Home Insurance in Colorado


UPDATED: NOV 2020 | 2 MIN READ

Home insurance is one of the most important purchases you can make to protect your home and its contents from natural disasters, weather events, and even other people. In Colorado, home insurance is costly, reflecting the high price of housing, as well as the higher rates of property crime and the growing risk of wildfires. To get the best home insurance possible, it is best to compare the policies offered by many different companies. But what policies are competitive? Knowing more about home insurance rates and trends in Colorado can help you during your search.

  • Fun fact:  Colorado’s Star Dune in the Great Sand Dunes National Monument is the tallest sand dune in North America – approximately 750 feet tall!

Average Rates in Colorado

Colorado is among the top ten most expensive states for home insurance, coming in at number 8 with $1,495 premiums, according to the Insurance Information Institute. This is a little less than $300 over the national average of $1,211. States with comparable prices to Colorado include Arkansas, with $1,373 premiums, and Massachusetts, with $1,488 premiums.

Renters’ insurance in Colorado tends to be more affordable, with middling premium prices of $159 that are cheaper than the national average of $180. It’s not the only state with this rate though – Delaware’s average rates for renters’ insurance also comes in at $159.

When buying home insurance, keep in mind that although average rates provide a general picture of what kind of pricing you can expect, premiums can vary significantly. Rating structures can take into account the age of a home, the presence of smoke detectors, the presence of deadbolts, the proximity to a fire station or fire hydrant, whether your home’s frame is made from wood or masonry, and more when determining pricing.

Colorado Legal Insurance Requirements

Home insurance is not required by Colorado’s state government, although your mortgage will likely require it. Below we explain the most common types of standard insurance policy types you will be offered in Colorado, as well as average coverage limits according to data from the Colorado Department of Regulatory Agencies. IT’s important to note that depending on the condition of your home, its location, and other factors, that the actual coverage limits of the policies available to you may look different:

HO-3 Form

This policy is for standard homes, and includes a dwelling replacement cost (average limit set at $200,000), and a contents replacement cost (average limit $160,000) that will protect personal possessions such as furniture, jewelry, and other valuables. This form usually protects you based on the actual cash value of your home – so it can be cheaper than other forms. The HO-3 also covers personal liability ($100,000 average) for when you are sued for damages to another person or another’s property due to negligence over your property, and medical expenses ($1,000 average) for when a guest is injured on your property.

HO-4 Form

This form is for renters’ insurance – while it covers your personal property it does not insure for the property’s structure. The house or apartment itself is insured by the landlord of the rental unit. In Colorado, the average contents replacement cost limit is set at $40,000. Renter’s insurance, like homeowner’s insurance, offers average personal liability coverage of $100,000 and medical expense coverage of $1,000

HO-6 Form

This insurance is offered to owners of condominiums. Similarly to homeowner’s insurance, it will offer dwelling coverage for the portion of the building that is owned by the insured, rather than charging based on the value of the entire condominium complex. It provides a coverage limit of $80,000 for replacing personal items, double the coverage offered by renter’s insurance. As with the HO-3 and HO-4 forms, in Colorado personal liability and medical expense coverage limits average around $100,000 and $1,000 respectively.

Common Risk Factors in Colorado

According to the Colorado Department of Regulatory Agencies, wildfire is a growing threat in Colorado, particularly in the Rocky Mountain region’s “Red Zone.” In this region, population is booming while mountain forests are becoming overgrown and prone to conflagration, which is made worse as climate change has extended the length of Colorado’s fire season. According to the Fund for Investigative Journalism, 1 in 4 Colorado homes are located in a fire zone. And Colorado fires can be devastating – the 2002 Hayman fire destroyed 133 homes and 600 other building structures as it razed the largest area of land in Colorado history. Fire is a peril usually covered by home insurance, and it’s important to consider how much protection is needed for your home depending on its location.

But wildfires aren’t the only risk to Colorado homes: eastern Colorado is also prone to tornadoes in May through September, located as it is on the edges of Tornado Alley. Damage from wind and falling structures (including winter avalanches) is also covered by most standard home insurance. What many Colorado residents underestimate is the risk of their homes becoming damaged due to flooding. Colorado is known for its severe storms, and as it turns out 1 in 3 insurance claims paid for flood damages in Colorado are for homes not located within a flood plain. Standard homeowner’s insurance does NOT cover flood damages. You must purchase flood insurance separately. For participating communities, the biggest source of flood insurance is through the National Flood Insurance Program backed by the federal government.

Insurance Demographics/Statistics in Colorado

Your insurance premiums aren’t based purely on the value of your home and personal possessions. Providers also consider certain demographic information to offset losses from “high risk” insured areas. When buying home insurance, it’s helpful to consider the following information:

Your Home’s Value

Most of your home insurance premiums are based off a percentage of the assessed value of your home. Insurance companies take into account the value of your home in terms of replacement cost and actual cash value. Replacement cost is how much it would take to rebuild your home using similar materials. Most insurers require insuring for at least 80% of your home’s replacement cost, though they can insure up to 100%. Insuring for actual cash value means you’re insuring for the actual market value of your home, which means that wear and tear can decrease the value.

Colorado housing is pricey, with an average market value of $408,794 that vastly overshoots the national average of $248,857. The higher value of homes alone can drive up the price of home insurance premiums. This is reflected in the average coverage limit for dwelling replacement costs: $200,000 according to the Colorado Department of Reporting Agencies.

Local Crime Rates

Just like having deadbolts and alarm systems in your home will often earn you discounts in home insurance, living in an area with high property crime rates like theft and vandalism will likely increase the price of your policy. In 2018, the FBI Uniform Crime Reporting Program provided information on property crime rates in Colorado. If you subtract auto theft from overall rates of property crime, the average rate in Colorado is 2,291.1 property crimes per 100,000 people, or 2.29%. This exceeds the 1.97% national property crime rate, and may make your home insurance more expensive depending on your location in the state.

Your Income and Education

If you have a high level of education, a good credit score, a higher income, living in a lower crime neighborhood, insurance companies may consider you at low risk of making a claim. This means you could receive home insurance at a bargain! In Colorado, the median income is reported at $71,953, and 40.1% of people over 25 have a bachelor’s degree or higher, according to the Census Bureau. That makes Colorado on average both wealthier and far more educated than the national average, with an average income of $63,179 and with 32.06% adults over 25 having a bachelor’s degree or higher.

Where To Purchase Home Insurance in Colorado

Only you can decide what the perfect home insurance policy for you looks like. Agilerates.com can offer you the chance to compare a comprehensive variety of options, giving you accurate quotes by quality insurers. This doesn’t just apply to new homeowners, either! Every year when your homeowner’s insurance policy renews, you have the opportunity to change insurers or make adjustments based on your current needs. According to the Pulse Whitepaper from iii.org, only 44% of homeowners compare prices of different insurers at renewal time, and only 17% do so online. That means more than half of all homeowners are leaving money on the table at renewal time. Use agilerates.com online form to get matched with a local agent, get free quotes, and shop around!

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