Despite the severity of the Colorado wildfires that have blazed through the state in recent weeks, the good news is that insurance companies insist homeowners rates won’t rise due to the immense amount of claims resulting from the fires, according to the Rocky Mountain News.
Carole Walker, the executive director for the Rocky Mountain Insurance Information Association stated that the fires would not have an immediate impact on insurance premiums. Insurance companies echoed her sentiment.
A spokesperson from State Farm Insurance agreed, commenting that rates are figured over a period of time, and dispersed over a large area. So far, State Farm has seen a total of 81 claims from three fires that engulfed Colorado over the last months.
While the number of claims is still expected to rise, the total damage is unlikely to exceed that of the 1990 Front Range hailstorm, which created $625 million in losses.
The spokesperson also noted that hail is a driving force in rate increases, with a moderate storm creating 2,000 to 5,000 claims.
Wind and hail make up a third to half of a Colorado homeowners’ insurance premium, Walker said.
A Farmers Insurance spokesperson noted that most companies are prepared to handle catastrophic losses without raising rates.
Walker cautioned, however, that a continuing tend in wildfires could see homeowners rates increase over time, as they are now with rebuilding costs, which have increased 16 percent this year.
Topics Trends Catastrophe Natural Disasters Wildfire Pricing Trends Homeowners
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