The 5 Best Colorado Homeowners Insurance Companies
Coloradans love to brag about getting 300 days of sunshine per year, but you probably won’t hear them brag much about the hailstorms. “We’ve had a real bad run on hail in Colorado,” says Scott Foster of Foster & Associates, an independent insurance brokerage based in Littleton. “The claims have been massive.” Colorado has the second-most claims for both hail damage and catastrophic claims in the United States. Since 2009, there’s been a surge in inclement weather and natural disasters — wildfires and windstorms, in addition to hail — that has premiums in the Centennial State on the rise.
The hope, of course, is that weather is in a bad cycle and it will pass. But in the present tense, Colorado homeowners are paying an average of $1,201 per year on an HO-3 homeowner’s insurance, according to the National Association of Insurance Commissioners. That’s higher than the US average of $1,096, but that number will vary considerably depending on your home and where you are in the state. An HO-3 premium in Denver, for example, averages a much higher $1,637 annually, while premiums in tornado-prone Sterling average about $1,767, according to the Colorado Division of Insurance. To find and compare rates for your home, enter your ZIP code in our quote tool below.
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Pricing, while important, is only part of the story. Many Colorado homeowners, Foster says, shop for price instead of coverage — the ins and outs of what makes a good policy that covers all the important aspects of your home. “Would you insure half your car?” Foster says. “It’s important to ask questions. Look at all the additional coverage options.”
For this review, we singled out the top five homeowners’ insurance providers in Colorado by market share: State Farm, Farmers Insurance Group, American Family Insurance, USAA, and Allstate. Using our review of nationwide homeowners’ insurance providers as a guide, we dug into each one. We analyzed each company’s financial standing, pored over customers’ claims, examined satisfaction ratings, and compared coverage options and discounts. We also posed as homeowners of a sample home in Denver to gauge the quote process and helpfulness of customer service agents. These are our findings.
Colorado Homeowners Insurance Reviews
USAA Insurance Group
Creditors and customers alike love USAA. It has the highest financial ratings of any of the top five providers in Colorado (Aaa from Moody’s, A++ from A.M. Best, and AA+ from S&P). It also scored high among the more than 9,000 readers at Consumer Reports, which ranked it as the best claims satisfaction, and gave it a 92 out of 100 in overall satisfaction. The next closest provider in overall satisfaction is State Farm at 82; our other three providers are all in the high 70s.
The one big caveat with USAA: It only insures active and retired US military members and their families. Also, if you’re just shopping around, USAA won’t give you a lot of detailed information on its homeowners insurance products — and its website is equally thin on educational materials.
We used a current customer’s account to get a quote, and we found prices were about 25 percent higher than everyone but State Farm, but it covered us at a higher replacement cost than competitors — nearly the full market value of our home. We also noticed USAA has a flat, 1 percent deductible for wind and hail, which is about average, though Allstate, American Family, and Farmers also have additional deductible options. Allstate, for example, lets you choose between a 1 percent wind and hail deductible, or a $1,000 deductible of the same type if you pay $1,000 more on your premium.
In all, where USAA lacks in slickness and wide availability, it makes up for in its smooth claims process and rock-solid financial soundness.
By a wide margin, State Farm is the largest homeowners’ insurance provider in Colorado. Its sheer amount of manpower and resources in the state gives it an advantage over its competitors. State Farm was second only to USAA in overall customer satisfaction on Consumer Reports, and edged out three of the other four providers in its claims process, according to J.D. Power and Associates. Our sample quote was the highest out of the five providers, but you are paying for reliability — and remember, your quote might be lower, depending on your home and area.
One peculiarity of State Farm is its deductible: It’s a flat 1 percent of the total cost of damage, with a $1,000 minimum, no matter what type of damage your home suffers. State Farm is the only provider of the five we looked at that doesn’t have a separate wind-hail deductible of some kind.
Wind and hail constituted 40 percent of all claims from 2010–2014, according to the RMIIA. To defray their costs, many providers now include wind and hail damage as a separate deductible, which typically costs anywhere from $1,000 to 1 percent of your home’s quoted replacement cost, out of pocket. For example, if your home is valued at $250,000, you’d pay a $2,500 deductible to repair hail damage. Wind-hail deductibles, while common, are now generally seen as disadvantageous for consumers — since Colorado is in “Hail Alley,” the odds are high that you will pay for hail damage at some point in your homeownership. With State Farm, there’s just one flat fee. That may be good or bad depending on your circumstances, but it sure keeps things simple.
We liked how easy it was to obtain a quote from State Farm online — there was no redirection to a pushy agent, just the facts. Like competitor Allstate, State Farm’s site is comprehensive: Whether or not you’re a customer, you have access to reams of educational materials and tools, such as refinancing calculators, video tips, and forms for scheduling your valuables.
And when it comes to the quote itself, State Farm was straightforward. Where Allstate, American Family, and Farmers gave us multiple pricing tiers, State Farm gave us one price for our initial quote. It spelled out coverage options clearly; to negotiate and get deep into the nitty-gritty, you’d have to get in touch with an agent. All up, though, State Farm is a safe bet for its no-nonsense, well-rounded coverage.
Farmers Insurance offers the most discount options of any of the five biggest providers we tested (13, by our count). That’s roughly double the amount of discounts offered explicitly by giants State Farm (6) and USAA (7). It also offered us three separate pricing tiers, with its middle tier comparable in pricing and coverage to the other insurers we reviewed. However, Farmers scored a shade lower than competitors on claims experience, and holds a solid, as opposed to exceptional, financial stability rating.
We liked how Farmers Insurance offers a “Premier” option for guaranteed replacement costs (GRC). In the event your home is destroyed — especially relevant for people in wildfire-prone areas — Farmers will replace your home no matter the cost. This Premium tier costs twice as much ($5,765/yr for our sample home) as its Standard option ($2,907/yr), but it sets Farmers apart from competitors, who only quoted us at regular replacement costs, which vary and may not be sufficient to cover your entire home. For what it’s worth, an agent cautioned that the higher-tiered prices are “for reference” and are negotiable depending on need.
Farmers also tacks on a $25 one time “policy/membership fee.” While that cost is negligible over the span of a policy life, it still sticks out. And one more annoying thing about Farmers Insurance: its online quoting process. We spent 10 minutes entering our information for an “online quote,” expecting a nice, round number to be delivered at the end. Instead, we were directed to an agent. To be fair, that agent promptly contacted us by phone and email and sent us a detailed quote, but for someone strictly shopping around, it’s a hassle.
American Family Insurance
American Family quoted us at the cheapest rate of anyone for our sample home — it was an incredible 60 percent lower than State Farm and USAA. Curiously, though, it quoted our replacement cost at half the market value of our home, which gave us pause, though the agent reassured us that the quote was an “open conversation” and that the replacement cost is negotiable.
Another reason American Family’s prices are cheaper on the surface: It charges more for deductibles. American Family charges deductibles for identity fraud ($250) and property loss ($1,000), in addition to a hail deduction of $1,000. So while the overall annual price is appealing, it may even out over time with added deductibles.
Probably the biggest differences between American Family Insurance and its competition is that it doesn’t offer HO-3 policies, only HO-5 policies. Where HO-3 policies cover you on a named-perils basis, HO-5 is “open-perils.” In essence, in an HO-3 policy, the burden of proof is on the claimant to prove that a named peril is included in their policy. In an HO-5, the burden of proof is on the insurance company — the policy covers everything, unless it is specifically excluded in your policy.
Like Allstate and Farmers, we had to go through a few hoops to get our quote. An agent emailed us and requested a Social Security number to get an accurate quote. We told them we weren’t comfortable with that, and the rep was polite and understanding, but contended that it would help us lower our rates. When it comes to quotes, we prefer the ease of State Farm and USAA (for members), where you can get a reasonably accurate starting price with a few clicks.
Allstate wins points for its web savvy, discount offerings, and unique coverage options. In May 2016, Allstate rolled out extra homesharing protection for people in Colorado and five other states who rent out their homes on sites like Airbnb and VRBO. Allstate is the first large insurer to offer such extended protection, and it could be a worthwhile consideration for Coloradans with mountain vacation homes or coveted real estate in major metro areas. For its online presence and coverage options, we like Allstate as a provider for first-time homeowners, as we noted in our review of the best national homeowners’ insurance providers.
One downside for Allstate was its quoting process. Like Farmers and American Family, we filled out a bunch of information on online forms expecting to see a quote at the end. Instead, we were directed to a local agent. While friendly and helpful, the rep asked us for our SSN and driver’s license number, and getting the quote took eight hours to process, where others took a matter of minutes.
Despite its appealing prices and customer service, there’s another knock on Allstate: its claims experience. It rated lowest compared to all four major competitors.
Allstate, like American Family Insurance, offered us an Elite pricing option with a higher deductible for wind and hail damage ($1,000) and a lower-priced Base insurance option with a costlier deductible (1 percent of the total cost). The odds that you’ll make a claim for wind and hail are high in Denver, so we’d be taking a considerable risk by picking the Base option. The Elite tier also includes many optional coverages, such as identity theft protection and building code upgrades. The Elite option averaged about $700–$1,000 less per year for our sample home than USAA, State Farm, and Farmers, but like American Family, it covered us at a lower replacement cost — about 60 percent of our home’s market value. If you feel uncomfortable with the replacement cost quoted by an insurer, be sure to negotiate.
Did You Know?
We’ll say it again: Location matters.
According to Allstate, the most common claims in Denver are for theft, water damage, and hail — and according to the Denver Post, a bad hailstorm lasting just a few minutes can lead to far costlier claims than a forest fire that burns for days. Meanwhile, Durango, a smaller city in southwestern Colorado, manages to dodge hailstorms (it hasn’t had one in 2016, while Denver has had about 20, according to StormerSite). Durango also enjoys fewer claims for property crime, hence its more affordable policy prices.
Average Annual HO-3 Policy Prices in Colorado
American Family Insurance
Based on government data from July 2015.
Then there’s Sterling. While it’s just a little smaller than Durango in population, it has an unfortunate geography: It averages two to three tornadoes per year. That risk of disaster drives up the price of insurance.
Colorado’s two largest metro areas, Denver and Colorado Springs, are comparable in price across all providers — a swing of only $101, although those numbers will vary depending on your home, coverage, discounts, and more.
Wildfires in 2012 sparked big Colorado homeowners insurance reform.
More than 2 million Coloradans live in the wildland-urban interface, in idyllic homes amid mountains and pines. Unfortunately, the risk of wildfires is highest there, and it puts pressure on premium prices.
The Waldo Canyon wildfire of 2012 caused more than $450 million of damage, destroying nearly 500 homes. The devastation exposed a lot of problems with homeowners insurance in the state: Typically, insurers offer 12 months of living expenses for people as their homes are being re-built, but for many victims, 12 months wasn’t enough time, and they were left out in the cold.
In addition, many homeowners were lost in the confusing terms of their policy, and didn’t understand that “replacement costs” did not mean that their home would be replaced, but rather that the insurance company would only replace the home up to a specified dollar amount. Lucy Buck, an insurance agent for State Farm based in Denver, goes to extra lengths to make sure her customers understand replacement costs, but says, “There’s been a lot of litigation and confusion around the term.”
In 2013, Gov. John Hickenlooper signed the Homeowners Insurance Reform Act, with the goal of improving communication and understanding between insurers and the insured. Among its provisions:
- Homeowners insurance policies must have more detailed disclosures, and be written at a 10th-grade reading level or lower.
- Homeowners and their insurers must carefully discuss “replacement value” up front rather than after the home is destroyed, and language in the written policies must define replacement costs for customers — i.e., that they may not cover the total costs of replacement for a home.
- All insurers must offer at least 12 months of living expenses for affected customers, and must offer the option for 24 months of living expenses.
- Insurers must offer policyholders extended replacement-cost coverage for at least 20 percent of the replacement limit, plus another 10 percent to cover laws and ordinances.
- Insurers must consider estimates from contractors solicited by the policyholders.
Beware of “stormchasers.”
Hail is such a widespread problem in Colorado that it has spawned its own cottage industry of roofing scammers. After a really bad hailstorm, scammers — known as “stormchasers” — often go door-to-door promising roof repairs, says the Denver Post. If you get an unlicensed contractor to perform hail repairs, you could end up damaging your home and your insurance premium.
Early June 2016 saw damaging hail throughout metro Denver, which spawned a local coalition led by the Better Business Bureau and the Colorado Division of Homeland Security and Emergency Management to raise awareness about these shady contractors. Most contractors don’t work door to door. Before you sign a contract with a roofing contractor, here are some tips from the coalition on how to avoid getting short shrift.
- Don’t get pushed into signing a contract right away. Try to compare estimates with another contractor first.
- Make sure the contractor is registered to conduct business in Colorado by checking this database, and see to it that they have a permanent address and federal tax ID number.
- Ask for proof of the contractor’s insurance.
- Don’t pay a contractor in full until the work is complete.
- Don’t sign a contract with blank entries, or wishy-washy language, where a contractor may be able to add in terms later that you didn’t agree to.
- Make sure the contract you sign complies with Senate Bill 38.
The Bottom Line
Colorado’s propensity for hail is a big variable in the cost of homeowners insurance — as well as the size and value of your home, and where in the state it’s located. Comparing coverage options and premiums from multiple providers really is the best way to find the right provider for you. Start shopping around by entering your ZIP code in the tool below.
Find the best homeowners insurance in your area.
Get a quote by entering your ZIP code and start saving today.