Wildfire has always been part of Colorado’s landscape. But in recent years, the risk has expanded in ways that caught a lot of homeowners — and insurance companies — off guard.
The Marshall Fire in December 2021 changed everything. It destroyed over 1,000 homes in suburban Boulder County, in neighborhoods that most people never considered to be at wildfire risk. It became the most destructive wildfire in Colorado history, and it happened in a suburban community, not a remote mountain area.
If you own a home in Colorado, wildfire risk is something you need to understand — and your insurance coverage needs to match.
What Your Homeowners Policy Covers
Standard homeowners insurance includes fire coverage, and that includes wildfire. Here’s what’s typically covered:
- Dwelling coverage — Damage to your home’s structure from fire
- Other structures — Detached garages, sheds, fences damaged by fire
- Personal property — Belongings destroyed or damaged by fire or smoke
- Loss of use / additional living expenses (ALE) — Hotel, meals, and other costs if you’re displaced from your home
- Debris removal — Cost to clear fire-damaged materials from your property
So far, so good. But the devil is in the details.
Coverage Gaps You Need to Know About
1. Additional Living Expenses (ALE) Limits
Your policy covers temporary living expenses if your home is uninhabitable, but there are limits — both in dollar amount and time. After the Marshall Fire, many families were displaced for 18-24 months while their homes were rebuilt. Some discovered their ALE coverage ran out before their home was finished.
What to check: What’s your ALE limit? Is it a flat dollar amount or a percentage of your dwelling coverage? Is there a time limit?
2. Building Code Upgrades
When you rebuild after a total loss, you have to build to current building codes — which may be stricter than when your original home was built. Standard policies typically cover rebuilding “like kind and quality,” but the cost of meeting updated codes can add 10-20% to the rebuild cost.
What to check: Does your policy include an ordinance or law endorsement? This covers the additional cost of meeting current building codes during a rebuild.
3. Landscaping and Hardscaping
Most homeowners policies have very limited coverage for landscaping — typically 5% of your dwelling coverage, with a cap of $250-$500 per tree or shrub. If you have mature landscaping worth tens of thousands of dollars, you’ll recover very little of that.
4. Debris Removal Limits
Fire debris removal is expensive — often $30,000 to $75,000 or more for a total loss. Standard policies include some debris removal coverage, but it may not be enough for a complete fire loss. An additional debris removal endorsement can increase your limit.
5. Smoke Damage Without Fire Contact
If a nearby wildfire creates heavy smoke that damages your home’s interior — staining walls, ruining HVAC systems, contaminating soft goods — but the fire never physically reaches your property, coverage can be a gray area depending on your policy language.
Defensible Space and Premium Discounts
Defensible space is the buffer zone around your home where you manage vegetation to reduce wildfire fuel. Colorado’s defensible space guidelines typically call for three zones:
- Zone 1 (0-5 feet): Non-combustible area immediately around the home
- Zone 2 (5-30 feet): Lean, clean, and green — well-spaced trees, mowed grass, cleared brush
- Zone 3 (30-100 feet): Reduced fuels — thinned trees, cleared dead wood
Insurance Benefits of Defensible Space
Many insurance carriers offer premium discounts for documented defensible space — typically 5-15% off your premium. More importantly, maintaining defensible space can be the difference between getting coverage at all in high-risk areas.
Some carriers now require a wildfire risk assessment or defensible space certification before they’ll write or renew a policy in certain areas. Investing in defensible space isn’t just good fire safety — it’s good for your insurability.
Other Mitigation Discounts
Beyond defensible space, you may qualify for discounts by:
- Installing fire-resistant roofing materials (Class A rated)
- Using fire-resistant siding and deck materials
- Enclosing eaves and vents with ember-resistant screens
- Installing exterior sprinkler systems
- Having a community wildfire protection plan in place
What If You Can’t Find Coverage?
Some Colorado homeowners in high-risk wildfire areas have struggled to find coverage as major carriers have pulled back from certain zones. If you’re in this situation:
1. Work with an independent agent. We have access to carriers and surplus lines insurers that specialize in harder-to-place risks. Options exist — they’re just not always with the big brand-name carriers.
2. Colorado FAIR Plan. Colorado has a FAIR Plan (Fair Access to Insurance Requirements) that provides basic property insurance for homeowners who can’t find coverage in the standard market. It’s coverage of last resort — premiums are higher and coverage may be more limited — but it ensures you’re not left without any protection.
3. Mitigation first. Before assuming you can’t get coverage, invest in defensible space and home hardening. Many carriers will reconsider a property after mitigation improvements are documented.
What to Do Right Now
Whether you’re in a known wildfire area or not, here’s what every Colorado homeowner should do:
- Review your ALE limits. Make sure your additional living expenses coverage is enough to sustain your family for 12-24 months if needed.
- Check for ordinance or law coverage. This endorsement is inexpensive and critical for rebuilding to current codes.
- Document your belongings. Take a video walk-through of your home and store it in the cloud. This makes the claims process much smoother.
- Create and maintain defensible space. Even in suburban areas, basic vegetation management reduces your risk.
- Talk to your agent annually. Wildfire risk and carrier appetite change every year. An annual review keeps you ahead of the curve.
Bottom Line
Wildfire risk in Colorado is not going away — it’s growing. The good news is that proper insurance coverage and proactive mitigation can protect you and your family. You should also understand how much home insurance costs in Colorado and whether you need separate flood insurance — especially if you’re near a burn scar area. The key is understanding what you have, what you need, and where the gaps are.
If you’re concerned about wildfire coverage — or if you’ve been told you can’t get insurance in your area — reach out. We specialize in finding solutions for Colorado homeowners, even in challenging risk zones.
Have questions? Call Patrick at 303-994-7814 or visit patrickhenigan.com/contact.