‘The ability to afford where we live is decreasing rapidly’

Data from the National Interagency Fire Center shows that the extent of area burned by wildfires in the U.S. appears to have increased since the 1980s, per the U.S. Environmental Protection Agency.

As wildfire damage becomes more rampant in the wake of human-induced extreme weather events, insurance companies are losing massive amounts of money to frequent payouts, forcing them to drop coverage, as we see happening to Boulder residents.

What’s happening?

Insurance companies are pulling the rug from under Boulder residents for several reasons.

Some residents’ coverage was dropped due to living in a high-wildfire-risk zone. Other Boulder residents saw their premiums double, forcing them to reconsider whether staying in the area was feasible. Still, other residents lost coverage due to owning high-value properties (over $1 million in value), which fell outside the purview of insurance company policies. 

Boulder resident Kristina Miller Olsen falls in this last category of homeowners, with a property valued at $3.5 million, according to Zillow. 

Olsen said the thought of losing her house to a wildfire without full insurance coverage worries her “because we have a fair amount of retirement savings in our property valuation,” per Boulder Reporting Lab. 

After being dropped by Nationwide due to having a high-value property, Olsen found new coverage with State Farm. However, her premium jumped from $4,510 to $11,947. 

Rising home insurance costs are affecting homeowners across the country, including in North Carolina, California, Florida, and Louisiana.  

Why are rising home insurance costs concerning?

If climate data is any indication of what’s to come, rising global temperatures, caused by human activity — including burning dirty fossil fuels for energy — will only bring about more wildfires and other extreme weather events. 

The increased wildfire risk not only puts communities at risk, but it also gives insurance companies a reason to pull their coverage from high-risk areas, whether or not that is ethical. 

Homeowners who lose coverage or those who can’t afford to pay the inflated premiums risk losing their homes to fire or losing their homes to displacement. 

“The ability to afford where we live is decreasing rapidly,” Olsen said, per Boulder Reporting Lab.

What’s being done about rising home insurance costs?

Colorado policymakers are scrambling to keep homeowners and their homes safe amid disappointing insurance company decisions. 

To lower wildfire risk in communities and to appeal to insurance companies, the HB 1182 proposed bill will require insurers to consider wildfire mitigation efforts that homeowners take, to lower premiums. 

The state is also creating the Fair Access to Insurance Requirements (FAIR) Plan to provide last-resort coverage (up to $750,000) for high-risk property homeowners. The cost for coverage will be shared among major insurers to cover Colorado homeowners while recognizing the burden that insurers will bear.

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