Colorado is the latest state embroiled by an insurance crisis that is impacting homeowners from the West Coast to the East Coast — and a growing number of Americans in between — with extreme weather events becoming more frequent and severe.
What's happening?
As detailed by Colorado Public Radio, homeowners in the state are paying $818 more per year for insurance than they did in 2020, per analysis by the National Bureau of Economic Research. In some places, such as Phillips County, prices rose by more than 50%.
Meanwhile, the U.S. Senate Committee on the Budget found that nonrenewal notices in areas such as Grand County skyrocketed by approximately 77% from 2018 to 2023. All in all, the Centennial State has the fourth-highest insurance premiums in the United States.
For Trevor Donahue and Trish Krajniak, buying their mountain dream home turned into a nightmare after Allstate agreed to insure them and then backed out after they closed. The company gave them a 60-day deadline to mitigate for wildfires and hail, and Donahue told CPR News that "none of it was outlandishly unreasonable." However, snow and ice made the deadline difficult to meet, and Allstate refused to make any exceptions.
"We have a gun held to our head right now," Krajniak said. "I have no guarantee if we complete all of these steps, and spend the several thousand dollars, that [Allstate] will actually continue to insure us."
After the couple filed a complaint with Colorado's Department of Regulatory Agencies, Allstate offered them an extension, but that provided little relief.
"There's massive relief that we don't have this looming deadline. But I am very concerned if Allstate decides to drop us in the future, we're in the same place. It's scary," Krajniak added.
Why is this important?
Like other areas of the country, Colorado is feeling the effects of the planet warming at an "unprecedented rate," per NASA. As temperatures have risen, so too has the frequency of extreme weather such as wildfires, droughts, and severe storms.
Last year, the U.S. recorded its second-highest number of billion-dollar disasters just one year after it set an unenviable record for such events with 28, per Environment America.
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Definitely 🙁 CPR News reported that insurers are hesitant to provide coverage primarily because of hail damage, though wildfires are also a factor.
"Hail is by far the biggest driver of losses in most years for the homeowners insurance market," explained Michael Conway, the state's insurance commissioner. "In 2023, [hail reports] went up dramatically over the previous highest year…both in the overarching number of events, but also in the severity of those events, too."
What's being done about the insurance crisis?
In 2025, Colorado plans to introduce a state-run plan for homeowners struggling to find private coverage, according to CPR News. While the state approved the FAIR Plan in 2023, coverage is limited.
Meanwhile, two pieces of legislation aim to address rising insurance costs. The first bill would encourage insurers to better account for mitigation efforts and allow homeowners to appeal wildfire risk scores, while the second would support the installation of hail-resistant roofs.
However, while investing in climate-resilient structures is a short-term solution, addressing the root cause of the uptick in extreme weather will bring down costs in the long run. With dirty fuels primarily responsible for the planet's overheating, reducing pollution from them is crucial.
Upgrading to energy-efficient appliances, unplugging unused devices, and signing up for community solar are among the wallet-friendly actions that will contribute to a cooler future.
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