After many had been told that the fires wouldn’t have much impact on rates, increases are still here.
Many long time residents of Colorado are now facing the largest homeowners insurance premiums increase they’ve ever seen, as the impact of years of catastrophes, barely including the wildfires, on their rates is now being revealed.
Unfortunately, this is only the start of what is likely to be a larger wave of increases.
Though the very first of the homeowners insurance customers to see the increases have already done so on their most recent bills, those who have not yet had the raise applied to their premiums shouldn’t be counting themselves lucky quite yet. These changes are expected to become much more common throughout upcoming months, as insurers within the state attempt to align the premiums they are charging with the losses from the wildfire and other claims.
The increases in homeowners insurance premiums are not exclusively from the fires.
According to the Rocky Mountain Insurance Information Association’s executive director, Carole Walker, while many people may be assuming that it is the wildfires that are sending the premiums upward – fuelling frustrations when they were assured that rates wouldn’t be impacted by the fires this year – the truth is that there are much larger events to blame. Insurers are raising the rates to compensate for the claims from 2008 through 2010 storms and catastrophes. This year’s losses are contributing very little to the rising rates.
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Representing the trade group, Walker explained that “Insurance premiums are based on patterns and trends over a long time.” Although the destructive wildfires that occurred over the summer will likely cause homeowners insurance rates to change, this will be more localized and likely won’t occur for another couple of years, at least. She added that “It is a multiyear process.”
Walker pointed out that there are some homeowners insurance policyholders who reside along the Front Range who will be seeing increases in the double digits this year and next year as their renewals come up.
The main costs being considered by the current homeowners insurance increases were from the 2008 Windsor tornado (which was the most costly in the history of the state, with insured losses at $193.5 million), and the three 2009 hailstorms, with damages worth $1.4 billion (the most costliest year ever in the state).