Denver, CO — As home insurance premiums continue to climb and policy options dwindle across Colorado, state lawmakers are advancing a plan aimed at stabilizing the market—even if it means homeowners may have to pay more in the short term.
The proposed solution, backed by the state’s insurance commissioner, includes a 1% fee on every home insurance policy sold in Colorado. For the average homeowner, that would add about $30 annually to their insurance bill. The revenue would fund two new initiatives: one to strengthen homes against hail damage and another to help insurers shoulder the financial burden of large wildfire-related claims.
Supporters argue that these programs would improve the durability of homes and reduce the risk for insurance providers, ultimately encouraging more companies to operate in Colorado. Increased competition, they say, could help bring premiums down over time.
“Homeowners need relief,” said an official involved in drafting the legislation. “This plan is a step toward making insurance more accessible and more affordable in the long run.”
Dual Legislation Targets Risk and Pricing Transparency
Two bills have been introduced to implement the proposal. The first establishes the new programs and the fee structure. The second addresses the way insurers assess risk and set rates. Currently, many insurers rely heavily on predictive computer models that may overlook individual mitigation efforts by homeowners.
The new legislation would require insurers to share risk scores with homeowners and provide guidance on how to improve them. Lawmakers hope this added transparency will allow homeowners to take preventive steps and qualify for lower premiums.
However, not everyone is convinced. Insurance industry groups initially opposed the bills, warning that additional regulation and fees could prompt more companies to exit the Colorado market. After revisions were made, some of these groups withdrew their objections, though skepticism remains about the implementation and oversight of the new rules.
Critics also question how risk-reducing home improvements will be defined and who will decide which upgrades qualify for benefits under the proposed programs.
Hail Damage: The Costliest Threat
While wildfires often dominate headlines, state officials point to hail as the primary driver of insurance costs. Colorado consistently ranks among the most expensive states for hail-related damage.
To address this, one of the proposed grant programs would help homeowners afford hail-resistant roofs, which can cost thousands more than standard options. Under the plan, the state would cover the additional cost, and homeowners who already have qualified hail-proof roofs would be exempt from the 1% fee.
By increasing the number of homes protected against hail, lawmakers hope to reduce the volume and cost of insurance claims, easing the financial pressure on both insurers and policyholders.
FAIR Plan Offers a Last Resort
In the meantime, some homeowners who have lost private coverage or been priced out of the market are turning to the Colorado FAIR Plan, a state-run insurance program offering basic protection to those unable to secure private policies. However, this option also comes with higher costs, which are ultimately passed on to consumers.
Consumer advocacy group United Policyholders has expressed strong support for the legislative proposals, citing potential benefits for accessibility and affordability. Local governments and fire departments are also backing the plan, saying it provides much-needed solutions to a worsening crisis.
A Wait-and-See Approach
While lawmakers are optimistic, the success of the proposed changes will take time to evaluate. The initiatives aim to improve the long-term outlook for Colorado’s insurance market, but immediate relief may not be forthcoming.
For many Colorado residents, the question remains: Will this plan bring the protection and affordability they’re seeking?
“We know people are frustrated,” said one lawmaker. “This is about laying a foundation for a stronger, fairer insurance system. But it’s not going to be an overnight fix.”
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