UPDATE: A shocking new study reveals that 74% of homeowners affected by the devastating Marshall Fire in Boulder County, Colorado, are underinsured, leaving many without the necessary funds to rebuild their homes. This urgent finding comes as Colorado grapples with a crisis of inadequate insurance coverage, particularly as wildfire risks rise across the state.
The research, conducted by economists at the University of Colorado Boulder, links detailed insurance data with real outcomes from the fires that destroyed over 1,000 homes in 2021. As Colorado homeowners face an insurance premium surge of nearly 60% over the past five years, this crisis could have profound implications for families and communities.
In a detailed analysis of 3,089 policies from 14 major insurers, the study found that 36% of homeowners were so severely underinsured that their coverage would not fully cover 75% of rebuilding costs. Alarmingly, even households with incomes exceeding $180,000 were affected, with 72% holding policies inadequate for full reconstruction.
The findings suggest severe consequences: families are less likely to rebuild after a total loss when insurance coverage falls short. If all underinsured households had been fully insured, the study estimates that 25.4% of homeowners would have filed for reconstruction permits within a year, compared to only 18.8% who actually did.
“Underinsurance isn’t just a financial statistic; it has real-world impacts on families and communities,” said lead researchers Tony Cookson and Emily Gallagher. Their work underscores the urgent need for homeowners to reassess their coverage in light of rising rebuilding costs and wildfire risks.
The study also highlights the shortcomings of Extended Replacement Cost policies, which, while beneficial, still left nearly 75% of homeowners short when reconstruction costs soared post-fire. This indicates a critical flaw in how insurance companies assess and provide coverage.
As Colorado anticipates future wildfire seasons, experts urge homeowners to take immediate action. They recommend obtaining side-by-side insurance quotes to ensure adequate coverage and revisiting policy limits after any renovations or significant economic changes.
In light of the ongoing crisis, homeowners are encouraged to prioritize comprehensive insurance solutions and consider the reputation and local presence of their insurer. This could significantly affect coverage levels and the ability to rebuild.
The Front Range faces an uncertain future with escalating wildfire risks. Homeowners must act as if a total loss could happen tomorrow, ensuring their insurance is sufficient to protect their homes and families.
As communities rebuild from the ashes, the call for better insurance practices and awareness has never been more critical. Homeowners are urged to take these recommendations seriously to safeguard their futures.
