Cost & Coverage
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Your guide to the best home insurance companies, coverage needs, and educational resources for Colorado homeowners.
From the endless outdoor playground that’s the Rocky Mountains to the vibrant cities and adventurous spirit of its residents — it’s no wonder Colorado is one of the fastest growing states in the country. Colorado is also home to some nasty blizzards, hailstorms, and wildfires, so if you own a home in Colorado, you should make sure you have good home insurance coverage.
Your mortgage lender will require that you get at least some form of hazard insurance, but if you own a home in the Centennial State, you should make sure you have that extra amount of protection.
In dry, forested areas of the state, Colorado homes are often at risk of catastrophic loss — particularly to wildfires. In fact, the state ranks third in the country in percentage of homes at risk of wildfire loss (17% as of 2017, according to the Insurance Information Institute), ahead of California, and trailing only Montana and Idaho. If you live in a fire-prone area of Colorado, you should have comprehensive replacement cost coverage for your home and personal property.
If you live in a brushfire area of Colorado, or a region that was recently affected by a natural disaster, your insurer may drop or “non-renew” your policy. If that happens, be sure to contact your insurance agent to talk about next steps. If you feel that your policy was cancelled unfairly, you can file a complaint through the Colorado Division of Regulatory Agencies (DORA).
In this guide:
|Insurance company||Avg Policy Cost||A.M. Best Rating||Market Share|
Methodology: Policy cost data courtesy of the Colorado Division of Regulatory Agencies (DORA). Average policy cost for each insurer is based on a 10-year-old, frame-structured home in the Denver area. Market share numbers based on 2017 NAIC data.
Coverage and claims: USAA - Despite only servicing active and retired U.S. military members and their families, USAA still manages to insure the second most homes in Colorado, behind just State Farm. If you’re fortunate enough to get a USAA policy, you can expect top notch coverage, evidenced by their 5 out of 5 policy offerings rating with consumer insights leader J.D. Power. USAA also earned perfect marks from J.D. Power in their property claims satisfaction study, so you can rest assured that when it comes time to file a claim, you’ll get what you’re owed.
Low rates: Allstate - When it comes to rates, Allstate policies are among the cheapest in Colorado. Allstate also has a number of discount opportunities to keep your premiums even lower. For example, if you bundle your home and auto insurance, you can save up to 30% on your policies and up to 20% if you’ve never filed an insurance claim.
Digital tools: Travelers - If you plan on modernizing your home and you want discounts for doing so, Travelers is the insurer to go with. Apply for a policy with Travelers through Amazon and you get a free Amazon Echo Dot. And not only that, but you can take further advantage of their Amazon affiliation by purchasing certain smart-home devices at a discounted rate. These devices, which include everything from water leak sensors to security cameras, can also get you a loss-prevention discount of up to 20%.
Discounts: Farmers - Farmers offers a number of discounts to Colorado residents to keep rates down. Discounts include affinity discounts if you’re a member of certain business or professional groups, multi-line discounts if you have multiple policies with Farmers, and a number of home upkeep and home safety discounts.
New homebuyers: State Farm - If you’re a first-time homeowner who’s never dealt with an insurance company before, State Farm is one of the better options out there. With a helpful website complete with helpful educational tools, a seamless application process, and an excellent app where you can pay your bill and file claims, State Farm offers the easiest home insurance experience in the Colorado market.
As of 2016, homeowners in Colorado paid an average of $1,446 for homeowners insurance — making it the 10th most expensive state to insure your home in the U.S.
If you own a home in Colorado, the amount you pay for insurance will be impacted by the following:
Generally, your lender will require that you get a minimum amount of “hazard” insurance, which is another way of saying a homeowners insurance policy.
If you live in an area of Colorado that’s prone to flooding or in a FEMA-designated flood plain, your mortgage company may require you to get flood insurance as well. Flood insurance is typically available as both a standalone policy (through the National Flood Insurance Program) or as an endorsement to your homeowners insurance policy.
Looking to buy home or flood insurance or both? Well look no further than Policygenius. We understand how burdensome the insurance buying process can be, so we’re making it easier.
Your policy’s dwelling coverage is your home’s insured value — this is the part of your policy that reimburses you when your home is damaged by a covered peril.
Before you’re reimbursed for a dwelling coverage claim, you first need to pay your deductible. Since wind- and hail-related losses in the Centennial State happen so frequently, home insurance companies charge two types of deductibles: dollar-amount deductible for most perils, and a separate wind and hail deductible. Your wind and hail deductible will be anywhere from 1% to 5% of your dwelling coverage amount, not the loss amount, so make sure you set your deductible at an amount you can afford when you need to file a claim.
Your other structures coverage reimburses you for covered losses to structures not directly attached to your home. Fences, detached garages, sheds, and gazebos are all considered “other structures.”
A standard policy may only reimburse you for your other structures’ “actual cash value” (meaning you’re only receiving claim money for the structures’ depreciated value). Talk to your insurer and see if you can get replacement cost coverage for other structures. If a wildfire or tornado takes your home and your garage or gazebo, you’ll want to make sure all of your structures are covered by their replacement cost.
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Your personal property coverage is typically 50% of your home’s insured value and covers the contents of your home up to your personal property coverage limit.
This part of your policy is typically only covered by “named perils,” and you’re generally only reimbursed the actual cash value of an item’s worth under a standard policy. If that’s the case, ask your insurer about getting replacement cost coverage instead. Replacement cost is more expensive than actual cash value but provides much better payouts for losses.
Some types of personal property – like jewelry, vintage instruments, furs, or expensive keepsakes – have sublimits and are typically only covered up to $1,500 per damaged or stolen item. For increased sublimits, get a scheduled valuables endorsement or rider.
Be sure to take an inventory of all of your personal belongings inside the home, value it, and calculate what it would cost to repair or replace your stuff if it’s damaged, destroyed, or stolen by a covered loss.
Loss-of-use coverage, or your “additional living expenses,” pays for your living expenses if a covered peril displaces you from your home and makes it uninhabitable. In some cases, you’ll need to use your loss-of-use coverage for a year or longer, depending on if your home incurred a total loss or not.
Loss-of-use is typically 20% of your home’s dwelling coverage, but your insurer may let you increase your coverage limits.
Liability coverage protects your assets if someone is injured in your home and sues you. It also provides coverage for you if you accidentally cause damage to someone else’s personal property. Most liability limits are anywhere from $100,000 to $500,000.
Covers guests’ medical bills if they’re injured in your home. Medical payments coverage is generally anywhere from $1,000 to $5,000.
As we discussed earlier, Colorado residents usually have to pay a separate wind and hail deductible to be covered for windstorm, hail, or tornado damage, and is listed as a percentage of your home’s insured value. That means if your home is insured for $300,000, and your wind and hail deductible is 3%, you need to pay the first $9,000 for a wind or hail loss before your insurance company covers the remaining loss amount.
When setting your coverage limits and deductibles for your policy, be mindful of what you’ll be able to afford if a loss occurs. Setting your deductible at 5% may keep your insurance premiums down, but if a weather catastrophe wipes out your home, you don’t want to be stuck paying exorbitantly high out-of-pocket expenses before your insurance kicks in.
Colorado was outside of the top 10 in the U.S. in terms of the number of wildfires and the number of acres burned in 2018, according to the III. But as we went over earlier, Colorado has the third most households at high or extreme risk of wildfire losses, and was second among states for insured catastrophe losses in 2016 — most of that because of tornado and wildfire damage.
As wildfire frequency continues to be on the uptick in the Western U.S., it’s especially important for Colorado residents to take preventative measures to mitigate losses. If you live in a wildfire prone area, your insurance company may also require that you take the following mitigation efforts in order to be covered for wildfire losses:
Keep in mind that your insurance company can’t cancel your policy if it’s been in-force for more than 60 days, but they can choose to not renew your policy. If that’s the case and you can’t find adequate coverage through a standard insurer, you may need to find coverage through specialized surplus lines.
Homeowners insurance doesn’t cover flooding, so if you live in a flood zone established by FEMA and you receive FHA or VA loans, you’re required to get flood insurance.
Although Colorado might not be the first place you think of catastrophic floods happening, recent history suggests you’ll want flood insurance in certain areas. In fact, it was only five years ago that Colorado endured one of the worst flood events in the state’s history, engulfing 200 miles and affecting 17 counties.
Most insurance companies offer flood insurance through the National Flood Insurance Program (NFIP), but NFIP policies have coverage limitations. Government policies only insure your home up to $250,000, and your personal property is only covered up to $100,000. For more robust flood coverage, see if your insurance company offers a private flood policy or a flood endorsement to your home insurance policy. Certain surplus lines, a group of highly specialized insurance companies, may also offer flood protection.
Colorado residents should also be mindful that homeowners insurance doesn’t cover earthquake damage, so you’ll need a separate policy or endorsement if you want coverage for seismic events.
Your home insurance policy typically covers certain types of water damage, but only if the damage was sudden and unexpected. Water damage claim reimbursements are also usually limited to around $1,000 in a standard policy.
For more comprehensive coverage for water damage — such as coverage for frozen pipes or sewage overflow, along with higher coverage limits, you’ll need water backup coverage.
Considering Colorado’s propensity for frigid temperatures, water backup coverage should be a no-brainer.
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