URGENT UPDATE: A shocking new study reveals that 74% of Colorado homeowners are dangerously underinsured, putting families at risk of financial ruin in the event of a total loss. This alarming finding comes on the heels of the devastating Marshall Fire, which destroyed over 1,000 homes in Boulder County.
Research from economists at the University of Colorado Boulder indicates that many homeowners lack adequate coverage to rebuild their homes. With insurance premiums soaring nearly 60% over the past five years due to escalating wildfire and hail damage, the time to act is now. The study analyzed 3,089 policies from 14 major insurers and found that even households earning above $180,000 are not immune, with 72% holding policies that fail to cover rebuilding costs.
The consequences of being underinsured are dire. When a household’s insurance coverage falls short, they are significantly less likely to rebuild after a disaster. The study projects that if all underinsured households had adequate coverage, a staggering 25.4% would have sought reconstruction permits within a year of the fire, compared to only 18.8% who actually did. This leaves many families in a precarious situation, forcing them to sell and relocate instead of rebuilding their lives.
Despite 87% of affected homeowners purchasing extended replacement cost policies meant to cover rising construction costs, nearly three-quarters of these still fell short of rebuilding expenses. The research emphasizes that the insurance provider chosen plays a critical role in determining coverage levels, with some companies systematically offering less coverage than others.
Experts urge homeowners to take immediate steps to ensure they are adequately protected. When shopping for insurance or renewing policies, homeowners should request a side-by-side comparison of coverage limits across insurers. Additionally, regular updates to coverage limits are crucial, especially after renovations or significant economic changes.
As Colorado faces ongoing wildfire threats, the urgency for adequate home insurance has never been more critical. Homeowners must act now to secure their financial future and protect their homes against the looming risk of natural disasters.
For more insightful analysis on this pressing issue, stay tuned for updates and practical advice from financial experts.
