Urgent Report: 74% of Colorado Homes Underinsured After Wildfires

UPDATE: A shocking new study reveals that 74% of homeowners affected by Colorado’s devastating Marshall Fire are underinsured, leaving families vulnerable amid rising rebuilding costs. This urgent finding comes as Colorado grapples with a surge in insurance premiums, which have risen nearly 60% over the past five years due to frequent wildfires and other disasters.

Researchers from the University of Colorado Boulder analyzed 3,089 policies from 14 major insurers to assess the adequacy of coverage for homes destroyed in the Marshall Fire, which ravaged over 1,000 homes in Boulder County. Their alarming conclusion highlights a critical gap in insurance coverage that threatens the stability of affected families.

The study found that 36% of homeowners were so severely underinsured that their policies covered less than 75% of the actual rebuilding costs. Notably, even households with incomes exceeding $180,000 were not immune, with 72% of them holding inadequate policies. These findings underscore the widespread nature of underinsurance across socioeconomic lines.

As construction costs skyrocket following major fires, many homeowners opt for Extended Replacement Cost policies, yet nearly 87% of those studied still fell short of complete coverage. The report stresses that even with extended coverage, most policies were insufficient from the outset.

“Underinsurance isn’t just a statistic; it leaves real gaps in rebuilding,”

said co-author Tony Cookson. The research indicates that insufficient coverage significantly hinders the likelihood of homeowners rebuilding after a total loss. If all underinsured households had been fully insured, 25.4% would have filed for reconstruction permits within a year, compared to just 18.8% who did.

The report emphasizes the urgency for homeowners to reassess their insurance policies. As wildfires become more frequent, they must ensure their coverage reflects the rising risks and costs. Experts recommend obtaining side-by-side policy comparisons, updating coverage limits annually, and considering insurers with strong local reputations to avoid underinsurance pitfalls.

With wildfire season looming, Colorado homeowners are urged to act swiftly. The Front Range region remains susceptible to destructive fires, and with insurance premiums unlikely to stabilize quickly, families must shop for adequate coverage as if a total loss could happen at any moment.

For those impacted by the Marshall Fire, the implications of this research are profound. More families could secure their homes and remain in their communities if they had sufficient insurance. As the situation develops, homeowners must prioritize proper coverage to safeguard against future disasters.

Stay informed as we continue to monitor this situation and its impact on Colorado communities.