Colorado is taking action to help homeowners who can no longer get insurance.
Rising wildfire risks have caused insurance companies to drop many policies, leaving some families worried about losing their homes.
Starting in 2025, the new FAIR Plan will offer coverage to those with no other options.
Rising Insurance Challenges in Colorado
Wildfires have become a growing problem for Colorado homeowners.
Insurers are pulling out of high-risk areas, making it harder for families to find coverage. In 2022 alone, the average cost of home insurance in Colorado jumped by 23%, and many policies were canceled.
Without insurance, homeowners risk losing their properties due to mortgage requirements.
For families in fire-prone areas, the lack of affordable coverage creates financial stress and uncertainty.
This has pushed state leaders to find new ways to support affected homeowners.
Understanding the FAIR Plan
The FAIR Plan is set to launch in 2025 to serve as an "insurer of last resort."
It will provide coverage to people who can prove they have been rejected by at least three other insurance companies.
This program is designed to offer a safety net for those struggling to find insurance elsewhere.
Homeowners will have coverage limits of up to $750,000, while commercial properties can be insured for up to $5 million.
The plan will be funded by premiums and contributions from other insurance companies operating in Colorado.
This structure spreads the financial risk across the market.
Efforts to Address Affordability
State lawmakers are also working on ways to make insurance more affordable.
One proposed idea involves selling catastrophe bonds to raise money that can help offset the costs of major wildfires.
These funds would help stabilize premiums and keep insurance more accessible.
Other efforts include updating wildfire risk models to consider homeowners’ fire prevention work, such as clearing brush or adding fire-resistant features.
Additionally, the state is looking at grants to help homeowners afford hail-resistant roofs, which could lower claims and reduce insurance costs.
