Homeowners insurance premiums in Colorado climbed nearly 58% between 2018 and 2023, according to the Rocky Mountain Insurance Association. The increases, driven by inflation, catastrophic losses, and repeated wildfire and hail damage, have made coverage more expensive and (in some cases) harder to obtain. Nationally, an estimated one in seven homes is uninsured.
To address potential gaps in the market, lawmakers created the Colorado FAIR Plan, a state-backed “last resort” insurance option for homeowners denied coverage by traditional carriers. Gov. Jared Polis signed the program into law in 2023 and launched it in April 2025.
Limited Uptake Since Launch
Only 51 homeowners have enrolled less than a year after its rollout. The FAIR Plan is not intended to compete with private insurance and is marketed as a last resort, with clear warnings about its limited coverage and high costs. Applicants are informed upfront that it is “the most expensive way to insure a property” and that it comes with coverage restrictions.
Applicants must show proof of rejection from at least three admitted carriers—those regulated by the state—before they can apply. This requirement can be a hurdle for homeowners seeking coverage quickly after a policy cancellation.
Coverage Details and Limitations
The FAIR Plan offers actual cash value coverage, rather than full replacement cost, meaning depreciation is factored into payouts. A total-loss claim for a $300,000 home could yield $150,000 to $180,000. The program also caps coverage at $750,000 in property value.
Coverage focuses primarily on major risks such as fire and may not include the broader protections available in many private market policies.
Who Is Using the Program
Most policies issued so far have been for homes in wildfire-prone areas or for properties with repeated claims—situations that often lead to denial from traditional carriers. Many of these homeowners are still able to find coverage in the non-admitted market, where insurers have more flexibility in underwriting but are not backed by the state and are not required to follow the same consumer protection regulations.
Potential for Broader Use
Non-admitted carriers currently absorb much of the high-risk market in Colorado. However, if cancellations and rejections increase, the FAIR Plan could become the primary option for more homeowners. In other states, similar programs have grown significantly under market pressure.
California’s FAIR Plan, for example, covered about 2% of homes a decade ago but now insures more than 591,000 households. In the first half of 2025 alone, nearly 90,000 new policies were issued there. State officials in California are now seeking to draw private insurers back into high-risk markets by adjusting rate-setting rules.
Key Considerations for Homeowners
For Coloradans unable to secure private coverage, the FAIR Plan remains an available option. Applicants must provide documentation of at least three coverage denials and basic property information. While the coverage is more limited and costly than typical policies, it can meet mortgage requirements and provide protection against major risks.
Stay informed and ahead of the curve — explore more industry insights and program opportunities at ProgramBusiness.com.