Colorado’s housing affordability crisis, which has made recruitment and retention more difficult for employers statewide, is not just an issue of home costs but of property insurance rates that are pricing out potential homebuyers — if they can even get policies.
On Tuesday, the Colorado Division of Insurance took the first official step in what most observers agree will have to be a multi-tiered process to gradually bringing down the cost of homeowners insurance. That step was to release draft rules for how insurers must consider homeowner and community-level wildfire-mitigation efforts in determining the rates that homeowners get offered.
No one is sure exactly what impact the new rule, created in a bill passed in the 2025 regular legislative session, will do. Theoretically, it will give homeowners and owners of multifamily properties more specific information about how they can make residences more resistant to wildfire and hail — information that can be used to make changes that then reduce insurance costs.
“Insurance companies are increasingly using wildfire risk scoring and models to determine policy coverage and pricing, but the lack of transparency has left property owners confused about the policy decisions their insurers make,” cosponsoring Rep. Brianna Titone, D-Arvada, said after House Bill 1182 bill passed this spring. “This bill promotes transparency and accountability in property insurance so Coloradans can take effective mitigation efforts that help bring down their insurance costs.”
Disasters make Colorado difficult for insurers
But transparency and accountability can only go so far when matched up against a state where weather disasters make it highly unprofitable to offer insurance policies at all.
In testimony during special legislative session last month against a bill to rescind a tax break for insurers with large local workforces, the Rocky Mountain Insurance Association’s Dan Jablan said property insurers have lost money in the state in eight of the past 10 years. Online lending marketplace LendingTree found that Colorado home insurance rates rose 76.6% between 2019 and 2024 — the largest hike in the United States and nearly double the rate that premiums grew nationally on average.
After passing HB 1182 with bipartisan support, legislators rejected a separate effort, HB 1302, that sought to create two enterprises that would assess fees on homes statewide and use the revenues to offer grants to hail-proof roofs and boost fire protection. While sponsors and the Colorado Division of Insurance argued average premium prices would drop by amounts greater than homeowners would have to pay in new fees, too many senators said they didn’t want already strapped residents to shell out more for help.
What changes can diffuse rising insurance rates?
Bryan Bernier, CEO of the Property Independent Insurance Agents of Colorado, said in an interview that the state doesn’t have to pass another law to move this conversation and solutions further along. It must, though, find more impactful ways to do what HB 1182 seeks to do — increase mitigation against disasters, which will reduce property-insurance claims and allow insurers to pause the raising of rates needed to recoup their losses.
But to do that, the state must lead a discussion with insurers about what standards of mitigation they will accept to acknowledge that the risk of destruction from wildfire and hail has been reduced significantly enough that rates don’t need to skyrocket, Bernier said. Unless they can find a sweet spot to eliminate the $15,000 annual policies that he’s seen on some $500,000 homes or the inability of homeowners in wildland-urban-interface areas like Boulder and Estes Park to even get policies, progress will be hard to come by.
“If everybody mitigated throughout the state tomorrow morning, we’d have a lot less insurance problems,” Bernier said. “I see the eagerness of consumers saying, ‘Tell us what we have to do to make our insurance work.’”
How the new rules work
The new draft rules — about which the DOI is holding a public meeting on Sept. 25 as it moves toward a July 1 implementation date — require insurers to post property-specific and community actions that can be taken by policyholders to adjust premiums downward. They also require insurers to set up appeals processes through which homeowners can offer evidence as to the mitigation steps they have taken that they believe should result in them paying lower premiums.
A draft bulletin suggests that insurers offer to homeowners — either upon renewal of an insurance policy, consideration of an application of a new policy or a decision of non-renewal because of their wildfire risk score — an assigned score and classification. They then must offer a maximum achievable score if all applicable property-mitigation actions are completed, as well as a list of the primary parcel characteristics impacting the score.
Individual property-mitigation actions can include creation of defensible space around a residence, installation of roofs with substantial resistance to fire or hail and addition of features like fire-resistant siding, mesh-covered vents and noncombustible gutters. Community-level actions that can reduce risk include utility wildfire-mitigation plan completion withing 300 feet of community properties, burial of utility lines underground, addition of fire breaks and the oversight of a fulltime-staffed fire department.
Sponsors worked with insurers to make changes as the bill advanced, including removal of commercial properties (other than multifamily complexes) from the requirements, as those properties tend to be rated at a national level rather than an individual property level. Insurance-industry groups did not oppose the bill so much as they worked to amend it, acknowledging that they backed the broader goal of being able to provide homeowners with a greater understanding of their wildfire-risk scores.
How Colorado homeowners insurance rates stack up
Various sources list different average rates for Colorado homeowner insurance policies, but most put them somewhere between $3,000 and $4,500 per year and most lists rank Colorado in the 10 most expensive states in this way. Adding $300 per month to insurance payments at a time when the median sales price of a single-family home in Colorado was $585,000 in July, according to a Colorado Association of Realtors report, effectively can block people from home ownership.
And employers have said repeatedly that it’s getting harder to attract and hold onto workers when the cost of home ownership is so much lower elsewhere. When asked to list their top three challenges in a Colorado Chamber of Commerce survey released earlier this year, 39% of employers cited affordable and attainable housing, making it the fourth biggest barrier to business growth here.
DOI officials will take comments now about whether the forms they are proposing are workable for insurers and will have the effect of allowing homeowners to understand what they need to do to hold down the rise in premiums. Come July, they will put the new requirements into place.
But the 218,000 acres of Colorado that have been burned by wildfires this summer show that the factors that are driving up the costs of claims payouts and of the reinsurance policies that insurers purchase to limit their losses aren’t going away. And, as such, conversations are likely to continue into the 2026 legislative session of what role the state can or should play in trying to keep down costs of insurance without placing unrealistic burdens on either insurers or homeowners.