The Marshall Fire: What Happened?
When the Marshall Fire swept through 6,200 acres of Superior, Louisville, and Boulder County in late December 2021, over 1,000 Colorado homeowners tragically lost their homes. After filing insurance claims, roughly two-thirds of these homeowners were shocked to discover their homes are underinsured. According to the state’s analysis, the average shortfall per home after the fire ranged from around $99,000 to $240,000. In total, less than 10% of the homes lost in the Marshall Fire held insurance coverage that would cover the entire cost to rebuild. With over 54 formal complaints filed against insurance companies, the Colorado Division of Insurance and homeowners alike are left wondering what went wrong.
Within their analysis, the Colorado Division of Insurance collected data from 61 insurance companies covering 951 of the 1,084 homes damaged or destroyed in the fire. To estimate the total cost to rebuild, the state employed three different calculations: At a cost of $250 per square foot, the estimated total amount of underinsurance is $39 million. For $300 per square foot, the total underinsurance is roughly $100 million. At $350 per square foot, underinsurance estimates reach as high as $179 million. In total, over $1 billion in insurance claims have been filed.
According to Colorado Insurance Commissioner Michael Conway, underinsurance issues are one of the biggest challenges that the State faces after a wildfire. While most affected homeowners carried the standard insurance policies required by mortgage companies, the payouts from many of these policies do not cover the entire cost to repair and rebuild. This is because insurance benefits vary, with different policies having different levels of payout. With 67% of homeowners affected by the wildfire now facing underinsurance, finding the right policy for you and your family is more important than ever.
What Leads to Underinsurance?
Underinsurance can emerge from a variety of external factors, such as local escalations in building and material costs, increased state and local requirements, and the increasing prevalence of natural disasters over geographic areas. Colorado residents in particular face these complications as the state of Colorado has the third highest risk of wildfire and the second most hail claims in the country. As a result, some Colorado homeowners and business owners struggle to find insurance plans that provide coverage in their neighborhoods. For those who have retained coverage, policyholders still face adjuster-handling issues, claim delays, and unsatisfactory settlement offers. According to one family affected by the Marshall Fire, their Dwelling Coverage A covers roughly $860,000, yet the adjuster estimate places the rebuilding costs closer to $1.3 million. Some insurance companies claim that it is the homeowner’s responsibility to understand what is insured and what is uninsured. With such a vast discrepancy between insurance estimates and adjuster estimates, many homeowners without guaranteed replacement coverage are struggling to rebuild.
Assessing Your Home’s Risk For Wildfire Damage
As the survivors of the Marshall Fire know, it’s imperative to understand your home’s risk for wildfire damage. Several factors can contribute to a home’s wildfire risk, including the materials used in the construction of the property, the property’s distance from a fire hydrant or fire station, the elevation of the property, the ease of access to and from the property for emergency vehicles, and the nearby vegetation or weather patterns. Brokers and agents use scoring tools to tally up these factors and determine the potential damage a fire might cause. However, while agents use this risk score to match you with a policy within their individual company, our brokers at Hamilton Insurance Partners work with nearly 30 different insurance companies to match you with the best wilfire coverage at the most affordable price.
What Can You Do To Ensure You’re Not Underinsured?
Whether you are buying a new home or commercial property or simply reviewing your existing policy, there are steps you can take to ensure your insurance policy will cover the cost of repairs or replacement in the case of an accident or natural disaster. It can be a challenge to navigate the wide array of available policies out there. Working with an insurance broker can help to take the guesswork out of finding affordable, full coverage for your home or business. At Hamilton Insurance Partners, we hope to simplify the process of finding the right insurance policy for you. As an independent, family-owned insurance agency, we know how important it is to protect your home. Don’t wait until it’s too late: request a quote today or send us a message to speak with a qualified broker.