Most people who lost homes in the Marshall Fire were underinsured, Colorado insurance regulators say

The aftermath of the Marshall fire in Louisville. Jan. 18, 2022.
Kevin J. Beaty/Denverite
The aftermath of the Marshall fire in Louisville. Jan. 18, 2022.

Roughly two-thirds of homes lost in the Marshall Fire last year may have been underinsured, meaning homeowner insurance policies won’t cover the full cost to rebuild, according to data collected by Colorado’s Division of Insurance.

The final tally depends on how much it will cost homeowners to rebuild.

“This is our initial analysis, but we will continue to analyze the claims data as it comes in from the insurance companies,” Colorado Insurance Commissioner Michael Conway said in a statement. “The challenge now and going forward will be nailing down reliable rebuilding costs.”

The state analyzed data from 61 homeowners’ insurance companies, capturing 951 of the 1,084 homes lost when the Marshall Fire burned about 6,200 acres in Superior, Louisville and unincorporated Boulder county in late December 2021. A little over $1 billion in claims have been filed on those homes, state data show. 

The analysis ran the numbers using three calculations for the cost to rebuild. At a conservative estimate of $250 per-square-foot, roughly one-third of homes are underinsured. At a cost of $350 per-square-foot, 67 percent of homes are underinsured. The average shortfall per home ranges from about $99,000 to more than $240,000.

Standard homeowners’ insurance that mortgage companies require homeowners to have covers the repair and replacement of homes lost or damaged in a wildfire — but that doesn’t mean the entire cost is covered. Different policies will have different levels of payout, and it’s impossible to give a one-size-fits-all explanation of insurance benefits. Less than 10 percent of homes lost in the Marshall Fire carried coverage that guaranteed coverage for the entire cost to rebuild, the state’s data show.

The cost to rebuild is a moving target at this stage, with supply chain snags, staffing shortages and inflation driving up construction costs. Homeowners that lost everything in the Marshall Fire have lodged complaints with the insurance commissioner about difficulties getting insurers to pay out their claims.

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