Do most Colorado homeowner’s policies offer full replacement value?

A 2022 analysis by the Colorado Division of Insurance found that fewer than 1 in 10 homeowner’s policies in the state offer full replacement value if a home is destroyed. 

Just 8% of insurance policies surveyed had guaranteed replacement, which covers unlimited rebuilding costs after a disaster, the DOI found. The report was released after the 2021 Marshall fire, which destroyed more than 1,000 homes and businesses in northern Colorado, causing more than $2 billion in property damage.

A University of Colorado study found that 74% of policyholders were underinsured after the Marshall fire and 36% were “severely” underinsured, meaning their policy covered less than 75% of rebuilding costs. 

Despite the gap in coverage, most Americans believe their home is fully insured, with 74% reporting they thought their insurance would fully replace their home if disaster strikes.