How California wildfires could impact Colorado’s homeowners insurance rates
COLORADO SPRINGS, Colo. (KRDO) - Insurance experts in Colorado say the "ripple" effects of California's raging wildfires will be felt in the insurance market in the Centennial State.
"I've spent tons of time in Pacific Palisades, Malibu. You know, they all break your heart. I mean, it's the same heartbreak that we've seen over and over," Carole Walker with Rocky Mountain Insurance Association said.
It's the kind of heartbreak that's destroyed thousands of homes and caused over a billion dollars in damage.
"Any time you have a historic, tragic event like we're seeing with the California fires, it does have a ripple effect because not only is it due to their severe drought and escalating wildfire risk in California, they have an insurance crisis occurring in California, and that will then have a ripple effect as to what we see in states like Colorado," Walker said.
She explained that the historic wildfire impacts reinsurance rates. Insurance companies rely on bigger insurance companies in moments of catastrophic damage. When they make a claim, it will raise their insurance rates.
Walker says things could get worse if the Colorado legislature follows the same road map California's lawmakers did.
"So many of these public policy decisions as a whole forced insurance companies to say, 'I don't think we can handle the next big event,'" Walker said. "We couldn't pay our claims to our policyholders and then we couldn't insure all the other policyholders that are in high-risk wildfire areas."
Thankfully, some solutions are coming down the pipeline in the next few months for Colorado. The Colorado FAIR plan comes online in just a couple of months.
The plan is designed to only take on the highest-risk homeowners who can't be insured by other companies in an effort to take pressure off the insurance industry in Colorado.