do,’” said Carole Walker, who lives in Denver and is executive director of the Rocky Mountain Insurance Information Association. “We strongly encourage individual carriers to do outreach and share information. Our organization has all those materials and it’s a responsibility of the state too.”

A number of new state laws passed in recent years require more transparency by insurers and added consumer protection laws for Coloradans facing national disasters.

A law passed in 2022, House Bill 111, requires insurers to pay 65% of covered contents — no itemized list of losses needed — when a customer loses their home in a wildfire that’s been declared a disaster by the governor. For the full amount, policyholders must provide a complete  inventory of lost items.

House Bill 1322 passed last year and requires insurers to share a copy of a homeowner’s policy within three days of a request. This year’s House Bill 1182 requires insurers to provide customers a “plain-language explanation” of their wildfire risk score, which is used to calculate premiums. 

The Colorado Division of Insurance has been sharing wildfire advisories about what to expect from one’s insurance company, including the new laws as well as good-to-know policies that insurers may cover temporary housing for those forced to evacuate, or pay at least 24 months of living expenses for those who lose their home. 

Currently, the Snyder, Gold Mountain, Aspen Acres, Willow, Big Sheep and Ferris fires have been declared disasters by Gov. Polis. As of Wednesday, 275 houses have been destroyed in Pueblo and Custer counties where the Aspen Acres fire is burning.  

On Thursday, the state insurance division shared a different message on flood insurance.

“In the aftermath of wildfires, there is a greater threat of flooding and mudflow in and below the burn scars because fires remove vegetation that would normally absorb rainfall and runoff,” said the advisory. “However, basic homeowners insurance does not include protection from flood damage, so homeowners will have to purchase flood insurance to be covered.”

Insurance affordability crisis

But even with these newer laws in place, Division of Insurance Commissioner Michael Conway said the state needs to figure out better ways to keep insurance affordable.

“I can almost guarantee you that people have reduced their coverage in a variety of different ways in order to be able to continue to afford it,” Conway said. “We continue to have a real affordability challenge, really in the western half of the country when it comes to homeowners insurance coverage, but certainly in Colorado.”

Colorado’s property insurance costs are among the highest in the nation, with double-digit rate increase in the last couple of years blamed partly on the region’s affinity for natural disasters, according to an analysis by the insurance-comparison site Insurify. 

“It’s gone up from around $2,600 at the end of 2023 to about $4,000 at the end of 2025 and we expect it to get to almost $4,200 by the end of the year,” said Matt Brannon, an Insurify senior economic analyst. “In that time, Colorado has gone from the ninth-most expensive state for home insurance to the sixth-most expensive.”

All states have seen large increases but Colorado’s has been rising faster than most. And for the most part, he said, it’s due to damage from hailstorms, a reason also cited by the recent state Division of Insurance report. The state agency surveyed 20 homeowners insurance carriers and found that claims for hail damage largely outnumbered wildfire. 

Going without coverage may be on the upswing, according to the latest U.S. Census data. But so far, the state’s stats for homeowners who pay for coverage is quite good — one survey has Colorado with the lowest percentage of uninsured homes in the nation. 

The state’s Fair Access to Insurance Requirements plan, or the FAIR plan, also exists because of a 2023 state law. It’s available to homeowners who have been turned down for coverage by pretty much every available insurer. FAIR plan executive director Kelly Campbell said in the past year that it’s been available, FAIR now covers hundreds of properties in 39 counties for a total insured value of $144 million.

But it is the insurance of last resort, she pointed out. It’s not inexpensive and it doesn’t cover the contents inside a home — just the cash value of the home and not the cost of rebuilding it.

“Far more people are able to find coverage elsewhere,” Campbell said. “They may begin the submission process with the FAIR plan but then they may withdraw because they found coverage on the open market. … I know a particular agent where they were able to secure more robust coverage for a policyholder. It was several times more expensive than the FAIR plan but again, the additional coverage was worth it.”

Conway said one new law signed by Polis last month could help folks who are facing affordability issues with rising homeowner insurance. Senate Bill 155 created the Strengthen Colorado Homes Enterprise program, which rewards homeowners who take steps to do mitigation on their homes, like fortifying their roof to minimize damage from hailstorms. Home insurers in Colorado would pay a small fee of 0.5% on premiums to fund the grant program. The law, which went into effect this month, is still in set-up mode and is in the process of creating a board before the end of the year.

“Ideally, we would start to be able to get grants out at some point next year,” said Conway, who is trying to find the balance between high cost of insurance but also making sure enough insurers stick around and compete in Colorado. 

“Mitigation is incredibly important from a risk safety standpoint, but I’m not convinced that we’re going to be able to mitigate our way to affordability when it comes to homeowners insurance coverage,” he said. “I think we’re going to have to figure out a way to set up a high-risk program and or reinsurance program of some kind in order to offset some of the risk from the insurers.”