Colorado insurance rates had been rising for years — by more than 67 percent for homeowners and 52 percent for vehicle owners — even before three hailstorms hit Colorado's Front Range over the past two months, generating more than $500 million in insurance claims.
State auto and homeowner's insurance average rates rose at the third-fastest clip in the nation over two eight-year periods, and now exceed the national average, reports show.
Worse yet, consumers can expect this year's storms to trigger even more rate increases over the next few years, said Carole Walker, executive director of the Rocky Mountain Insurance Information Association, a Greenwood Village-based trade group that represents property and casualty insurers in Colorado, New Mexico, Utah and Wyoming.
"The scary part of this is that in Colorado during the ensuing years (since those studies), we have seen record-breaking storms," Walker said. "People are seeing rate increases upon renewal, depending on the size of their property. But marketplace factors put us all in the same perfect storm of rising rates."
A hailstorm early June 13 hit Fountain, triggering 26,000 claims totaling $169 million in damage. And, on Aug. 6, hailstones — some as big as softballs —pounded Fountain and southwest Colorado Springs. That second storm spurred 27,000 claims totaling $172.8 million. It also severely damaged the Cheyenne Mountain Zoo, injuring 21 people, killing five animals and forcing a five-day closure. Another June hailstorm in northern Colorado resulted in claims totaling $276.4 million.
The economic impact of the two Springs-area hailstorms likely will be felt for months, as body shops, roofing contractors and glass vendors are backed up with repairs. Vehicle sales surge after major hailstorms, as drivers replace cars and trucks that their insurers declared destroyed. One 50-acre parcel near the Colorado Springs Airport holds nearly 5,000 totaled vehicles from recent storms.
Homeowner insurance rates have risen faster than auto rates, and exceeded the national average by nearly 18 percent, says a study released in March on homeowner rates from 2007-2015 by QuoteWizard.com, a Seattle-based website that helps consumers shop for insurance.
Average rates in Colorado rose 67.4 percent during that period, just behind even larger rate hikes in Oklahoma and Kansas and well ahead of the 42.7 percent increase in the national average over the same period.
The biggest increases in Colorado rates came in 2013-15, when the state average increased twice as quickly as the national average and went from $4 above the U.S. average to $210, reports the National Association of Insurance Commissioners. Colorado's average homeowner premium had been $18 below the national average as recently as 2011, the reports show.
That big rise resulted from natural disasters — not only hail, but also high winds, wildfires and floods, said Vincent Plymell, a spokesman for the Colorado Division of Insurance. That includes the series of hailstorms that strike the Front Range nearly every year, tornadoes, major windstorms and the Waldo Canyon and Black Forest fires that hit Colorado Springs and El Paso County in 2012 and 2013. That doesn't even count the worst hailstorms, which hit Colorado Springs and Denver in 2016 and 2017, after the period studied.
Vehicle owners haven't been spared the pain of rapidly increasing insurance rates either. Average auto premiums in Colorado rose 52 percent between 2011 and 2017 — the third-fastest growth after Montana and Mississippi — to $1,435, or $8 more than the national average, says a study released in February by The Zebra, an Austin, Texas-based insurance search engine. Nationwide, premiums rose 20 percent over the same period.
Colorado auto rates rose at double-digit percentages in three of four years between 2012 and 2015, as the national average was increasing by only 2.8 percent to 6.9 percent, before slowing to 6.5 percent in 2016 and declining less than 1 percent last year. The national average rose 4.3 percent last year.
The Zebra said weather played a big role in rising auto insurance rates, including a Denver-area hailstorm that caused $2.3 billion in damage as well as three major hurricanes and California wildfires. Other factors pushing rates higher included population growth, crime, legislative changes and the growing problem of distracted driving.
Colorado had the second-most insurance claims from hail and high winds in 2016, including a July 2016 storm in eastern Colorado Springs that triggered claims totaling $352.8 million, says a May 2017 news release from the National Insurance Crime Bureau. Texas led the nation in hail claims that year, as those claims surged nationally by 48 percent to nearly 1 million.
Colorado hailstorms this year, including those in the Colorado Springs area in June and August, plus hail in nearby states, likely will trigger damages exceeding $10 billion for an 11th consecutive year, said Ian Giammanco, lead research meteorologist at the Institute for Business and Home Safety in South Carolina. While hail damage is the most common natural disaster that spurs claims, that's not because hailstorms are more frequent or severe.
"Population centers are expanding, making some areas that were once rural into suburban neighborhoods. So hail is now falling on homes in areas that were farms or ranches 10 to 15 years ago" Gaimmanco said. "The average home size also has increased from about 1,500 to 1,700 square feet 30 years ago to more than 2,500 square feet in 2015. Adding to that, you also have more cars per family unit to insure."
Plymell, the state insurance division spokesman, also blamed higher auto and homeowner insurance rates on population growth — with more people living in Colorado homes and driving more cars — as well as larger, more expensive homes and vehicles that contain costly materials and components.
Walker, of the insurance trade group, said cars and homes are more expensive to repair or replace, especially cars equipped with sensors and electronic gear. A damaged bumper on a newer car costs more to replace because that bumper has a camera to show the driver what's behind.
Policyholders can keep their rates from increasing as much by raising their deductible levels, the dollar amount at which insurance coverage kicks in, Walker said. Another way to reduce premiums is to consider dropping collision and comprehensive coverage and keeping only liability coverage for older vehicles that are worth only a few thousand dollars.