Colorado’s Homeowners Insurance Costs: New Rules Aim to Lower Rates Amid Wildfire Risks

The Colorado Division of Insurance has officially initiated an important process aimed at reducing the rising costs of homeowners insurance. Observers suggest this will need a multi-faceted approach as the state grapples with severe weather-related disasters.

New Regulations to Guide Insurance Pricing

On Tuesday, the Division released draft rules mandating that insurers consider homeowner and community wildfire-mitigation efforts when calculating insurance rates. This step is part of a broader legislative mandate established in House Bill 1182, passed during the 2025 regular legislative session. The intention behind this new rule is to provide homeowners and multifamily property owners with clearer guidance on how they can fortify their homes against wildfires and hail—efforts that could potentially lower their insurance premiums.

Rep. Brianna Titone (D-Arvada), a co-sponsor of the bill, emphasized, “This bill promotes transparency and accountability in property insurance so Coloradans can take effective mitigation efforts that help bring down their insurance costs.”

The Challenge of Natural Disasters

Despite these promising steps, maintaining transparency and accountability in insurance will face challenges due to Colorado’s unique climate. The Rocky Mountain Insurance Association reports that property insurers have posted losses in eight of the past ten years due to natural disasters. A study by LendingTree revealed that homeowners insurance rates in Colorado surged by 76.6% from 2019 to 2024—the highest increase in the nation—while national averages experienced substantially lower growth.

Bipartisan support enabled the passage of HB 1182. However, another proposal, HB 1302, aimed at creating revenue-generating enterprises for hail-proofing roofs and enhancing fire protection, was ultimately rejected. Many legislators felt that adding further financial burdens on homeowners wasn’t the right approach.

Moving Forward: Effective Mitigation Strategies

Bryan Bernier, CEO of the Property Independent Insurance Agents of Colorado, expressed that new laws aren’t necessarily the solution; rather, open discussions between the state and insurers are essential to determine effective disaster mitigation standards. “If everybody mitigated throughout the state tomorrow morning, we’d have a lot less insurance problems,” he stated, highlighting that many homeowners are eager to learn how they can make their properties more insurable.

Details of the New Draft Rules

A public meeting scheduled for September 25 will discuss the proposed rules, which are projected for implementation by July 1. These draft regulations demand insurers provide property-specific actions that homeowners can undertake to reduce their premiums. Additionally, insurers will need to establish an appeals process for homeowners to contest premium increases based on their mitigation efforts.

These rules require insurers to assign a wildfire risk score and offer both a potential maximum score achievable through mitigation and details about factors influencing that score. Homeowners can implement actions such as:

• Creating defensible space around their residences
• Installing fire-resistant roofs
• Adding features like fire-resistant siding, mesh-covered vents, and noncombustible gutters

Community-wide measures include utility wildfire-mitigation plans, burying utility lines, and having a full-time fire department.

What are Average Homeowners Insurance Rates in Colorado?

Current estimates for homeowners insurance premiums in Colorado range between $3,000 and $4,500 annually, ranking it among the top 10 most expensive states for homeowners insurance. High insurance costs effectively deter potential buyers, especially given that the median price of a single-family home is around $590,000.

Employers have consistently noted that escalating housing costs impede their ability to attract and retain talent, with nearly 39% citing affordable housing as a significant barrier to business growth, according to a Colorado Chamber of Commerce survey.

The Road Ahead for Homeowners Insurance

The Colorado Division of Insurance encourages public feedback regarding the feasibility of their proposed forms and whether these measures effectively clarify homeowners’ paths to lower premiums. As new requirements take effect in July, ongoing dialogue will be crucial to shaping future legislative responses and ensuring that both insurers and homeowners can navigate the complexities of rising costs and wildfire risks.

The plight of 218,000 acres burned by wildfires in Colorado this summer serves as a reminder that the driving factors behind escalating claims costs persist, making it likely that the conversation surrounding homeowners insurance will continue well into the next legislative session.

In the ever-evolving landscape of homeowners insurance, stakeholders across Colorado seek innovative solutions to alleviate these burdens while ensuring safety from increasingly frequent and devastating weather events.

For ongoing updates and resources about homeowners insurance in Colorado, visit The Sum & Substance.