Florida and Colorado Home Insurance Rates Are Soaring: Are You At Risk?

Homeowners insurance prices have become significantly higher in states like Florida and Colorado in recent years as factors like increasingly destructive natural disasters and inflation have put a strain on insurance companies and limited their ability to cover risky properties while still turning a profit.

Continue reading to learn more about home insurance rate increases in Colorado and Florida along with how you can combat rising prices and what your options are if you’re struggling to find coverage.

On This Page

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  What’s Driving the Increase in Costs for Insurance in Colorado and Florida?

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  Why Are Insurance Companies Considering Leaving High-Risk States?

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  Is My Home At Risk for an Insurance Rate Increase?

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  What Options Do I Have if My Rates Increase?

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  FAQs

What’s Driving the Increase in Costs for Insurance in Colorado and Florida?

See the below sections for an overview of the various factors impacting Colorado and Florida that have contributed to rising homeowners insurance premiums.

Home Insurance Rate Increases in Colorado

Recent increases in average homeowners insurance rates in Colorado can largely be attributed to wildfires and inflation.^[1] The three largest wildfires in Colorado history all happened in 2020, while the state’s most destructive wildfire ever occurred in 2021.^[2]

Meanwhile, consumer products became 3.5% more expensive overall for people living in the Denver metropolitan area from January 2023 to January 2024, although prices have begun to trend marginally downward.^[3] While construction costs actually dropped by 11.68% from the third quarter of 2022 to the third quarter of 2023, they had risen by a whopping 85.09% from the third quarter of 2021 to the third quarter of 2022, which means home insurance claims are still costing insurance companies more now than they did a few years ago.^[4]

Because of these factors, the average cost of homeowners insurance in Colorado rose by 51.7% from January 2019 to October 2022.^[1] Despite this, the Colorado insurance market remains unprofitable, with property insurance companies in the state likely operating at a loss on average since 2018.^[5]

Home Insurance Rate Increases in Florida

Homeowners in Florida are also dealing with higher home insurance premiums not only due to inflation but also due to the fact that natural disasters are becoming more intense. A 2021 study found that tropical cyclones produced increasingly more rain each year from 1998 to 2016.^[6] This is particularly concerning for Florida, which is more susceptible to hurricanes than any other state in the country by far.^[7]

Another factor affecting home insurance prices in Florida is the rising cost of reinsurance.

At the beginning of 2024, reinsurance rates rose by as much as 50% for American property insurance companies that covered natural disaster losses in 2023.^[8] This could cripple the small insurers that dominate Florida’s insurance market since they don’t have the capital necessary to cover large-scale losses without the help of a reinsurer.^[9]

It’s worth noting that lawmakers passed legislation toward the end of 2022 to combat the fraud and excessive litigation that previously contributed to Florida’s high insurance prices.^[10] Even so, property insurance premiums in the Orlando metropolitan area rose by 18.1% on average from September 2022 to September 2023.^[11]

Why Are Insurance Companies Considering Leaving High-Risk States?

It’s not unheard of for insurance carriers to stop doing business in a state altogether if they aren’t able to raise premiums enough to offset the various risks associated with insuring properties in that state in order to make a profit.

For example, Lemonade withdrew from California completely in November 2022 after the state government rejected its requested rate hike.^[12] Meanwhile, other insurers like Allstate and State Farm have stopped selling certain types of policies in California while continuing to cover losses for existing policyholders.^[13][14]

In addition, smaller insurance companies in high-risk states can potentially become insolvent, meaning they must cease operations because they no longer have the financial resources to pay out their policyholders’ claims. For example, 11 insurance providers in Louisiana became insolvent between 2020 and 2022.^[15]

Are Insurance Companies Planning on Leaving Colorado and Florida?

In 2022, six insurers in Florida became insolvent and more than 12 either stopped doing business in the state or put a pause on selling new policies.^[10] Examples of companies that left Florida entirely include Farmers and AIG subsidiary Lexington Insurance.^[16][17]

While there has not yet been an exodus of major insurance carriers from Colorado, recent indicators suggest that the Colorado insurance market could potentially be heading in a similar direction as the Florida market.

For example, some insurance companies have stopped insuring homes in mountain communities that are particularly susceptible to wildfires.^[18] In addition, American National Group has announced its intention to nonrenew home insurance policies in nine states including Colorado later this year.^[19]

Is My Home At Risk for an Insurance Rate Increase?

You may encounter higher home insurance premiums if your region has begun to experience a higher rate of theft, windstorms or any other loss covered by standard home insurance policies. Even if you don’t file any claims yourself, your insurer may need to raise premiums across the board to account for the increasing number of claims filed by other people in your area.

Additionally, your insurance prices may increase steadily due to inflation and could rise more rapidly if certain factors contribute to higher construction costs in your area. For example, if a hurricane destroys several homes in your town, then the price of rebuilding those homes will likely skyrocket due to the increased demand for labor and materials. As a result, insurance companies may face higher costs and pass those costs onto their policyholders in the form of higher premiums.

What Options Do I Have if My Rates Increase?

Consider taking steps like these if your homeowners insurance company starts to charge you a higher rate for coverage:

• Shop around: Different insurance carriers will assess the risk of covering your home differently, so it’s important to compare home insurance quotes from multiple companies to see if another insurer would be willing to provide similar coverage for your home at a more affordable price.
• Ask your insurer about discounts: Many insurers offer numerous discounts that can help you lower your homeowners insurance prices. Examples of actions that often lead to discounted rates include bundling policies and installing a home security system.
• Take steps to mitigate your exposure to certain losses: Filing a claim will often cause your rates to go up, which means you may be able to prevent further rate increases by preventing damage that would require you to file a claim in the first place. For example, removing vegetation and other highly flammable materials that are within five feet of your home may lower the risk of your house burning down in a wildfire.^[20]
• Raise your deductible: Deductibles tend to have an inverse relationship with premiums, so you may want to consider lowering your premium by raising your deductible as long as you have enough money saved up to cover it in case you experience a covered loss.

What To Do if Your Insurance Company Drops You

If your current carrier drops you, you should begin applying for coverage from other home insurance companies. You may need to shop from high-risk home insurance companies that specialize in covering risky properties, although you should be aware that these companies tend to charge higher premiums than standard insurers.

It’s possible that you won’t be able to find a private insurer that is willing to cover you, in which case you can turn to your state’s government-funded insurer of last resort. However, as the name suggests, insurers of last resort are only recommended if you have exhausted all other options since they tend to provide little coverage for how much their policies cost.

For example, Florida’s Citizens Property Insurance only offers up to $700,000 or $1 million in dwelling coverage depending on where you live, regardless of how much your home is actually worth, and sets fairly low coverage limits for other standard home insurance coverage types.^[21] You should note that Colorado began the process of establishing an insurer of last resort called the Fair Access to Insurance Requirements (FAIR) Plan in 2023 but state-funded policies likely won’t be available through the Colorado FAIR Plan until 2025.^[22]