Increasing Cost for Property Insurance in 2025?
In 2024, Colorado remains among the top 10 states with the highest insurance premiums. Property owners have faced further increases in their policies due to the rising frequency and intensity of natural disasters, including the devastating impact of wildfires and escalating construction material costs. Wildfire risk is particularly significant in Colorado, with many residents living in or near high-risk areas. Recent fires, such as the Alexander Fire, have further underscored the vulnerability of our state to destructive wildfires, contributing to higher insurance costs.
The Alexander Fire, which burned over 3,000 acres in Colorado, highlighted the ongoing threat that wildfires pose to communities. With extended drought conditions and warmer temperatures, Colorado’s wildfire season has become longer and more severe, putting properties at greater risk of damage. Insurers have responded by raising premiums to account for the higher probability of wildfire losses. In addition to wildfires, Colorado continues to experience frequent severe hailstorms, exacerbating the strain on the insurance market.
The recent hurricanes, including Helena and Milton, have further amplified the pressure on national insurance markets. These storms, along with the rising number of significant natural disasters, have contributed to over 185 reports of hailstorms measuring 2 inches or larger in 2024 alone, a notable increase from the 91 hailstorms recorded in 2018.
From 2020 to 2024, replacement costs have risen by over 50 percent due to inflation, labor shortages, and material costs. Since property insurance is tied to the cost of rebuilding, insurers have had to adjust premiums to offset the rising expenses and higher loss ratios. While there is hope that inflation will stabilize in the coming years, the combination of wildfire risks, hurricanes, and other natural disasters leaves the future uncertain.
Despite rising premiums, insurance companies are not seeing large profits, particularly in states like Colorado, where profit margins are among the lowest in the country. The high exposure to natural disasters and inflationary pressures means that insurers are facing increased costs and losses.
To help property owners navigate these rising costs, two key solutions have been implemented. First, the Fair Access to Insurance Requirements (FAIR) plan, signed into law in May 2023, provides coverage for policyholders who cannot secure insurance in the standard market. Second, property owners are being encouraged to mitigate risk by improving property maintenance and safety. Insurers are conducting more inspections and may require upgrades if a property no longer meets their guidelines.
Given these ongoing challenges, it is critical for property owners to stay informed and assess their coverage needs. If you would like a reconstruction cost analysis or to compare your premiums with other carriers, feel free to reach out. I am available to help with an updated insurance review for your investment properties and buildings.
As an experienced insurance professional, my goal is to ensure that you are fully protected, even in these challenging times. I offer personalized insurance solutions tailored to your specific needs, whether you are protecting your home, rental properties, or business investments. By working with me, you’ll receive expert guidance on the latest market trends, risk assessments, and ways to keep your premiums manageable. Let’s work together to safeguard your investments and provide peace of mind for the future. Contact me today for a consultation and let’s find the right coverage for you!
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