Best Homeowners Insurance in Colorado: Top 5 Insurance Companies to Protect Your Investment

Colorado is an attractive state for those wanting to invest in real estate. There are plenty of opportunities if you have the budget and are willing to go into the market. Unfortunately, there are also many risks you can face as a homeowner in Colorado, particularly those coming from natural disasters.

Whether it's harsh winters or extremely hot summers, some unexpected events could cause extensive damage to your home. This can hurt your investment in the future, so how can you prepare for that?

In any case, the best thing you can do is get home insurance. Depending on the coverage limits of your policy, you'll be able to protect your property and/or belongings after certain events.

There are many options to consider when it comes to looking for a great insurance company, so how do you know you're getting the right coverage?

We want to make things easier for you, so we gathered five of the best home insurance companies in Colorado. Each of these companies was reviewed based on its coverage, discounts, features, and add-ons.

What's Colorado Homeowners Insurance?

Let's quickly go over the definition of homeowners insurance in Colorado. This will help you get a grasp of all the benefits you can get from these services.

Home insurance is one type of property insurance. It covers your dwelling and any other structures on your property. Dwelling coverage may also cover your personal belongings or living expenses above your standard cost of living.

In other words, Colorado homeowners insurance protects you during any unexpected events that may harm your property, your belongings, and other assets.

Is homeowners insurance required by law? No. You don't have to get a new homeowners insurance policy if you don't want to go through that extra expense. However, it's greatly recommended to get some sort of coverage just in case.

A property can easily be one of your most valuable assets. Considering how exposed Colorado is to natural disasters, you may want to go over different homeowners insurance policies and choose one. Home insurance could also protect you if someone sues you for accidental injuries, which is also a great point to consider.

Whether you get paid for certain damages or not depends on your policy.

What Are the Average Home Insurance Costs in Colorado?

This is when things get a bit complicated. Unfortunately for those looking to invest in Colorado, the average insurance rate is much higher than the national average.

According to NerdWallet, the average homeowners' insurance in this state is $2,580 per year or $215 per month. This is about 42% higher than the national average.

Why is homeowners insurance so expensive in Colorado? The simple answer is that there's high inflation and increased risks of natural disasters. The average personal property replacement cost in high-risk areas has become higher every year, making it harder for insurance companies to cover those losses.

To fight those higher costs, these companies increased their premiums.

Does this mean you shouldn't invest in Colorado real estate? Not at all! As mentioned, this state offers many opportunities of earning money through your property. However, you must know where to look and also how to choose the right insurance company to work with.

Factors That Affect Your Home Insurance Coverage in Colorado

The fact that Colorado homeowners insurance usually is expensive doesn't mean that you'll have to pay the highest premiums for your property. You'll get different rates depending on a few factors:

• Location
• Age, Type, Features, Condition, and Value of Your Property
• State of Your Roof
• Past Claims History
• Coverage Limits
• Deductibles
• Discounts
• Credit History
• Personal Liability Coverage
• Extras Like Flood Coverage

Should you get the cheapest homeowners insurance? Not necessarily. There's no "absolute" answer to these questions since every person's case is different. You must do proper research on the real estate market you're planning on investing in, as well as the best home insurance companies in the area.

Once you have all the information you need, you can compare it with your financial budget and your goals to come up with the best solution. One of the best things you can do is talk to your home insurance agent and ask as many questions as you consider appropriate. Also, try not to go for the first company you talk to.

It's always best to look at the bigger picture and have different policies to compare.

Is Homeowners Insurance the Same as Landlord Insurance?

Many people compare homeowners insurance and landlord insurance. Do they offer the same benefits?

Even though they seem similar, there's a crucial difference between them. Both policies protect your property and other structures. However, homeowners insurance requires you to live on the property to get it. Landlord insurance doesn't ask you to do that. It protects you from any damage that got caused by your tenants or anything that can affect your rental income.

Let's evaluate certain scenarios to help you decide which coverage option is best for you:

How You'll Use Your Property

This is the first thing you must consider when buying landlord/home insurance. If you're planning on living on the property you bought or renting occasionally, homeowners insurance may be the best option.

On the contrary, if you're not going to live in the property you bought, one of the smartest things you can do is rent it. Renting properties is one of the best ways to earn passive income. If this is the approach you want to go for, you may prefer landlord insurance.

What You Want to Protect

Another important thing you must evaluate is what you want to protect. As mentioned, both policies protect your property and certain detached structures like sheds.

Homeowners insurance extends coverage to your personal property, whereas landlord insurance doesn't. If you're renting your property a lot, the chances are that the items there aren't yours but rather the tenants'. In that case, you wouldn't need to pay for personal property coverage. You can encourage your tenant to get renters insurance to solve this issue.

What if you have personal furnishings on your property? You could add them to your "landlord policy" for an extra fee.

Again, your decision could get heavily influenced depending on whether you're living on your property or renting it to other people.

Loss-of-use vs. Loss-of-rent Coverage

Both homeowners and landlord insurance cover similar things, but you may get different "types" of coverage.

Colorado homeowners insurance, for example, can cover loss-of-use expenses, which can include meals or lodging. This is important if the "covered peril" forced you to move out of your property while it gets repaired.

Landlord insurance, on the other hand, isn't meant to protect who lives on the property; it's supposed to protect you as the landlord. If you were to use your policy, you would cover things like lost rent. This protects you if the tenant doesn't pay or if the property damage is so severe that the tenant has to move out.

What If You're Living in the Property and Renting at the Same Time?

Some people decide to rent a part of their property to save some money on rent/utility expenses. If this is your case, homeowners insurance would be the better option.

In any case, the best thing you can do is ask your insurer and be honest about your intentions with the property. These professionals will guide you toward the most appropriate option depending on your needs.

If you lie about your intentions (i.e. you told your insurer you would live on the property but are instead renting it), you expose yourself to getting your claims denied. In the worst-case scenario, you could get your policy canceled.

Some home insurance providers offer policy bundles or add-ons that could give you everything you need to protect yourself. All you have to do is take your time before deciding.

What Do You Need to Choose the Right Homeowners Insurance in Colorado?

If you've already decided to get home insurance for your property, it's time to know how to do it.

Colorado has a particular situation to consider. It's a state exposed to many natural disasters, meaning you'll possibly need to get add-ons to cover a few things that the basic policy doesn't.

Even though additional insurance coverage may not be too convenient money-wise, it's still better than having to pay out-of-pocket if an unexpected event happens and damages your property.

Which add-ons should you have for your insurance policy in Colorado? Here are a few:

Flood Insurance

Flood insurance is a must when it comes to this state. Typically, floods aren't covered by standard insurance policies.

Thankfully, many insurance companies work with the National Flood Insurance Program (NFIP), meaning they offer flood coverage for an extra fee. This saves you from the hassle of looking for another private insurer.

Water Backup Insurance

Standard home insurance policies don't cover sewer and sump pump backups. Many natural disasters tend to affect your home's sewer line and cause extensive water damage in general. You could get this add-on and forget about paying out-of-pocket.

Mine Subsidence Coverage

A few areas in Colorado get affected by subsidence. Subsidence happens when underground mines collapse or shift, causing the ground to move.

If your property is close to a subsidence area (or in one), you should consider getting that extra coverage. Regular home insurance policies don't include that.

Common Causes of Insurance Claims in Colorado

We've mentioned that insurance premiums are higher in Colorado mostly because of natural disasters, but which ones? Here are three of the most common claims that get filed in Colorado:

• Water Damage: Whether it's due to heavy rains or melting snow, many properties are exposed to extreme flooding conditions. This causes water damage claims to be more common than in other states.
• Fire Damage: Colorado has dry air and sweeping forests, making it more susceptible to wildfires. A significant fire could damage your property in unimaginable ways, so it's always a great idea to get some coverage for that.
• Hail Damage: The state is known for having a high elevation and thin air, meaning that hail can fall faster than in other areas. Since hail in Colorado may not melt as fast as in other states, it can cause significant damage to your property if you're exposed to these disasters.

Tips to Find the Best Homeowners Insurance Companies in Colorado and Save Money

Choosing the right Colorado homeowners insurance can seem complicated, but it's not. You have to consider your particular needs surrounding the property you're investing in. There'll be less risks if you take your time to research.

Here are some tips to follow if you want to have a better chance of choosing the right insurance company:

• Compare Quotes: Whether this is your first home or not, you must get quotes from different providers. This will make it easier to find a policy that adapts to your needs the best.
• Maintain a Good Credit Score: Many insurance companies consider your credit score before giving you a premium. If you have a lower score, you may have to pay more for insurance. Make sure you're maintaining a good score if you want to find lower premiums.
• Consider a Higher Deductible: Even though many people prefer choosing a low deductible just in case, they can cause your annual premium to be much higher. Evaluate your current situation to see if a higher deductible is a more convenient choice.
• Look for Discounts: Most providers offer discounts if you're buying a property. If you choose the right ones, you could save a ton of money in the future.
• Make Security Upgrades: Making security upgrades to your home means that it'll be less likely to get damaged. Even though these upgrades represent a higher upfront investment, they could get you insurance discounts.
• Evaluate Your Needs and Budget: Don't do what everyone else is doing. If you want to make the best decision possible, you must prioritize your goals, needs, and financial situation. You can use other people's cases as references, but never decide based on them.

What Are the Best Five Homeowners Insurance Companies in Colorado?

There are plenty of Colorado homeowners insurance options to get in 2023. Let's look at some of the best you can get!

#1 - Allstate

Allstate is the best home insurance company you can consider if your goal is to get rewards/discounts.

This insurance company has agencies in more than 40 cities in Colorado. It offers online quotes for free to make the process much easier.

Following up on the online advantages, Allstate allows you to track your claims through your smartphone or web browser, making things much more convenient.

Coverage and Features

In its general home insurance package, you can expect protection against personal liability and any damage to your personal property besides insuring your home.

What makes Allstate shine is its wide selection of add-ons. You can get additional coverage for:

• Theft Restoration
• Green Improvements
• Flood Coverage
• Earthquake Coverage
• Water Backup Coverage

Other bonuses include:

• Claim RateGuard: It's common for insurance companies to get your premium up after you file a claim. Thankfully, you can avoid this with Allstate's Claim RateGuard. It keeps your premium the same even if you file a claim. However, this only applies to one claim every five years.
• Claim-Free Rewards: You can ask for 5% back on your renewal each year you don't have a claim. This allows you to save some money.
• Deductible Rewards: Allstate allows you to get $100 off your deductible once you sign up, as well as $100 each year you don't make a claim. This bonus can add up to $500.

Discounts

The average annual premium for Allstate is $1,660 for up to $250,000 of coverage.

There are many ways to save money with Allstate. You can consider these options:

• Responsible Payment Discount
• Claim-free Discount
• Multi-policy Discount
• Home Buyer Discount
• Welcome and Loyalty Discount
• Easy Pay Plan (Automatic Payments)
• Protective Device Discount
• Early Signing Discount

#2 - State Farm

State Farm is another insurance provider that gives you plenty of options to protect your property. It has agents in almost 100 cities in Colorado, so you won't have any issues getting everything done.

Something important to note is that State Farm is the largest homeowners insurance company in the United States, meaning that it's best for those looking for a company with a longer track record.

Coverage and Features

You can check your insurance claims from State Farm's website or mobile app. Moreover, if you want to talk to an agent, all you have to do is use the "Find an Agent" tool online, and you'll get redirected to someone as fast as possible.

The consumer experience in State Farm is great most of the time, so you won't have any issues when filing or managing your claims.

Standard insurance coverage from State Farm includes:

• Dwelling Protection
• Unattached Structure Protection
• Personal Property Protection
• Personal Liability Protection
• Loss-of-use Protection
• Medical Payments

You can expect a ton of add-ons too, such as:

• Water Backup Coverage
• Identity Fraud Coverage
• Earthquake Coverage
• Home Rental Coverage
• Service Line Coverage
• Damaged Foundation Coverage
• And more

Discounts

The average annual premium for State Farm is $1,500.

You can save money in many different ways as a State Farm policyholder. Some of the discounts you can get include:

• Multiple Line Discount (if you bundle different policies from the same company)
• Protective Device Discount
• Roofing Discount
• Home Security Insurance Discount

Even though State Farm may not have as many discounts as other options here, it makes up for it with its lower premiums.

#3 - Nationwide

Nationwide is one of those insurance companies with premiums on the expensive side. However, the company makes up for it by offering extensive coverage.

Coverage and Features

What makes Nationwide stand out is the fact that it offers coverage options in its base policy. Some of these would be sold as "extras" in other companies, which is great news for those who want to save money.

You can get:

• Personal Property Coverage
• Dwelling Coverage
• Credit Card Coverage
• Personal Liability Protection
• Medical Payments

Additionally, you may be able to add the following bonuses, depending on where you live and the type of policy you get:

• High-value Belonging Coverage
• Brand New Belonging Coverage
• Extended Replacement Cost Coverage
• Service Line Coverage
• Water Backup Coverage
• Personal Injury Protection

Discounts

Nationwide has one of the highest average annual premiums. It's currently at $2,180.

You can save a bit of money on your homeowners insurance through the following:

• Multi-policy Insurance
• Protective Devices
• New Home Purchase
• Prior Insurance History
• Gated/Protected Properties
• Claims-free Discounts
• Roof Ratings
• Home Renovation Credit
• Smart Home Technology (available in a few states only)

#4 - American Family

American Family offers a decent range of coverage options for those living in Colorado. Even if you're not convinced with the basic insurance policy, you can customize it and add as many extras as you consider appropriate.

Coverage and Features

As with the rest of the options on this list, you can file and manage your claims through the company's website or mobile app. If you want to talk to an agent over the phone, you can do it by calling 800-692-6326.

You can expect your American Family insurance to cover the basics that all the other options here do:

• Property Coverage
• Unattached Structure Coverage
• Personal Property Coverage
• Personal Liability Protection
• Medical Payments
• Loss-of-use Protection

If that doesn't feel enough, you can add:

• Identity Theft Protection
• Water Backup Protection
• Matching Siding Protection
• Senior Living Protection
• Service Line Protection
• Extra Coverage for Home-based Businesses
• Temporary Rental Coverage
• And more

Discounts

The average annual premium for American Family insurance is $1,980.

As with all the other options on this list, you have access to many discount options. You'll have to see if you're eligible for them, so ask your insurer first.

These are the discount options available in 2023:

• Loyalty Discounts
• Automatic/Paperless/Full Pay Insurance Discounts
• Generational Discounts
• Bundles
• New Home Discount
• Renovation Discounts
• Smart Device Discounts

#5 - Lemonade

Lemonade is the best option if your goal is to get your claims through faster. Although it doesn't offer as many coverage options as the other companies on the list, it gives you enough to achieve peace of mind.

Coverage and Features

This is a rather new insurance company. It has been around since 2015. One of its main benefits is that it uses AI to process claims. According to the company, this allows you to manage your case much faster.

Moreover, the company donates a portion of your premium to a charity organization that you choose.

Here, you'll pay a flat fee for your premium. The rest of the money will go toward paying your claims and other expenses.

You can expect the following:

• Property Protection
• Unattached Structure Protection
• Personal Liability
• Personal Property Replacement/Repair Protection
• Loss-of-use Protection

Policyholders can also add:

• Water Backup Coverage
• Day Care Liability
• Extended Reconstruction Cost
• Swimming Pool Liability
• High-value Item Coverage
• Buried Utility Coverage

Discounts

You could get a few discounts by doing the following:

• Bundle your policy with another one from Lemonade.
• Pay your premium annually.
• Install protective devices in your home.

Other Homeowners Insurance Companies in Colorado You Can Consider

Here are the runner-ups for our list of top home insurance companies in Colorado:

• Amica
• Liberty Mutual
• USAA (not available to non-military residents)
• Chubb

Take your time to evaluate each homeowners insurance policy, compare your favorites, and choose a winner. All of the options we mentioned will protect your property efficiently, so go for the one that feels more appropriate.

Conclusion

Your Colorado real estate investment will be worth it as long as you make the right calls.

Ensuring your property is always protected against unforeseeable events will give you the peace of mind you didn't know you needed.

We hope this guide has helped you make an informed decision for your next home insurance policy. Remember to take your time and never rush your decision.

As long as you explore all the possibilities and evaluate your risks, you'll make the most out of your investment.