According to a recent report by Insurify, Colorado has more than 300,000 properties at risk of wildfire, with nearly $200 billion in exposed assets.[1] In addition, severe weather (particularly hailstorms) has driven the average cost to insure a home in Colorado up to $6,630 a year in 2025, which is an 11% increase from last year.[2] As the number and severity of wildfires, hurricanes, floods, tornadoes, and other natural disasters increase as a result of climate change, home insurance rates are skyrocketing, particularly in high-risk areas. This article discusses insurance market changes because of the increasing number and severity of natural disasters, a new Colorado law aimed at addressing the increasing cost of homeowners’ insurance, and what steps homeowners can take to mitigate their risks and protect their property.
Climate Change and Insurance Market Changes
It has been widely reported that due to climate change, natural disasters are becoming more frequent and more intense. According to the National Centers for Environmental Information, “[i]n 2024, there were 27 confirmed weather/climate disaster events with losses exceeding $1 billion each” in the United States. [3] There was an annual average of nine such events between 1980 and 2004. [4] Between 2020 and 2024, there was an annual average of 23 events. [5]
In January of 2025, the U.S. Department of the Treasury’s Federal Insurance Office (FIO) released the most comprehensive data on homeowners’ insurance in history, along with a report “showing that homeowners insurance is becoming more costly and harder to procure for millions of Americans as the costs of climate-related events pose growing challenges to insurers and their customers alike.” [6]
Insurance companies are facing unprecedented challenges given the increasing frequency and severity of natural disasters, such as: (1) making significantly increased numbers of payouts on simultaneous claims; (2) needing to increase their capital reserves and/or purchase more reinsurance to safeguard their solvency;7 and (3) needing to improve their risk and catastrophe modeling. [8] These challenges have caused insurance companies to raise premiums and, in some instances, leave high-risk markets entirely.
Homeowners insurance is required, however, under most mortgage agreements, and it is an essential part of home ownership. With dramatically increasing costs and insurance companies refusing to insure homes in certain areas, states are looking for solutions.
As discussed below, the Colorado Legislature has recently passed legislation to try and address some of these problems.
Insurance Risk Model Legislation
In 2025, the Colorado Legislature passed HB25-1182 which addresses rising homeowner property insurance premiums associated with the risk of wildfires in Colorado. The new law requires property insurers that use wildlife risk models, catastrophe models, and scoring methods as part of the underwriting process to provide the state with information and data about those models and scoring methods as part of the insurer’s rate filings. HB25-1182 also requires insurers to incorporate property-specific and community-level mitigation into their models. In addition, insurers must offer lower premiums to policyholders who undertake property-specific mitigation actions or who provide evidence of community-level mitigation actions. Insurers must also notify policyholders annually regarding price increases associated with wildfire risk, wildfire risk scores, and opportunities for policyholders to obtain mitigation discounts. HB25-1182 took effect on July 1, 2025 and is codified at Colo. Rev. Stat. § 10-4-124.
FAIR Plan Legislation
In 2023, the Colorado Legislature passed HB23-1288, establishing the Fair Access to Insurance Requirements (FAIR) Plan, which is a program designed to provide property insurance coverage for homeowners and businesses when coverage is unavailable through traditional means.9 The Fair Plan is intended to “address situations where insurance companies may refuse coverage due to high-risk factors, such as the property’s location or vulnerability to certain perils such as wildfires. It ensures homeowners and businesses in Colorado have access to insurance even in areas prone to natural disasters or other risks.” [10] To oversee the program, the General Assembly also created the Fair Access to Insurance Requirements Plan Association, or “FAIR Plan Association,” which is a nonprofit, unincorporated entity. HB23-1288 took effect in 2023 and is codified at Colo. Rev. Stat. §§ 10-4-1801 to -1812.
In 2025, the General Assembly passed HB25-1205, which amends the laws applicable to the FAIR Plan Association. The new law clarifies that the FAIR Plan Association is not: (1) a department, unit, agency, political subdivision, or instrumentality of the state; or (2) an insurance company or a person engaged in the business of insurance. HB25-1205 also grants a member insurer, the association and its agents or employees, the board of directors of the association, and the commissioner of insurance or the commissioner’s representatives, immunity for any action taken by them in the performance of their powers and duties for the association. In addition, the new law specifies that the only causes of action and remedies available to a policyholder of a FAIR Plan policy against the association are breach of contract and breach of the implied covenant of good faith and fair dealing. Further, if a court finds that a claim brought against a FAIR Plan Association is frivolous, it must award costs and attorney fees to the association. HB25-1205 takes effect immediately and is codified at Colo. Rev. Stat. §§ 10-4-1804 and 10-4-1810.5.
Steps Homeowners Can Take
Homeowners should consider taking steps to protect themselves and their property, such as: (1) obtain a copy of your current homeowners insurance policy and review it; (2) work with an insurance agent and a lawyer to determine if existing coverage is adequate given the value of the home and potential natural disaster risk; (3) update the policy in anticipation of natural disasters which may affect your geographic area; (4) contact your insurance company to determine what wildfire or other mitigation efforts may be taken to reduce insurance premium costs; (5) take immediate action to mitigate wildfire risks around the home; (6) find out what your community is doing to reduce the risk of fire and advocate for community mitigation if none exists; (7) let your insurance company know what mitigation efforts you have taken and what efforts are being taken by your community; (8) develop a personal natural disaster emergency plan; and (9) keep important documents and valuables in a fireproof location.
For helpful resources and information from the Colorado Division of Insurance on how to prepare for a natural disaster and what to do in the event of an evacuation alert or order, visit: https://doi.colorado.gove/insurance-products/homeowners/renters-insurance/being-prepared/are-you-disaster-ready
Our Team
BHGR’s Insurance Group provides coverage analysis to its clients. Our attorneys also represent clients in state and federal courts seeking to enforce insurance coverage or recover policy proceeds and represented multiple clients impacted by historic Colorado flooding in 2013 and the Marshall Fire in 2021.
This article is informational only. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. Readers of this website should contact their attorneys to obtain advice with respect to any particular legal matter. No reader, user, or browser of this site should act or refrain from acting based on information on this site without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein—and your interpretation of it—is applicable or appropriate to your particular situation. All liability with respect to actions taken or not taken based on the contents of this site is hereby expressly disclaimed. The content on this posting is provided “as is;” no representations are made that the content is error-free
[1] https://insurify.com/homeowners-insurance/report/home-insurance-price-projections/, citing https://www.insurancejournal.com/news/national/2025/02/28/813736.htm
[2] See id.
[3] https://www.ncei.noaa.gov/access/billions, DOI: https://www.doi.org/10.25921/stkw-7w73
[4] See id.
[5] See id.
[8] See id.
[10] Id.