Colorado homeowners received new rights to transparency and appeal starting in October under a state law aimed at holding insurance companies accountable for how they price and underwrite policies based on wildfire risk.
The legislation, HB25-1182 (Risk Model Use in Property Insurance), requires admitted insurance companies and the Colorado FAIR Plan to disclose wildfire risk scores and explain how those scores affect premiums. The law also requires insurers to account for qualified mitigation efforts—such as defensible space clearing or Insurance Institute for Business and Home Safety (IBHS) Wildfire Prepared Home certification—when rating policies.
"Coloradans have stepped up to protect our state and their properties from wildfire with mitigation efforts," said Colorado Insurance Commissioner Michael Conway. "This law requires insurers to recognize the work homeowners complete to protect their homes and communities, and to be open with homeowners about how wildfire mitigation can lead to potential savings."
Starting October 1, insurers must provide applicants with a written notice within 15 days of receiving a completed application, and existing policyholders must receive the notice with their renewal offer or nonrenewal notice. The notice must clearly state the property's wildfire risk score, explain in plain language how it was calculated, show where the property falls on the full range of possible scores, detail which property features influenced the score, and explain the right to appeal.
Homeowners who believe their risk score is inaccurate can submit an appeal with evidence of property or community-level mitigation efforts. Insurers must acknowledge the appeal within 10 calendar days and provide a final decision within 30 calendar days. If the review extends past policy expiration, coverage must continue for at least 10 calendar days after the decision is communicated.
Insurers using wildfire risk models must also publish information on their websites about available premium discounts or adjustments for mitigation, and those without discounts must post that clearly as well. Some insurers have already announced new mitigation-based discounts. CSAA is offering a 15% discount on the wildfire portion of premiums for homes achieving IBHS Wildfire Prepared Home Enhanced or Essential designation, and State Farm is now willing to insure properties in high wildfire risk areas if owners meet mitigation requirements.
Homeowners who do not receive required notices, believe they were unfairly denied discounts, or believe insurers refused to consider their mitigation evidence can file complaints with the Colorado Division of Insurance at 303-894-7490, via email at DORA_Insurance@state.co.us, or online at doi.colorado.gov.