The Colorado FAIR Plan officially launched on Thursday, which will provide some hope and relief for Colorado homeowners who’ve been dropped by their carrier or are unable to obtain insurance due to the state’s large wildfire and hail risk.
“This is a historic day for Colorado and insurance because the FAIR Plan was created for people who truly can't find insurance anywhere else to have a safety net for them,” said Carole Walker, executive director of the Rocky Mountain Insurance Association. “That comes with a caution. This isn’t insurance for everyone. It’s more limited and more expensive coverage.”
The FAIR Plan, which stands for Fair Access to Insurance Requirements, was approved by the state legislature in 2023. If a Colorado homeowner in a disaster-prone area isn’t facing steep premium increases, they’re likely being dropped altogether by their carrier. The FAIR Plan aims to address that gap.
“I think this an important step forward for Colorado and for those struggling to find insurance in those high-risk areas,” said Walker.
To qualify, homeowners must be denied coverage three times by insurance carriers before they can speak with any licensed broker and begin the application process for FAIR Plan coverage.
But Walker and those with the Colorado FAIR Plan stress this isn’t an option meant to be more “affordable” for those upset with steep increases in costs, but for those who truly have no other choice.
For example, according to premium rate examples provided by the Colorado FAIR Plan, a 2,288 square foot home in Evergreen, Colo. with a market value of $850,000 would be charged $4,361.69 for fire coverage and an additional $1,151.94 for extended coverage (like hail and wind).
In the 80903 Colorado Springs postal code, which isn’t as susceptible to wildfires since it covers downtown, it is prone to hail risk. A 2 bed, 1 bath house worth $363,000 could get a FAIR Plan fire premium for $182, but an extended coverage premium for hail and wind damage would cost $1,197.
Colorado isn’t the first state to offer a FAIR plan, but it is the first plan to launch in 40 years.
Kelly Campbell, executive director of the Colorado FAIR Plan, previously described the process as essentially building a new insurance company from the ground up.
“Building the FAIR Plan was like building an airplane while you were flying through a thunderstorm without landing gear,” said Campbell. “I think the great news is with this launch is that we have found that, in fact, we do have landing gear. We have very strong landing gear. So we have great partners that are around us to help make this happen and to bring this forward, and so we really do feel like we are creating that safety net for Colorado homeowners and businesses.”
Though only the residential option is offered for now, Campbell said the commercial FAIR Plan is expected to launch later in the spring. Policy limits are $750,000 for residential and $5 million for commercial properties.
For those who think they might qualify, Campbell said they should be able to go through any licensed insurer in the state.
“They can't call the FAIR Plan directly. We can't sell directly to consumers. You must work through an agent,” she said. “So if you have been declined by multiple carriers, you have had a challenge finding coverage, then we encourage you to reach out to your agent because any licensed producer can write in the FAIR Plan if they choose.”
The genesis of FAIR Plans stemmed from inner city riots in the 60s and 70s, according to Campbell, which is why Colorado’s version also offers vandalism coverage in addition to fire premiums and extended coverage.
Colorado hopes to avoid the insurance crisis bubbling in other states like California and Florida. In Florida, the insurer of last resort is the largest in the state as the private market has been driven out.
“We know that a lot of insurers are seeing a lot of different pressure points all across the country, and we just want to make sure that there's that pressure release valve so that insurance carriers can really understand this new marketplace, this new level of catastrophes that we're seeing all across the country and really adjust,” said Campbell. “And we think the FAIR Plan is going to provide that opportunity.”
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A family in Colorado City says illegal dumping near their home is becoming a safety issue
One official told News5 the trash piles could be infested with rats or other dangerous factors, so they are waiting to work with the health department to remove trash from the area.
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