By Jennifer Simpson, Esq. — Buckley Simpson Law, Lakewood, CO
Most people don’t think about their homeowners insurance until something goes wrong. A burst pipe. A kitchen fire. A wind or hailstorm. Or — as too many Colorado families experienced — a catastrophic wildfire.
After the 2021 Marshall Fire, the same painful pattern emerged across Louisville, Superior, and Boulder County:
- Many homes were underinsured
- Rebuilding costs were much higher than expected
- Replacement limits didn’t keep up with Colorado construction prices
- Homeowners didn’t know what their policy actually covered
At Buckley Simpson Law, we still hear from families who thought they had “good” insurance, only to learn they weren’t protected the way they believed.
This guide breaks down the key questions every Colorado homeowner should ask — especially if you’re worried your current coverage isn’t enough to rebuild after a major loss.
Why So Many Colorado Homeowners Were Underinsured
Before the Marshall Fire, many policies were written years earlier, when construction was cheaper, labor was easier to find, and material costs weren’t volatile.
After the fire, families learned the hard truth:
“My home was insured for $500,000… but it costs $650,000 to rebuild.”
That insurance gap — often called being underinsured — forced thousands of Colorado families into difficult financial decisions.
The good news? Being underinsured is almost always preventable, if you know what to look for.
The Most Important Question: Could You Rebuild Your Home Today?
Homeowners insurance is based on replacement cost, not market value.
The value of your home on Zillow doesn’t matter. What matters is what it costs to rebuild your home in 2025.
Colorado rebuild costs are higher than the national average because of:
- Labor shortages
- High material prices
- Wildfire-resistant building requirements
- Updated code requirements (Class A roofing, ignition-resistant siding, ventilation changes, etc.)
- Complex terrain and soil conditions
- Limited contractors
If your policy hasn’t been updated recently, your coverage amount may be far too low.
The 5 Types of Coverage Colorado Homeowners Need to Review
1. Dwelling Coverage (Coverage A)
This is the most important number in your entire policy.
Ask yourself: Does my Coverage A equal the real cost to rebuild my home, at today’s Colorado prices?
Many policies default to square-foot formulas that undervalue custom layouts, older homes, additions, or upgraded finishes.
Common gaps discovered after the Marshall Fire:
- $100–$200/sq. ft. missing from rebuild estimates
- No adjustments for modern code upgrades
- No inflation adjustments
A 2,000 sq. ft. home can cost $450,000 to $700,000+ to rebuild in Colorado today depending on location and design.
2. Extended Replacement Cost
This is the coverage that saved many families after the Marshall Fire.
Typical policies offer:
- 25% extended replacement
- 50% extended replacement
- 100% guaranteed replacement
The higher this number is, the better your protection during a large catastrophe when prices spike.
Example:
Coverage A: $400,000
Extended Replacement Cost: +50%
Total Available Rebuild Coverage = $600,000
If you don’t know your percentage, you’re not alone. Most homeowners don’t.
3. Ordinance or Law Coverage
This is one of the areas where Colorado homeowners are often the most underinsured.
This coverage pays for code upgrades, including:
- Fire-resistant roofing
- Updated insulation and energy codes
- Sprinkler requirements (in certain jurisdictions)
- Electrical and plumbing code updates
- Wildfire mitigation construction changes
- Structural changes required by engineering
After the Marshall Fire, many families discovered they didn’t have enough Ordinance or Law coverage — and were forced to pay tens of thousands out of pocket.
If you own an older home in Denver, Lakewood, Wheat Ridge, Golden, or Boulder County, this coverage is critical.
4. Personal Property Coverage
Most people carry too little, or the wrong type.
There are two options:
- Actual Cash Value (ACV): Your belongings are depreciated
- Replacement Cost Value (RCV): You get the cost to replace the items today
A 10-year-old couch might be worth $50 in ACV — but $1,200 to replace under RCV.
After the Marshall Fire, families discovered their contents were insured at ACV without realizing it. This created massive gaps.
5. Additional Living Expenses (ALE / Loss of Use)
After a fire or major water event, ALE pays for:
- Temporary housing
- Increased food costs
- Storage
- Laundry
- Transportation
- Other displacement expenses
In Colorado, rebuilds can take 12–24 months, especially after disasters.
If your ALE only covers 12 months, you may run out of housing coverage long before your home is rebuilt.
How to Know If You Have Enough Homeowners Insurance
You don’t need to guess. Here’s what every Colorado homeowner should do once a year:
1. Review your Declarations Page
Look for:
- Coverage A amount
- Extended replacement cost percentage
- Ordinance or Law limits
- Contents coverage type (RCV vs. ACV)
- ALE time limits
2. Ask your insurer for a current rebuild estimate
It should reflect Colorado pricing, not national averages or outdated formulas.
3. Request code-upgrade details
Especially if your home is older, remodeled, or located in a wildfire-risk area.
4. Review wildfire-related requirements
Colorado’s new building codes continue to evolve.
5. Compare your policy to recent local disasters
If your policy wouldn’t have protected you during the Marshall Fire, you likely need an update.
When Should You Call an Attorney?
You may want legal help when:
- Coverage is unclear
- Your insurer is lowballing a rebuild estimate
- There’s a major dispute about costs
- The insurer delays the claim
- You believe you’re underinsured through no fault of your own
- You feel overwhelmed or pressured by the adjuster
At Buckley Simpson Law, we help homeowners understand their policies, resolve disputes, protect their rights, and move forward with clarity. If you have questions about your specific situation, contact us for a free consultation.
Final Thoughts: Don’t Wait for a Disaster to Find Out You’re Underinsured
The Marshall Fire changed how Colorado thinks about homeowners insurance. It revealed the gaps, the risks, and the financial realities of rebuilding in a growing, high-cost state.
You deserve a policy that protects your home — not one that leaves you exposed.
If you want help understanding your coverage, identifying gaps, or navigating a dispute with your insurer, we’re here to support you with the compassion, experience, and personal attention Buckley Simpson Law is known for.
Disclaimer
This blog is for informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. Past results do not guarantee future outcomes. For advice about your specific situation, please contact a licensed Colorado attorney.
About the Author
Jennifer Simpson, Esq. is a partner at Buckley Simpson Law and a proud Colorado native. While her primary practice focuses on personal injury cases including car accidents, slip and fall cases, wrongful death, and motorcycle accidents, she believes Colorado homeowners deserve clear information about insurance coverage and property protection. Jennifer has been recognized as a Colorado Rising Star by Super Lawyers (2020–2025) and Top 40 under 40 by the National Trial Lawyers (2019–2024). For legal advice on insurance disputes or property-related matters, contact Buckley Simpson Law at (720) 900-2003 or info@buckleysimpsonlaw.com.