As wildfire risk, severe weather, and rising construction costs continue to reshape the home insurance market, many Colorado homeowners are discovering an unsettling reality: traditional insurers are increasingly unwilling to renew or issue policies. For those who have been turned away, the Colorado FAIR Plan has emerged as a last-resort option—but one that comes with significant trade-offs.
Formally known as the Fair Access to Insurance Requirements (FAIR) Plan, this state-backed insurance program is designed to provide coverage when private insurers say no. While it offers a critical safety net, it is far from a perfect solution, and its limitations are becoming a growing concern for homeowners, buyers, and real estate professionals across the state.
What Is the Colorado FAIR Plan?
The Colorado FAIR Plan is a state-supported insurance program created to ensure homeowners can obtain basic property insurance when they are denied by the private market. It was signed into law by Governor Jared Polis in 2023and officially launched in April 2025.
The plan is intended for homeowners who are considered high risk due to factors such as:
- Wildfire exposure
- Repeated or significant prior insurance claims
- Other underwriting red flags that cause private insurers to decline coverage
In short, the FAIR Plan exists to prevent homeowners from becoming completely uninsured, particularly when insurance is required to satisfy a mortgage lender.
How FAIR Plan Coverage Differs From Traditional Insurance
While the FAIR Plan provides access to coverage, it does not mirror a standard homeowners policy.
Actual Cash Value, Not Replacement Cost
Most private insurers offer replacement cost coverage, meaning your payout reflects the cost to rebuild your home today. The FAIR Plan, however, only covers actual cash value (ACV), which factors in depreciation.
That difference can be financially significant.
- A $300,000 home could receive a payout closer to $150,000 to $180,000 in a total-loss scenario, according to reporting from The Gazette.
- Coverage is capped at $750,000, meaning higher-value homes are ineligible altogether.
For homeowners in appreciating markets or high-cost rebuild areas, this gap can create substantial exposure.
Why So Few Homeowners Have Signed Up
Despite growing nonrenewals in wildfire- and hail-prone regions, enrollment has been extremely limited. Since its April launch, the Colorado FAIR Plan has issued only 51 policies.
Several factors help explain why.
High Barriers to Entry
Before applying, homeowners must prove that at least three admitted insurers—companies regulated by the Colorado Division of Insurance—have denied them coverage. During an insurance crisis, when timelines are tight and cancellations are sudden, that requirement alone can be difficult to meet.
Cost and Messaging
The FAIR Plan does not attempt to position itself as affordable. In fact, its own website explicitly warns applicants that it is the “most expensive way to insure a property” and highlights coverage limitations before users even begin the application.
While transparent, this messaging reinforces the idea that the plan is a last resort, not a viable long-term solution.
Competition From Non-Admitted Carriers
For now, many high-risk homeowners are still finding coverage through non-admitted insurers, which operate outside standard state regulations. These companies offer more flexible underwriting but come with fewer consumer protections and no state-backed guarantee if the insurer fails.
Who Is Using the FAIR Plan—And Who May Soon Need It
At present, FAIR Plan policies are primarily being issued for:
- Homes located in designated wildfire zones
- Properties with multiple or severe past insurance claims
However, insurance agents across Colorado are reporting rising rejection rates, even for long-time homeowners who previously had no trouble maintaining coverage.
As non-admitted carriers reach their own limits or raise prices further, the FAIR Plan may become the only remaining option for entire communities, regardless of whether homeowners can comfortably afford it.
The takeaway for Colorado is clear: a safety net can quickly become the default system if broader market solutions are not implemented.