Your Questions Answered: How wildfires affect insurance rates
DENVER — With wildfires destroying more than 600 homes across Colorado, many people are expecting their homeowners insurance cost to skyrocket.
Insurance experts say you will pay more for premiums, the fires aren’t to blame.
The way it works is simple.
The more insurance companies pay out for damages in one area, the more everyone who lives in that area end up paying for insurance.
Colorado has had several record-breaking years for insured losses and this season’s fires are just the tip of the iceberg.
The Waldo Canyon firestorm wiped out 350 homes in just one evening. The losses add up for anyone who pays for homeowners insurance.
“Fire officials and the insurance industry really have been saying it’s not a matter of if but when we’re going to have a wildfire season like this one,” says insurance industry spokeswoman Carole Walker.
Colorado has hundreds of millions in damages from fires this season.
Since 2009, with a record $1 billion hail season, the state has been in a cycle of catastrophe.
“Year after year we’ve seen tornado losses that are historic, hail losses that are historic, now wildfire losses that are historic,” Walker says.
Insurance rates are based on past disasters and how much companies expect to pay out.
“We get more damaging hail here to cars to roofs than almost anywhere else in the country,” Walker says.
Two huge hail storms in early June alone caused more than $320 million in damage.
“And that likely will have more affect along the Front Range or if you live right in Denver on what you’re paying for homeowners insurance,” she says.
The good news is that Colorado still has some of the most affordable homeowner insurance premiums in the country.
Everyone, including people living in high fire risk areas can still get insurance.
That’s becoming impossible in some parts of the U.S. such as those that get ravaged by hurricanes.