As the Senate Finance Committee considered a bill last May to put fees on homeowners’ insurance policies and create a grant fund for disaster mitigation, one member was gobsmacked that the proposal sought to raise costs in order to lower them eventually.
“I think we’re heading into an economic downturn, a potential recession right now. And I am also worried at the fact that the resolution that we come up with is ‘We’re going to charge you more,’” the Thornton Democrat said before voting to kill the bill. “I think that’s tough to swallow when the conversation is ‘We’re tired of being charged more,’ but the solution is to charge you more.”
That member was Sen. Kyle Mullica.
On Tuesday of this week, Senate Bill 155, which seeks to assess a fee on property insurers to create a grant fund that would cover much of the costs of homeowners adding hail-resistant roofs, was introduced. And Mullica is the bill’s primary sponsor.
His journey from skeptic to lead advocate for the new bill illustrates just how hard Colorado leaders are searching for a solution for skyrocketing homeowners’ insurance prices that are adding one more obstacle to home ownership. SB 155 includes several provisions that Mullica said will protect homeowners’ pocketbooks, including a rarely inserted clause that bars insurers from passing along the cost of the fee to policy holders.
Is the bill really the answer?
But others look at the bill and question whether homeowners still will have to bear the brunt of the cost of these new charges despite its avowed protections. And observers question too whether the bill will do enough to stop the meteoric rise of homeowners’ insurance premiums, which have more than doubled since 2020 and have risen by more than the rate of inflation — 3.8 times that rate — in Colorado than in any other state.
Colorado’s average annual homeowners’ insurance premium in 2025 was $3,412, according to consumer financial-services firm Bankrate. That ranked eighth in the country — not the chart on which state leaders want to be near the top.
But more worrying to them has been the accelerated rise of these costs. Homeowners’ premiums rose 18.3% in 2025 alone, according to a study from online loan marketplace LendingTree — the largest bump in the country. And the 100.8% increase between 2020 and 2025 also topped all states, the company found.
Extreme weather events are the largest culprit for the rise, particularly the increasing prevalence of fire and hailstorms, said Rob Bhatt, a LendingTree insurance analyst. The more claims that companies get, the greater the risk they’ll lose money and the more they must raise rates to compensate for that. Some lenders are limiting the sizes of potential home loans because of the financial burden homeowners also carry in insurance, he said.
Another blow to home affordability in Colorado
“Traditionally you build property insurance costs into your budget. Now it’s having an outsized influence on what you can afford,” Bhatt said. “This is something that’s going to eat away at the money you have for other needs.”
And while wildfires may grab more attention than hailstorms, they have far less influence on the skyrocketing property insurance rates, found a study that the Colorado Division of Insurance released in February. While wildfire risks range from 1% of premium costs to 24.6% in some of the most forested mountain counties, hail risk accounts for anywhere between 26% and 54% of the costs across the board, it found.
To lower the risk of damage from hail, SB 155 proposes the creation of a new fund, the Strengthen Colorado Homes Enterprise, that would offer as much as $20 million in grants annually, beginning in 2027, to incentivize homeowners to add hail-resistant roofs. Grants would cover the difference in cost between tougher roofs and traditional shingles, requiring a board overseeing the enterprise to determine a minimum durability for the new roofs that is based upon standards set by the Insurance Institute for Business & Home Safety.
Just like with last year’s SB 25-1302, which fell in bipartisan fashion, the revenue for the enterprise would come from a 0.5% fee on multiperil homeowners’ insurance policies, which are the standard policies bundled against multiple risks like hail and fire. Grants would be awarded based on various considerations — the age of roofs, applicant income, the susceptibility of a home’s location to extreme weather — and could be used to train and certify roofers on putting in resilient systems as well.
Protecting homeowners from homeowners’ insurance fees?
But this year’s bill bars insurers from passing the surcharge onto customers, Instead, it would require that insurers demonstrate in their rate filings that the savings from installations of resilient roof systems are passed through to homeowners via discounts or reduced premiums.
This, Mullica said in an interview on Thursday, was the key to him signing onto the bill this year — ensuring that homeowners won’t have to take on an added cost to fill this new grant fund. He believes that the DOI will be able to comb through rate filings and ensure that cost is not being passed along, an admittedly eagle-eyed requirement as a part of filings that already have sought and received the OK for 18% hikes in recent years.
“The proposal is very similar. But it’s a very different bill when it comes to the aspect that the homeowner won’t be paying the cost,” Mullica said. “We’re hearing from constituents that our homeowners’ insurance is getting less and less affordable in Colorado.”
The more hardened roofs that go up, the less insurers will have to spend to replace hail-battered roofs and, eventually, the eye-popping annual cost increases for insurance will become less, Mullica said. He also believes, after having worked with industry officials to craft the bill, that insurers that have stopped writing policies in the state or in certain high-risk areas of Colorado will come back and offer consumers more options, which can drive down pricing through competition.
But while most observers agree in principle with the goals of the bill, some say that caution is needed that it could achieve the ends it seeks by the means it sets forth.
Is Alabama homeowners’ insurance program the model?
While 0.5% of each policy may not seem an exorbitant amount to ask property and casualty insurers to pay, this is an industry that, as a whole, lost money in Colorado for eight of the 11 years culminating in 2024. Then legislators, during the 2025 special session, repealed a tax credit for those insurers with substantial workforces here that will cost the sector $91 million annually. Exoduses like the one that is happening in California show that insurers will stop writing policies in a state if they reach a financial tipping point.
Both Mullica and Lyn Elliott, vice president of state government relations for the American Property and Casualty Insurance Association, point to the Strengthen Alabama Homes program as an example of what happens when a state invests in disaster mitigation. But a close look at that program offers both hopeful and cautionary lessons.
Launched in 2011 after a series of hurricanes and tornados boosted average homeowners’ insurance premiums and reduced the number of insurers willing to sell policies in the state, the program offers grants up to $10,000 to help harden roofs against wind. The state now has more than 50,000 IBHS-certified Fortified roofs — the highest number in the U.S.
A study done after Hurricane Sally in 2020 found that the installed roofs reduced loss frequency by more than 50% and that if all homes had those roofs, insurers would have saved $99.9 million in losses. The risk reduction provided by these roofs has brought insurers back to hurricane-prone areas like the gulf region and boosted homeowner options, officials have said.
Even with grants, premiums on the rise
But premium reductions have been harder to see. Alabama still ranks 12th in the county in average premium cost, at $3,114. And while premiums have gone up less there since 2011 than in Colorado (which has seen a 255% spike over 14 years), they still have boomed by 121% during that time.
Alabama transfers money from existing insurance-industry licensing fees annually into the program, meaning it did not have to impose a new fee to launch it. However, the state also puts about $1 million a year to the program — a total that officials are looking now to increase — where Colorado is seeking to generate 20 times that total.
Another thing that Alabama’s program does that SB 155 doesn’t contemplate in its current form is that it mandates that insurers offer discounts for homeowners who have fortified up to IBHS standards. Those discounts range from 20% to 60% on wind-based risk factors, depending on the level of fortification.
Stephen Myers, CEO of Thrive Home Builders in Denver, noted that it costs about 50% more to install IBHS-rated hail-resistant shingles than standard roof shingles right now, which partly explains why many homeowners have been slow to make the investment. New grants that cover the delta between those two cost levels will make the investment more attractive, but without guarantees like Alabama has that homeowners’ insurance premiums will come down by a certain level, many homeowners still may be hesitant, he said.
Must state demand homeowners’ insurance premium rollbacks?
Myers lauded the provision in SB 155 that requires contractors for grant-funded projects to be a member of the Colorado Roofing Association or equivalent body and to not waive deductibles, which will protect consumers from fly-by-night operators. But he believes the bill needs to require more pricing transparency on insurance premiums for grant recipients to have its fullest impact.
“The discount programs are a little uncertain, so it’s hard to make a big front-end investment based on that,” he said. “I think it would make a small dent at the end of the day. And part of that is we’re in unexplored territory a bit.”
Mullica, who said he’s on the bill because something needs to be done, said he thinks there could be a quicker uptake of the grants as people see what impact the hail-resistant roofs have on individual premiums. And just like in Alabama, he thinks that as insurers return and compete for business, that will have its own positive impact on the market.
Hearing coming quickly
Insurers support the concept of the bill — taking concrete action to get people to hail-proof their homes more, just as the state has taken action to spur more wildfire mitigation — but are seeking some amendments, Elliott said. The industry would prefer a financing mechanism like Alabama’s, a.k.a. using existing funds, but acknowledged that’s not an option while Colorado is trying to close a $1.5 billion budget shortfall, she said.
Thus, the coming weeks will be crucial for the growing push among state public and business leaders who say that it will be impossible to bring down the rising price of housing without addressing the rising cost of homeowners’ insurance simultaneously. SB 155 is set to get its first hearing in the same Senate Finance Committee meeting on Tuesday where members also will consider a bipartisan bill from Sens. Marc Snyder and Lisa Frizzel, to set up tax-free savings accounts to let people put away money for hail-resistant roofs.
“With fortifications, it takes time to see the impact of that,” Elliott said. “We are hopeful that we can get a bill that is operable for insurers and affordable for consumers.”