Why are Home Insurance Rates Rapidly Increasing in CO?
According to a recently published article from Policy Genius (Dated July 12,2002), Nationwide Home insurance rates continue to climb with an average of 12.1 % across the U.S. Colorado home insurance rates went up an average of 17.5%. This is the 3rd highest rate increase in the country; only Arkansas and Washington State were higher.
There are multiple reasons for this recent rate increases.
General inflation is hitting the insurance market as well. The costs for all goods and services are increasing, this includes insurance rates
Continued Weather-Related Catastrophic Events
Insurance carriers carefully watch and plot these events to help determine insurance rates. The statistics don’t lie. Our weather is changing. Weather events are increasing in duration and severity. These events cause major damage to homes, therefore increasing the amount of money the carrier pays out to replace these homes.
Boulder county, CO experienced the loss of 1,100 homes in Dec 2021 when a freak firestorm swept a neighborhood at the end of December; a time when fire danger in the state is supposed to be low. But drought conditions causing dry grass surrounding the community, combined with 115 miles/hour winds made it almost impossible for firefighters to deploy their usually firefighting techniques.
Shortages of Building Materials and Labor
The National Association of Home Builders released a study based on the Producer Price Index showing the cost building materials his increase 35.6% since the start of the Covid pandemic in 2020. This means is 35 % more expensive to repair or rebuild a home in just the past 2 years. That is a huge cost to the insurance carrier who must distribute these costs amongst their policy holders.
Like all industries across the nation, the construction community is experiencing a shortage of skilled labor. This also increases the cost to repair/rebuild a home.
Rising insurance rates are not fun for anyone. But the nature of the way insurance works dictates that increasing insurance payouts are shared amongst all policy holders. While it’s not fun, it does help to understand why this is occurring.
Denver West Insurance Brokers is located in downtown Golden, Colorado. We have clients all over the state and serve the communities of Denver, Lakewood, Littleton, Morrison, Arvada, Wheat Ridge, Evergreen, Westminster. Give us a call at 303-960-5290 and speak to one of our licensed agents about your insurance needs.
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