Urgent Update: 74% of Colorado Homeowners Underinsured After Fires

UPDATE: New research reveals a staggering 74% of Colorado homeowners are underinsured, putting families at risk of financial ruin after disasters like the Marshall Fire. This urgent study highlights the critical issue of insufficient insurance coverage for homes destroyed in the devastating fire that ravaged over **1,000 houses** in Boulder County.

As homeowners grapple with rising construction costs and insurance premiums that have surged nearly 60% over the past five years, many find themselves unprepared for total losses. This alarming trend is not just a local concern; it reflects a national reassessment of risks related to natural disasters.

The study, conducted by economists at the University of Colorado Boulder, analyzed 3,089 policies from major insurers, revealing that even families with incomes exceeding $180,000 face significant underinsurance. With 36% of affected homeowners holding policies that cover less than 75% of rebuilding costs, the stakes couldn’t be higher.

While 87% of the policies included Extended Replacement Cost coverage aimed at cushioning the blow of rising rebuilding costs, nearly three-quarters of these still fell short of full coverage. This indicates a pervasive issue where homeowners are not adequately covered from the start, risking their ability to rebuild after catastrophic losses.

The implications of underinsurance are dire. The study indicates that households lacking sufficient coverage are significantly less likely to rebuild after a disaster, with only 18.8% of homeowners filing for reconstruction permits within a year of the fire. If all underinsured households had sufficient coverage, this percentage could have jumped to 25.4%, allowing more families to remain in their communities.

As Colorado faces ongoing wildfire threats, homeowners must act swiftly. Experts recommend several immediate steps to ensure adequate coverage:

1. **Request side-by-side insurance quotes**: When shopping for insurance, homeowners should compare coverage limits and extended options across different insurers to avoid underinsurance while chasing lower premiums.

2. **Update coverage regularly**: It’s crucial to revisit insurance limits annually, especially after renovations or significant economic changes that affect construction costs.

3. **Consider the insurer’s reputation**: Choose companies with a strong local presence as they are less likely to underinsure properties, motivated by their community standing.

The urgency is clear: the Front Range will see continuing wildfire risks, underscoring the need for homeowners to renew policies with the mindset that total loss could happen at any moment.

The study serves as a wake-up call for Colorado homeowners to understand the risks of underinsurance and take immediate action to protect their homes and families.

For more insights and updates on insurance coverage, stay tuned as we track this developing story.