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State reps take on underinsurance issue after devastating wildfires

State Rep. Judy Amabile's bill would create guaranteed replacement cost coverage in homeowners insurance.

DENVER — A Colorado lawmaker has introduced a bill to help people rebuild after losing a home in a wildfire. Democratic state Rep. Judy Amabile introduced HB23-1174, which would create guaranteed replacement cost coverage in homeowners insurance. 

Amabile represents Boulder County, where many homeowners found themselves underinsured after the Marshall Fire. She's represented constituents affected by the East Troublesome Fire, Cameron Peak Fire and Marshall Fire. 

After hearing countless stories, she wanted to help find a solution to the underinsurance problem before the next disaster. 

The guaranteed replacement cost coverage would pay the full cost to repair or replace a damaged or destroyed structure, even if the cost is more than the policy limits. 

"You would have to pay extra for that, and if you don't want that then they have to offer you some other policies that allow you to get more if you are underinsured," Amabile said.    

She wants guaranteed replacement cost coverage to at least be an option. However, some in the industry worry this idea would do more harm than good. 

Carole Walker is with the Rocky Mountain Insurance Association. Her group is working with Amabile on this bill. She said language in the legislation right now would raise costs for consumers. 

"Have a one-size fits all policy that's required that insurance companies offer, and buying that policy will be very expensive," Walker said. 

Walker said buying this type of coverage would require on-site inspections, and it can take weeks to get a guaranteed replacement policy. 

She said these policies are more expensive because of lessons learned during previous disasters. According to Walker, companies that sold these policies went bankrupt in the 1980s and 1990s after natural disasters in other states. 

"This could really put some insurance companies out of the insurance game in Colorado," Walker said.

Amabile doesn't want to see Coloradans struggle to get insurance, so she hopes to find some compromise. 

Amabile is also working on legislation that would create government-run insurance. It would be a last resort for homeowners who can't get coverage from private companies because wildfire risk is going up.

"The plans on that program are going to be really bare bones and they are going to be very expensive," she said in January.

If Coloradans can't find insurance, Amabile hopes the state can at least offer a backup, even if it's not a lot.

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