Homeowners insurance rate could force some families out of Colorado

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DENVER — Craig Plazure and his wife, Morgan, describe themselves as two of the “lucky ones” who were able to buy a home in Colorado in August 2021. But after settling down and having two children, the family wonders how long they’ll be able to stay in Colorado because of their higher home insurance premiums.

The Plazures moved into a 130-year-old house in the Whittier neighborhood of central Denver because of its access to City Park, the Madison Recreation Center and the pedestrian zone. Their home insurance policy had an annual price of around $1,800, but after a summer of extreme weather, the family received a letter from the bank stating that their premium was increasing by more than 20%.

Like many Colorado households, the increase has forced them to look for areas where they can cut costs, as inflation continues to drive up the prices of basic necessities like food, energy and childcare. ‘children.

“People are in a rush in every way,” Plazure told Colorado Newsline. “And I think that’s just another example.”

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Home insurance is often a small fraction of a homeowner’s annual budget, but it can be one of the biggest payments. These insurance policies cover everything from the house itself to its contents in case of damage.

As Colorado’s climate continues to produce extreme weather and natural hazards, homeowners are seeing their premiums rise much faster than expected. According to a report by Policygenius, an online insurance marketplace, homeowners in Colorado have seen their premiums increase an average of 17.5% over the past 12 months, the third highest increase in the nation.

One of the reasons for the steep increases is climate change, according to Pat Howard, property and casualty specialist at Policygenius. And Colorado homeowners saw how devastating this phenomenon becomes in December, when the Marshall Fire in Boulder County flattened more than 1,000 households and caused more than $500 million in damage, according to local estimates.

In addition to climate change, the cost of rebuilding homes has also increased due to both inflation and supply chain issues. Data from the National Association of Home Builders shows that building material prices have risen 20.4% over the past year and 33% since the pandemic began in March 2020.

“As those costs go up, you’ll often see insurance rates do the same,” Howard told Colorado Newsline.

Looking to lower your premiums

For Colorado families like the Plazures, rising premiums have real-world implications. The Plazures welcomed twins into their lives in January and are now paying for in-home childcare as they could not find a center with space for their two children. It comes at a time when prices for necessities like groceries and home energy have risen 10.6% and 11.7%, respectively, according to the Bureau of Labor Statistics.

Plazure said his family was able to negotiate a minimal increase in their homeowners insurance rate with their agent, but added that many Colorado households might not be so lucky.

“We were lucky that our overall raise wasn’t as bad as the bank said it was,” Plazure said. “But these issues aren’t going away anytime soon, so what will happen next year if we have more wildfires and other extreme weather?”

Some insurance brokers like Todd Berg, owner of Spotlight Insurance in Denver, have been getting calls from customers asking similar questions for over a year. Home insurance is usually a place where families look to save a few dollars for their annual budget, but right now “it’s a double-edged sword,” Berg told Newsline.

Berg said he has received “more calls than ever” from customers seeking to lower their annual premiums. But it can lead to lower coverage levels and create situations where homeowners are underinsured when a disaster like the Marshall Fire strikes.

These increases can have a particularly big impact on families like the Plazures who live in older homes, as building materials are often older than local building codes allow.

Homeowners who can’t afford to upgrade their roof or water pipes, for example, often see the biggest increases in insurance premiums, Berg said.

But, state agencies such as the Division of Insurance, which is responsible for overseeing Colorado’s insurance market, are only just beginning to understand how these insurance rate increases are impacting different communities across the country. State.

In 2021, the General Assembly adopted Senate Bill 21-169, which requires the DOI to investigate underwriting and pricing practices for marginalized communities. However, Vincent Plymell, spokesman for the Division, said the agency would first consider the impact of this on life insurance policies before moving on to other types of insurance.

While those studies are ongoing, Plazure said the increase in their home insurance rates caused them to reconsider raising their young children in Colorado. The state is warming up and temperatures have been near 100 degrees Fahrenheit five times in the past week alone. At the same time, air quality in Denver continues to be a concern.

“You don’t want to have to check the air quality just to take the babies out for morning walks,” Plazure said. “It’s not just a regional problem either. I think people are starting to realize that this is a national, even a global problem.

This story was first published by Colorado newspaperwhich is part of the States Newsroom network of news outlets that includes the Louisiana Illuminator.

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