If you own a home in Southwest Colorado, take an extra look at your next homeowners insurance renewal.
Starting this month, Colorado homeowners have new rights when an insurance company uses wildfire risk scores to help decide how a property is insured or priced.
The change comes from HB25-1182, a Colorado law aimed at giving homeowners more information about how insurers evaluate wildfire risk and whether mitigation work around a home can make a difference. The new requirements also apply when someone is applying for a new policy.
Here’s what I think homeowners should know.
You Can Now See Your Wildfire Risk Score
If your insurer uses a wildfire risk score or classification for your property, they now have to tell you what it is.
The notice should explain:
Your property’s wildfire risk score or classification
Where that score falls within the insurer’s overall range
What features of the property or surrounding area influenced it
How qualifying wildfire mitigation could affect the score
Your right to appeal the score or a mitigation discount
For current homeowners, this information should come with your renewal offer. If your insurer decides not to renew your policy, it should come with the nonrenewal notice.
That gives homeowners a lot more visibility into something that could have a real impact on the cost or availability of insurance.
If You’ve Done Wildfire Mitigation, Keep the Documentation
This is one of the parts I’d pay the most attention to.
If you’ve created defensible space, completed home-hardening work, or participated in other qualifying wildfire mitigation programs, your insurance company may need to take that work into account.
Colorado now requires insurers using wildfire models to include qualifying property-level and community-level mitigation in their models. If their model does not account for those improvements, the insurer must offer discounts to policyholders who can show that qualifying mitigation has been completed.
Not every project automatically qualifies, so I’d keep receipts, certifications, reports, photos, or other records and ask your insurer which mitigation standards they recognize.
Insurers are also required to publish information about available wildfire-mitigation discounts on their websites.
Think the Score Is Wrong? You Can Appeal It
Homeowners can now appeal a wildfire risk score or classification directly with the insurance company.
If you submit an appeal with evidence of qualifying mitigation, the insurer has to acknowledge it within 10 calendar days and generally provide a written decision within 30 calendar days. You can also request an updated score after completing new mitigation work.
That could be especially useful if you’ve made improvements around the property that aren’t reflected in the insurer’s current information.
This Matters When You’re Buying a Home Too
These protections aren’t just for people who already own their homes.
Someone applying for a new policy should receive the wildfire risk score and explanation within 15 days after the insurer receives a completed application.
So if you’re buying a home in an area where wildfire risk could be a concern, I’d start shopping for insurance early in the transaction.
Find out whether the property can be insured, what wildfire risk the insurer sees, and whether any mitigation already completed at the property is being recognized.
I also wouldn’t rely on just one insurance quote. Different insurers can use different models and underwriting standards, so it’s worth comparing your options. The Colorado Division of Insurance is encouraging homeowners to shop around as these new rules take effect.
One Important Limitation
These new requirements apply to admitted insurance companies and the Colorado FAIR Plan.
They do not apply to non-admitted or surplus-lines insurers.
If you’re not sure what type of insurer you have, ask your insurance agent.
What I’d Do as a Homeowner
When your next renewal arrives, don’t just look at the new premium.
Check whether there’s a wildfire risk notice included. Look at the score, see what factors are affecting your property, and find out whether any work you’ve already done could qualify for a discount or an updated risk assessment.
For those of us living in Southwest Colorado, wildfire is part of the reality of owning property here. Having more information about how an insurance company is looking at your home gives you a better chance to ask the right questions before there’s a problem.
Sources: Colorado Division of Insurance and Colorado General Assembly, HB25-1182 — Risk Model Use in Property Insurance Policies.
