Why is Car Insurance So High in Colorado?

Colorado has some of the highest car insurance rates in the nation, ranking 2nd for the largest premium increases over the past decade. The average Colorado driver now pays nearly $2,000 per year for coverage.

But why exactly are auto insurance costs increasing so rapidly in the state? There are several key factors unique to Colorado that push premiums upward:

High Urban Population Density

Over 86% of Colorado’s population lives in urban areas. Densely populated cities and metro regions tend to have higher rates of accidents, injuries, vandalism, and vehicle theft. With more cars and drivers concentrated together, the risk of collisions and claims rises. This gets priced into higher insurance premiums.

The Front Range Urban Corrido, spanning from Pueblo to Fort Collins, contains the majority of Colorado’s population. This urbanization and congestion helps explain the elevated insurance rates.

Growing Population and Congestion

Colorado’s population grew by over 14% from 2010 to 2020. All these new residents mean more vehicles out on the roads. Congestion is increasing in cities like Denver, compounding the accident risks.

Population growth far outpaced the national rate, indicating Colorado’s roads are getting disproportionately busier. Heavier traffic volumes lead insurers to raise rates.

Harsh Winter Weather

The severe winter conditions in Colorado take a toll on vehicles and lead to increased accident risks during snowy months. Icy, snow-packed roads result in more collisions, spin outs, and slide offs during the winter driving season.

Insurers know Coloradans face more hazardous winter driving conditions compared to warmer states. This leads to higher premiums.

Rising Medical and Repair Costs

When accidents do happen, the costs to repair vehicles and provide medical care for injuries continue to climb in Colorado and nationwide.

• The average medical claim from an auto injury increased over 20% from 2013 to 2020, driving up the claim payouts insurers must make after accidents.

• Repairing new high-tech safety features on modern cars also costs more – for example, repairing a cracked windshield with advanced ADAS sensors can cost thousands.

Insurers pass these rising costs onto customers through higher premiums.

Natural Disasters

From hail and winter storms to flash floods and wildfires, Colorado faces expensive natural disaster risks. Replacing vehicles damaged by disasters costs insurers big money.

Catastrophic hailstorms in the Denver metro area regularly cause over $1 billion in auto damage. Insurers know these severe weather events are frequent in Colorado, pressuring rates upward.

Rates of Theft

Vehicle thefts have surged in Colorado in recent years. Colorado had the 4th highest rate of motor vehicle thefts per capita in 2021.

These thefts end up being paid for by insurance companies, which then increase premiums on comprehensive coverage that protects against theft. Denver and Aurora have especially high theft rates.

Uninsured Motorists

Experts estimate around 20% of Colorado drivers lack insurance. When uninsured motorists cause accidents, it drives up the claim costs for insured drivers’ policies to cover damages.

Insurers charge higher premiums in regions with more uninsured drivers to offset this exposure. Colorado has one of the highest rates of uninsured drivers in the U.S.

Legal Environment

Colorado has relatively litigious laws regarding auto accident liability and lawsuits. The state also has no restrictions on lawsuits against insurance companies.

This legal environment leads to higher claim payouts in Colorado compared to other states. Insurers pad premiums to cover the increased legal costs and risks.

Fraudulent Claims

Questionable and exaggerated claims may be partially to blame for rising premiums in Colorado. Staged accidents and inflated bodily injury claims drain money from insurance companies.

While auto insurers are cracking down on fraud through technology like analytics, inflated claims likely contribute somewhat to the premium hikes.

Differences By City and Region

Car insurance rates within Colorado can vary dramatically between locations. On average, auto insurance costs:

• Denver: $2,861 per year
• Colorado Springs: $2,241 per year
• Fort Collins: $2,201 per year
• Pueblo: $1,950 per year
• Grand Junction: $1,911 per year

Rural and mountain towns tend to have lower premiums than crowded Front Range cities where accident rates run higher. But costs are rising statewide.

Recent Legislation Impacting Rates

A few recent legal changes in Colorado will apply upward pressure on car insurance rates:

• PIP repeal: Colorado eliminated the no-fault Personal Injury Protection (PIP) coverage in 2020. This may increase claim lawsuits, driving up liability claim costs.

• Caps on UM/UIM: New 2021 legislation caps uninsured and underinsured motorist bodily injury coverage. This exposes insured drivers to more risk.

• Collateral source rule reform: New law reduces double recoveries from insurers, but may increase claims legal costs.

While intended to reduce certain costs, these changes could potentially increase premiums for Colorado drivers.

How to Find Cheaper Car Insurance in Colorado

While rates are rising statewide, here are some ways Colorado drivers can save on car insurance:

• Comparison shop: Get quotes from national insurers like GEICO, State Farm, and Progressive to find the cheapest option. Rates can vary over $1,000 between major carriers.

• Review discounts: Take all discounts like good driver, low mileage, and multi-policy. Consider usage-based programs.

• Raise deductibles: Increasing deductibles to $500 or $1,000 can reduce premiums 20% or more.

• Limit coverage: Dropping comprehensive and collision coverage on an older car can lower premiums.

• Improve credit: Insurers use credit-based insurance scores to set rates. Improving your score could help lower your premium.

• Take defensive driving: Completing a defensive driving course can make you eligible for a discount.

While rates are high in the state, shopping carefully for coverage can help Colorado drivers control costs and find better deals on their auto insurance. Comparing multiple quotes remains the best way to save.