I love it here... so thankful for limited natural disasters like tornado, hurricane, earthquakes. However, Colorado is still subject to blizzards, hail, wind, and fire. 2012 and 2013 were devastating locally when it comes to fire. Much of those homes have been rebuilt. So, let's talk about the unfortunate weather issues of 2016 And how it's changing insurance for southern Colorado.
A huge part of eastern Colorado Springs was hit hard by a "hail bomb". According to the Colorado Springs Gazette, the 6th most devastating weather event in Colorado history. When you use the term catastrophic, you know it's serious. 33,200 property claims of $188.2 million and 51,300 vehicle claims of $164.6 million... I'll do the quick math, that's 84,500 claims to the tune of $352.8 million. There were other storms as well, but this was the worst. So if you think those claims aren't going to cause your rates to go up, think again!
We've all seen hundreds of vehicles driving round with temp tags, damaged hoods, temporary window patches and even some shattered windshields. There are also the vinyl siding homes and townhomes that are covered in patches. Frankly there were areas that looked like a war zone. Homes have seen damage to roof, window, siding, etc. Not all claims on vehicles necessitated full replacement, but shops were/are busy doing major repairs... plus rental cars were hard to come by and I'm sure the dealerships struggled to keep inventory.
So, now, the insurance... We were able to purchase and investment property this Spring. Thank God it was not hit by this catastrophic storm. I went to our HOA meeting this week and learned quite a bit about how HOA property insurance works. It was eye opening, that's for sure. Thankfully our insurance agent's office took great care of us when we set up our policy.
Here's the gist... many insurance carriers are on a percentage deductible, based on the value of the property. Let's say you have a 5-unit townhome building that is valued at $1,000,000 and your deductible is 2% (they range from 1-10% deductibles!)... that means your HOA will have to pay a $20,000 deductible. So your HOA reserves would have to exceed that deductible. In the case of this storm, there are thousands of "attached" units affected, I'm not sure how many buildings. But I can't imagine their HOAs had the reserves, which means the owners all get a "Special Assessment"... sounds so nice and special, but it's not good, its expensive!! So, homeowners have to come up with thousands out of pocket, even though they are "adequately insured". One of the biggest things that came out of this, and the most important take-away from this blog!!--- if you own a town home/condo go get LOSS ASSESSMENT COVERAGE, right now!!! It is not very expensive and can help cover this "gap"!!! This Loss Assessment Coverage should be in place with every home owner, so the special assessment doesn't kill your family budget! I called my agent's office the day afer the meeting and made sure we were set up, and we were. I upped our coverage anyway, because it's worth it.
I also had a new buyer move here from Wisconsin in November. She was shocked when she called to set up their vehicle insurance. It was about double the amount they had paid for their vehicle insurance in WI. Their agent sighted recent claims, specific to southern Colorado, that caused all rates to rise.
We heard a lot in 2013 after the Black Forest fire that insurance is really expensive, until you need it. There were many families that were under- or un-insured. My best advice, is that even if it costs maybe a bit more, MAKE SURE you have the coverage you need on all of your belongings, because otherwise it's going to cost you far more out of pocket should there ever be a need to file a major claim!! Also, review your policy notifications every year, because your insurance company could change your policy from flat deductibles to percentage, and it could be pricy to deal with the potential claims!