Opinion: Insurance Industry Changes to Follow Wicked Colorado Weather

By Shane Christley | September 20, 2013

As the sun peaked out of the normally bright blue Colorado sky, homeowners and businesses began to assess the damage done by the 100-year flood, as weather experts have labeled the devastating rain that pummeled the state’s Front-Range for the past week.

As the weather improved, residents of the hardest hit areas immediately began dialing their insurance provider for relief.

According to industry experts, the total damage figure from Colorado’s flood event could potentially exceed $1 billion, after insurance claims from damage to homes, roads, bridges, other infrastructure and agricultural losses are estimated.

Agents and brokers would be wise to familiarize themselves with companies that offer flood coverage separate from the National Flood Insurance Program. Chubb Personal Insurance, for example, offers replacement cost coverage up to $15 million, $7,500 in additional living expense and includes coverage for the basement.

Shane Christley
Shane Christley is a producer of personal lines for Van Gilder Insurance.

This year has been a wicked year for natural disasters in Colorado. We only need to look at the wildfires in Colorado Springs in early June to see the impact on the insurance industry with insurance estimates from that event totaling $292.8 million. Shortly following this destruction, the historic floods hit Colorado’s front range causing additional devastation and further impact on the insurance industry.

Comparing Natural Disasters

The Colorado Office of Emergency Management is estimating that more than 1,500 homes were destroyed in the flooding with close to 17,500 residential structures damaged. In addition,11,750 people were forced to evacuate.

According to the Federal Emergency Management Agency, about 22,000 Colorado homeowners have flood insurance policies. With 2.2 million housing units in Colorado, according to Census figures, that means about 1 percent of the State’s residences have flood coverage.

Other parts of the country have seen the devastation caused by Mother Nature and comparisons are being made to last year’s Hurricane Sandy that hit the northeast almost exactly a year ago.

By comparison, FEMA estimates show Hurricane Sandy received a total of $5.6 billion in federal assistance that included:$3.5 billion in total National Flood Insurance Program payments made on claims to date; and $413 million in FEMA grants disbursed for individuals and households

Changes on the Horizon

As a result of these catastrophic weather events in the United States, Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012, (BW-12) which calls on FEMA and other agencies to make a number of changes to the way the NFIP is run.

Some of these changes already have occurred, and others will be implemented in the coming months. Key provisions of the legislation will require the NFIP to raise rates to reflect true flood risk, make the program more financially stable, and change how Flood Insurance Rate Map (FIRM) updates impact policyholders. The changes will mean premium rate increases for some—but not all—policyholders over time. Homeowners and business owners are encouraged to learn their flood risk and talk to their insurance agent to determine if their policy will be affected by BW-12.

Unlike wildfire coverage or hail damage – two of the biggest natural disaster events that result in claims in Colorado – only a small percentage of people carry federal flood insurance because it is an added cost to the insured. As a result, we may not see the high percentage of claims that these other disasters see.

If a homeowner or business has flood insurance coverage, the following is covered under the federal program:


  1. Up to $250,000 for structural damage
  2. $100,000 in personal property coverage (personal property in basement excluded)


  1. Building property up to $500,000
  2. Personal Property up to $500,000

As the weather continues to improve, residents in the Colorado towns impacted by the devastating 2013 flood will be faced with the daunting cleanup and rebuilding process that so many along the eastern seaboard have experienced. The insurance industry will most likely be taking a look at flood coverage and its role in the process.

Shane Christley is a producer of personal lines for Van Gilder Insurance and can be reached at schristley@vgic.com or (303) 831-5215. Van Gilder Insurance is a privately held brokerage firm serving clients in the Rocky Mountain region and across the U.S.

Topics Agencies Flood Market Homeowners Colorado

About Shane Christley

Special to Insurance Journal

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