The Impact of Colorado’s Weather on Home Insurance Rates

Analyzing how local climate affects insurance premiums.

Homeowners face significant impacts to their property from escalating
extreme weather amplified by potential climate impacts. As roughly 85%
of homeowners have homeowners insurance, the rising likelihood of
extreme and catastrophic weather events makes monitoring the frequency
and impact of natural disasters a critical insurance regulatory function. This
makes climate change/natural catastrophe risk and resiliency a key strategic
priority of the National Association of Insurance Commissioners (NAIC).

To help guide NAIC efforts in this domain (e.g., consumer outreach), this
study sought to better understand how homeowners are making the
connection between extreme weather events and their insurance coverage.
Specifically, we looked at three main questions:

1) To what extent do respondents see a connection between extreme
weather events and their broader insurance coverage?

2) What is the relationship between what respondents believe about
extreme weather and what actions they have taken related to their
homeowners insurance?

3) How are homeowners segmented by their climate risk perceptions,
which further depend on loss experience and insurance coverage?
We surveyed 2,496 U.S. homeowners from age 18 to over 60 in every
U.S. state and Washington, DC. Respondents were recruited through
SurveyMonkey’s Audience panel. The survey was conducted March 9–16,
2021.

Overall, we find that:

· Most homeowners in our survey do, in fact, have homeowners
insurance, though respondents making less than $25,000 a year
were 13% less likely to have a policy than others with higher incomes.
Affordability issues were the most prevalent factor indicated for not
having coverage.

· A majority (56%) believe their homeowners policy covers flood, even
though flood is not covered under standard policies and only about
4% of homeowners actually have flood insurance.

· Two-thirds of respondents said their homeowners insurance costs
have gone up over the past three years, with “increase in natural
disasters such as hurricanes and wildfires” indicated as a key reason
believed to be driving the increase.

· People living in Pacific, West South Central and Middle Atlantic2 states
are most likely to report trouble getting or renewing homeowners
insurance due to an increase in natural disasters. Across all premium
levels, homeowners paying more for their insurance report
increasingly higher levels of trouble renewing insurance because of
wildfires or hurricanes.

· More than two-thirds of respondents said they were aware of things
they could do to protect their property from extreme weather events to
reduce their risk, but this awareness does not necessarily translate into
action. Only half had actually made changes, though more than threequarters said they would spend their own money to fortify their home in
exchange for a reduction in their homeowners insurance premium.

· Four out of five homeowners expressed interest in knowing what
insurance companies are doing to address changing weather patterns
and other climate-related risks.

· Homeowners revealed conflicting attitudes about climate-related
hazard risk. While many respondents indicated reluctance to move
to areas with flooding, hurricanes or wildfires and 75% think extreme
weather events are happening more frequently overall because of
climate change, on average they believe the area where they live
is slightly less vulnerable to extreme weather events than the U.S.
average.

· Survey respondents demonstrated a high level of worry related to
climate change, with 44% of respondents classified as “alarmed,” more
than double the national average.

· Those having trouble obtaining homeowners insurance consistently
indicate being alarmed about climate change.

 

What is the relationship between what consumers believe
about extreme weather and what actions they have taken
related to their homeowners insurance?

To explore this question, we looked at whether homeowners report being
aware of ways to protect their property and asked if they had taken steps to
do so. We also asked about their experience with threats to their property
and whether they would move somewhere that faced certain types of risks.
Respondents were asked to rate the vulnerability of their location and
consider whether extreme events are becoming more frequent. Finally, we
asked whether they would visit a website where they could learn about how
their insurance company is assessing and managing climate-related risks.
Actions to Protect Property

Most respondents overall (68%) said they were aware of things they could do
to protect their property from extreme weather events to reduce their risk;
this represents 73% of men and 63% of women. However, this awareness
does not necessarily translate into action. Only half (50%) of respondents
had actually made changes to their homes, though more than three-quarters
(77%) said they would be willing to spend their own money to fortify their
home in exchange for a reduction in their homeowners insurance premium.
Many respondents (42%) indicated they would be willing to spend between
$501 and $2,500 for a 1% to 10% premium reduction, suggesting that
homeowner willingness to invest in protective hom

 

Agate Insurance – A Fort Collins Insurance Company

We are happy to help you look over your policies and help you find the right coverage

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