Colorado lawmakers propose bill to curb underinsurance
State legislators say property insurance fell short for most Marshall Fire victims by about $164,000.
Two Colorado state representatives have proposed a bill aimed at curbing underinsurance in response to widespread problems Marshall Fire victims experienced covering the cost of rebuilding their homes.
The December 2021 Marshall Fire near Boulder become the most destructive in the state’s history. Two lives and nearly 1,100 structures were lost as a result of the event. More than 1,000 pet also perished in the blaze, which is suspected to have had two ignition points; one in a private shed and another inside an abandoned underground coal mine. The fire burned more than 6,000 acres, according to news reports, and caused more than $500 million worth of damage.
In the time since the event, several homeowners found that their property insurance was insufficient to rebuild their homes or businesses. Now that more than a year has passed, homeowners also have exceeded their additional living expenses coverage, spurring state leaders to respond.
Part of that response includes a proposed law that state leaders say is aimed at providing more property-insurance transparency and coverage for policyholders. “We have had a pervasive underinsurance problem, both in this state and throughout the country,” Colorado Insurance Commissioner Mike Conway told CBS News Colorado.
The legislation proposed by state representatives Judy Amabile and Kyle Brown would:
- Require extended property replacement coverage;
- Create an inflation guard so that coverage would adjust with economic conditions;
- Expand building code coverage; and
- Require the state Division of Insurance to release an annual report highlighting the cost of rebuilding a home based on where it’s located.
Colorado State Representative Kyle Brown says the law, if passed, would provide more peace of mind for homeowners. “They can feel confident that what they’re being told by the insurance company is something that should allow them to rebuild if the worst happens,” he told CBS News Colorado.
In late 2022, the Colorado Division of Insurance issued an open letter to insurers working with Marshall Fire victims requesting the carriers to extend ALE coverage beyond 12 months in applicable claims.
“Earlier this year, we asked the companies to do more, to step up and make things easier for the Marshall Fire survivors. And to their credit, most companies met our asks,” Commissioner Conway said in a statement. “As the rebuilding process has just started for so many, extending ALE coverage is critical in letting people know they can continue to have a roof over their heads.”
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