Colorado homeowners are facing a rapidly escalating crisis in the cost of insuring their properties, driven by a combination of factors including inflation, increasingly frequent and severe weather events, and a shifting risk landscape. Premiums have more than doubled on average between 2014 and 2024, placing the state among the top five most expensive for home insurance in the nation, alongside states like Florida and Louisiana, according to a recent analysis of over 70 million mortgage payments.
The surge in costs is hitting homeowners hard, forcing difficult choices and raising concerns about affordability. Eric Shannon, a homeowner in Jefferson County, experienced a near 50% increase in his Allstate premium when it jumped from $4,500 to $6,600 upon renewal in November. “This is ridiculous,” Shannon recalled thinking, a sentiment echoed by many across the state. The rising cost of home insurance is becoming a significant financial burden for Colorado families, adding to existing pressures from mortgage payments, property taxes, and everyday expenses.
The Rising Cost of Living in Colorado
While inflation is a significant driver of increased costs nationwide, in Colorado, the escalating risk from climate-related events is playing an outsized role. Benjamin Keys, a professor at the University of Pennsylvania’s Wharton School, explained that insurers are factoring in the increasing frequency and severity of wildfires and, notably, hailstorms. “A surprisingly large and disproportionate share of those expected losses in a state like Colorado are, in fact, coming from hailstorms, which are becoming more frequent and more severe,” Keys said.
New data from the Colorado Division of Insurance confirms this trend, revealing that hail risk is the primary contributor to the spike in home insurance premiums. The data also indicates that insurance companies are spreading hail risk across the state, meaning that even homeowners in areas not traditionally prone to severe hailstorms are seeing their premiums rise. In Jefferson County, hail accounts for roughly half of the average annual premium, while wildfire risk contributes only 6%.
Navigating a Difficult Insurance Market
For homeowners like Shannon, finding affordable coverage has develop into a challenge. After receiving the substantial increase from Allstate, he turned to Morgan Lloyd, an independent insurance agent at Trailstone Insurance, whom he found through Reddit. Lloyd was able to secure a more competitive policy with Auto Owners, a smaller insurance company. Lloyd noted that the construction of Shannon’s home—specifically, its concrete Spanish-style roof tiles—likely contributed to the lower cost, as these materials are more resistant to hail damage. Bundling home and auto insurance also helped reduce the premium.
“I indicate, gosh, it was a relief,” Shannon said. “I don’t recognize anybody in my friend group and my family that isn’t dealing with predominantly home insurance premiums increasing dramatically.”
What Homeowners Can Do
Carole Walker, executive director of the Rocky Mountain Insurance Information Association, suggests that homeowners can take steps to mitigate their risk and potentially lower their premiums. “Just putting on a hail resistant roof could qualify you for a discount with your individual insurance company, and place you at less risk for having a hail damaged roof,” she said. While these upgrades can be costly—ranging from $1,000 to several thousand dollars—they could result in savings of a few hundred dollars per year.
However, Walker cautions that insurance companies are facing increasing claims and expenses, and this trend is expected to continue. Homeowners should prepare for insurance to represent a larger portion of their household budget. The situation highlights the growing financial impact of climate change on homeowners and the need for proactive measures to manage risk.
The Colorado Division of Insurance continues to monitor the market and provide resources for homeowners. Further information and assistance can be found on their website. Colorado Division of Insurance
Disclaimer: This article provides information for general knowledge and informational purposes only, and does not constitute financial or insurance advice. It is essential to consult with a qualified insurance professional for personalized guidance based on your specific circumstances.
Looking ahead, the Colorado General Assembly is expected to continue discussions regarding insurance regulations and potential mitigation strategies during the upcoming legislative session. Homeowners should stay informed about these developments and advocate for policies that address the affordability and availability of home insurance in the state.
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