Colorado Homeowners Face Widespread Underinsurance in Disaster Recovery

An analysis by the Colorado Division of Insurance revealed that only 8% of homeowner’s insurance policies in Colorado provide guaranteed replacement coverage, which fully covers rebuilding costs after a disaster. This finding follows the 2021 Marshall fire, which caused over $2 billion in damages and highlighted widespread underinsurance in the region. A University of Colorado study indicated 74% of affected policyholders were underinsured, with 36% severely underinsured, having coverage for less than 75% of rebuilding expenses. Despite the prevalence of underinsurance, 74% of Americans believe their homeowner’s insurance would completely cover home replacement in a disaster. This discrepancy underscores a significant coverage gap and potential risk exposure for homeowners. The Colorado Sun and Gigafact collaborated to produce fact briefs that clarify common misconceptions around insurance coverage based on data from the Colorado Division of Insurance and other studies.