UPDATE: A shocking new study reveals that 74% of homeowners affected by Colorado’s devastating Marshall Fire are underinsured, putting families at risk of financial ruin following a total loss. As the wildfire season intensifies, this urgent finding highlights a critical gap in coverage for many homeowners.
The research, conducted by economists at the University of Colorado Boulder, examines policies held by individuals whose homes were among the more than 1,000 properties destroyed in the fire. With insurance premiums in Colorado skyrocketing nearly 60% over the past five years due to increasing risks from wildfires and other disasters, many homeowners are now facing dire consequences.
According to the study, which analyzed 3,089 insurance policies from 14 major insurers, an alarming 36% of affected homeowners have coverage that falls short of 75% of the actual rebuilding costs. Even families earning upwards of US$180,000 are not immune, with 72% of these households also lacking adequate coverage.
The consequences of underinsurance are severe. The study finds that when a household’s insurance does not meet the home’s replacement cost, they are significantly less likely to rebuild after a loss. If all underinsured homeowners had sufficient coverage, nearly 25.4% would have applied for reconstruction permits within a year, compared to just 18.8% who did.
Authorities stress the importance of reviewing insurance policies regularly. Homeowners are encouraged to request side-by-side coverage comparisons when shopping for insurance, ensuring they understand the limits and any extended coverages available. With construction costs spiking after disasters, relying solely on lower premiums could lead to significant financial shortfalls.
The study also emphasizes the need for homeowners to reassess their coverage limits regularly, especially after renovations or significant economic changes. With the Front Range poised for ongoing wildfire risks, it’s imperative for families to act now to protect their homes.
In light of these alarming findings, homeowners must prioritize shopping for insurance as if a total loss could occur tomorrow. The stakes are high, and the time to act is NOW.
For more information on how to safeguard your home and financial future, stay tuned for further updates.
