BOULDER COUNTY, Colorado (CBS4)– As across the state of Colorado, Denver resident Sara Henry saw flames from the Marshall Fire rip through Boulder County subdivisions. Before the fire was extinguished, she had contacted her insurance agent to verify her own coverage.
“I think I emailed the agent on Monday and said, ‘Where am I?'”
RELATED: Resources for Marshall Fire Victims
Henry, who lives in the Cherry Creek North neighborhood of Denver, wanted to know if her policy had kept up with rebuilding costs, which she said have recently been hit by increases in supply chain costs and inflation.
“Unfortunately, following the Marshall fire, it brought to the fore what I needed to do and I needed to do it quickly.”
After talking to her insurance agent, Henry decided to increase her home insurance coverage by about 20%, which she says will cost her extra.
“To me, it’s absolutely obvious to increase coverage,” she said. “I certainly don’t expect Boulder here in Denver, but you never know. I’d rather be overinsured than underinsured, of course.
Shannon Weston, who lives in Denver’s Washington Park neighborhood, said media coverage of the Marshall fire also gave her pause.
“I hadn’t looked at my home insurance since I bought the house 20 years ago. If something catastrophic happened and I couldn’t be cured, I would be in a lot of trouble,” said Weston, who retired from a job at Colorado State in 2018.
She contacted her insurance agent and spoke to him for about 15 minutes. She said the next day he told her she was underinsured by about $100,000, so she increased her coverage, which actually lowered her annual premiums by about $300 a year. She said she believed improvements she had made to the home, such as upgrading the electrical systems and replacing the roof, which she had not told her insurance company, had led to the lower premiums.
“It also got me making a mental note that I have to call the insurance agent every five years or so. Rebuilding costs have skyrocketed since the start of the pandemic because of the supply chain.
In Boulder County, real estate agent Laura Levy said what Henry and Weston have been up to since the Marshall fire was on the scene.
“If maybe it’s been a year or two since the last time you updated, the cost per square foot to rebuild may be much higher than when you last updated your policy,” Levy said. . “It’s a bit like having a medical exam, it’s a good thing to do even if it’s once a year. I would say while people are thinking about it, make it a priority and do it.
Levy went on to say that residents might consider increasing their coverage if they’ve made improvements or upgrades to their homes. She suggested landscaping or landscaping might need additional coverage.
“If you just spent $75,000 on your kitchen, they need to know that. Share this with your insurance agent right away.
Levy, who lives in the Boulder County foothills, suggested going through various scenarios with your insurance agent, like flood or fire, and learning what will and won’t be covered. She said that even if your house is destroyed you are obligated to continue making mortgage payments, find out how your insurance policy responds to this. Ask your agent about additional living expenses, also known as ALE, she suggested. These are costs such as hotels, meals and payment for storage if you are moved. How long will your policy pay for these things while you are displaced? Most policies should cover up to 12 months of living expenses.
Levy said insurance companies use a formula tool to determine reconstruction costs. She said she’d rather contact a local contractor and ask, “If I were to rebuild, what’s the cost per square foot?”
Following the Marshall fire, Levy took her own advice, contacting her insurance agent and determining that she was underinsured by approximately $50 per square foot. She increased her coverage to make up the difference.
“Honestly, I would rather sleep well at night and pay higher premiums,” she said.
- Additional information:
Take photos and videos from inside your home. Go from room to room, open cupboards, drawers and doors. Show the garage. If something catastrophic happens, you’ll have a visual reminder of what was in your home
- Keep receipts. They can help you remember what you had in your home and help you if you need to make a major claim.
- If you are a tenant, take out tenant insurance. It is inexpensive and can cover your belongings and pay for accommodation if you are displaced.
- An annual insurance report is essential, according to experts
- Consider replacement coverage – This is insurance that pays the policyholder the cost of replacing damaged property without deduction for depreciation, but limited to a maximum dollar amount
- Extended Replacement Cost – An extended replacement cost policy covers costs up to a certain percentage of the limit (usually 20%). This protects you against things like a sudden increase in construction costs
- Check the value of your insurance policy against the increase in local construction costs each year. Ask your agent for an “inflation protection clause”. This automatically adjusts the housing limit when you renew your policy to reflect current building costs in your area.
LINK: Rocky Mountain Insurance Information Association