Colorado’s last-resort insurance plan raises questions about its future amid California’s challenges
In Los Angeles, wildfires are causing losses over $50 billion, and private insurance will only cover about $20 billion of that. Remember the $2 billion Marshall Fire in Boulder County? Many Coloradans were underinsured or faced low estimates from their insurers.
Now, Californians are in for a similar wake-up call. But they can learn from Colorado’s experience. After the devastating fires in Louisville and Superior, Colorado lawmakers took steps to help those affected. They forgave sales taxes on building materials and made sure insurance companies considered state estimates for rebuilding costs.
California can do the same. Plus, big names like Billie Eilish and Lady Gaga are hosting a FireAid Benefit Concert to help. Colorado’s new FAIR Plan, created last year, is similar to California’s last-resort insurance plan. If California’s plan fails, Colorado can adjust its approach.
There are key differences, though. California covers up to $3 million in property, while Colorado caps it at $750,000. Both plans require insurance companies to contribute, but the real question is how much premiums will rise in California as insurers pass on costs.
Insurance is all about sharing risk, but it breaks down when too many people take on too much risk. For high-value homes in risky areas, the cost of insurance can be daunting. Some folks choose to take the risk themselves, knowing they might lose everything but can handle it financially.
Colorado’s FAIR Plan needs to strike a balance. We want to rebuild while keeping premiums affordable for everyone. It’ll take a mix of donations, federal aid, and insurance payouts to recover from California’s losses.
As climate change raises risks for all of us, we need to prepare for these challenges and find ways to share the burden.
