Lawmakers consider first-of-its kind report to address underinsurance
Wendy Wyss is among the more than 1,000 homeowners who lost everything they owned in the Marshall Fire.
She had just bought her house nine months before the fire and says her dwelling coverage was more than half of the purchase price. Wyss thought she was well insured, but learned her policy will only cover about a third of the cost to rebuild.
"That fire happened... we've lost more than half our net worth and we don't have the means to come up with this money. People that are underinsured, they are going out, they're asking family, friends for money. They're getting the SBA loan, GoFundMes. We shouldn't have to. You know? We all bought insurance with the intention that this was going to cover us," she said.
Colorado Insurance Commissioner Mike Conway says the Marshall Fire victims aren't alone.
"We have had a pervasive underinsurance problem, both in this state and throughout the country," he said.
A bill by state representatives Judy Amabile and Kyle Brown aims to change that. It would require that insurers offer homeowners more protection including:
- Extended replacement, which provides 50% additional coverage
- Inflation guard, which adjusts coverage to inflation upon renewal
- Building code upgrade coverage, which provides 20% additional coverage for things like energy efficiency codes
The bill also requires the Division of Insurance to release an annual report that gives estimates of what it would cost to rebuild a home based on where it's located.
Colorado would be the first state to compile such data. Conway says it would give homeowners an indication of whether their insurance estimate is appropriate.
"Then they can feel confident that what they're being told by the insurance company is something that should allow them to rebuild if the worst happens," he said.
The bill comes too late for Wyss, who testified in favor of it, she says, to help protect the next wildfire victims.
"It took a thousand homes in a single event for me to come down to the state Capitol. I've never been here before in my 40 years -- to come down and feel compelled to say 'This has got to change,'" she said.
Wyss is among dozens of fire victims who are suing their insurers.
Brown says 85% of Marshall Fire victims are underinsured by about $164,000 on average.
While the insurance industry isn't opposing the bill, it's concerned about the cost estimates that will be released by the Division of Insurance each year.
The bill calls for a third party to compile them, but it's unclear who that will be and what will go into the estimates.
The bill passed the House Business Affairs and Labor Committee 10-1 and is headed to the Appropriations Committee.
