As wildfires and hail damage continue to increase home insurance rates in Colorado. Approximately 90% of potential home buyers in the West Consider at least one climate risk factor when buying a home.

In late September, Zillow consolidates climate risk data From First Street Foundation, a nonprofit that assesses climate risk, to property listings for sale across the US

This new feature gives home shoppers insight into five key risks: flood, bushfire, wind, heat and air quality. Listings now include risk scores, interactive maps, and information on insurance requirements.

“Climate risks are now a critical factor in home buying decisions,” said Skylar Olsen, chief economist at Zillow. “Healthy markets are markets where buyers and sellers have access to all the data relevant to their decisions. “As concerns grow about flooding, extreme temperatures and wildfires and what this could mean for future insurance costs, this tool also helps agencies keep their clients informed about climate risk, insurance and long-term affordability.”

increased risk

A Zillow analysis in August found that more new home listings nationally showed significant climate risk than those listed five years ago. This trend holds for all five climate risk categories.

For example, approximately 17% of new listings in August showed significant wildfire risk.

increased premiums

Climate-related weather damage increases insurance rates across the US According to analysis by digital insurance agency Insurify, which provides real-time quotes from more than 100 insurance companies, Homeowners in 15 statesThey can expect continued weather-related rate hikes and reduced competition from insurers, including in Colorado.

According to Insurify’s research, Colorado has the second highest property damage after hailstorms$151 million annually. The state also has more than 321,000 homes at risk of wildfire, and the cost of rebuilding is estimated at $141 billion.

Frequent and severe hailstorms and increased wildfire risks increase home insurance premiums in Colorado. The state’s average premium is $4,186, among the highest in the nation.

In 2022, 76% of insurers scaled back in high-risk areas, leading to higher premiums and fewer options.

Chase Gardner, director of data insights at Insurify, said insurance companies are struggling as natural disaster claims exceed premium increases. This has led some states, such as Florida, to create state-run insurance programs for high-risk homeowners.

State lawmakers passed the Colorado Fair Access to Insurance Requirements (FAIR) Plan in 2023. This property insurance program is expected to begin in 2025 and will cover individuals and businesses in areas prone to natural disasters or other risks that may not be able to obtain traditional insurance.

To qualify for the FAIR Plan, homeowners must receive multiple denial letters from insurance companies and take steps to reduce wildfire risk. FAIR Plan policies generally offer less coverage at a higher cost and are designed as a last resort until people can find alternative coverage.

Getting the best deal

Gardner said homeowners can take steps to lower their insurance costs. He recommends shopping around and comparing policies to get the best rate.

“Different companies calculate risk differently, so you may find one that will give you a lower rate,” Gardner said. “It’s always good to check around.”