You’ve probably seen the news that major insurance carriers like State Farm, Allstate, and Farmers are halting new homeowners insurance policies in states like California and Florida due to the financial impact of increasing catastrophic claims and reinsurance costs.
The industry is changing at home, too, as Colorado ranks second in the country for hail insurance claims, and top-five for wildfire. Over the last 20 years, Colorado has seen a 275% increase in natural disaster occurrences.
We are in the early innings of a hardening insurance market – meaning underwriting appetites will tighten and premium costs will rise as carriers grapple with losses from historic catastrophic events and financial pressures.
Some carriers have already ceased writing new policies in wildfire-prone areas of Colorado, and the entire state for others.
Despite a challenging insurance environment, there are ways to put yourself in the strongest position to protect your assets and manage your insurance premiums.
Your insurance program should be structured to protect against catastrophic events. Exercise caution when reporting small claims. Discuss the long-term impact of reporting claims to your insurance provider, before opening a new claim.
Additionally, taking a proactive approach by investing in resources and features that protect your home will reward families in the long-run.
Insurers are prioritizing families who lower their risk profile by implementing features like:
Reducing the risk of a future claim can safeguard your home and your ability to obtain more favorable coverage options.
Deductibles are the quickest way to manage your annual premium spend – consider selecting a $5,000 or $10,000 home deductible on your policy.
Colorado has experienced more than a decade of consistent hail events, which means mandatory wind and hail deductibles ranging from 0.5 to 2% of the home’s insured value are the new industry norm.
What would it cost to rebuild your home in 2023?
That is the coverage amount you should carry. Remember that Home Replacement Cost and Home Market Value are independent values, and the replacement cost can often exceed the market value (especially for older homes). Following the Marshall Fire, many families unfortunately learned that their homes were substantially underinsured, leaving them footing six-figure bills to make up the coverage deficiency.
Many premium carriers, like Chubb, PURE, Berkley One, and AIG Private Client Group, offer Guaranteed Replacement Cost policies, which means there’s no top-end limit on the amount the carrier will cover if the home needs to be rebuilt. Families should prioritize these policies over others – especially for multi-million-dollar properties.
Taking proactive steps to improve your risk profile will present better to carriers and can result in stronger coverage and premium options, especially in dynamic markets like Colorado.
The right advisor partnerships make all the difference in a highly competitive environment, and we’re here to help. If you have any questions on your insurance program, please contact Andy Orlando, Senior Vice President & Partner at CCIG Private Client Group at Andy.Orlando@thinkccig.comBack to Resources