Is Your Home Underinsured for Wildfire? Lessons from the Marshall Fire

The Coverage Gap Nobody Sees Until It's Too Late

When the Marshall Fire destroyed more than 1,000 homes in Boulder County in December 2021, a pattern emerged in the months that followed: a large share of homeowners discovered their insurance would not cover the full cost to rebuild. Estimates from state regulators and homeowner surveys put many policies 30 to 50 percent below actual reconstruction cost. Families who thought they were fully covered found themselves facing six-figure gaps.

This is not a story about bad luck. It is about how homeowner policies are structured, how construction costs have moved, and a few specific coverages that are easy to overlook. The good news is that every one of these gaps is checkable — and fixable — before a fire ever happens.

Replacement Cost vs. Actual Cash Value

The first thing to confirm on your policy is whether your dwelling coverage is written for replacement cost or actual cash value (ACV). Replacement cost pays to rebuild your home at today's prices. Actual cash value pays the depreciated value of what was lost, which can be dramatically less on an older home. For a primary residence in a wildfire-prone area, replacement cost coverage is what you want.

The Rebuild-Cost Problem

Even with replacement cost coverage, the dwelling limit has to reflect what construction actually costs now. Post-wildfire rebuilding in Colorado's Front Range counties has seen costs rise sharply since 2020, driven by labor shortages, material prices, and the surge in simultaneous demand when hundreds of homes are lost at once. A limit set when you bought the house five years ago may be well short today.

Ask your agent to re-run your dwelling limit against current per-square-foot rebuild costs in your market, and consider extended or guaranteed replacement cost coverage, which provides a cushion above your base limit for exactly this scenario.

The Coverages People Forget

Three additional coverages routinely cause problems after a total loss:

**Ordinance or law coverage** pays for the cost of rebuilding to current building codes, which are often stricter than when your home was built. On a wildfire rebuild, code upgrades — from fire-rated roofing to updated electrical — can add a meaningful percentage to the project.

**Additional Living Expense (ALE)**, sometimes called loss of use, pays for temporary housing while your home is rebuilt. Wildfire rebuilds routinely take 18 to 36 months, and inadequate ALE limits leave families paying out of pocket for rent for a year or more.

**Contents coverage** pays for your belongings — and it is nearly impossible to document accurately from memory after everything is gone.

Document Everything Now

The single most valuable thing you can do today costs nothing: walk through your home with your phone and record video of every room, closet, and the exterior, narrating as you go. Store it in the cloud. Insurers settle contents claims faster and at higher amounts when there is pre-loss documentation, and without it, disputes are typically resolved in the insurer's favor.

Put It on a Schedule

NuBilt's free Wildfire Preparedness Kit includes an insurance-readiness section in both the home and commercial protection audits, so reviewing your coverage becomes a checklist item rather than a someday task. It is free and requires no email.

And if you are already navigating a wildfire claim, NuBilt uses Xactimate to document the full scope of damage, communicates directly with your adjuster, and bills your insurer directly — so your claim reflects what it genuinely costs to make you whole.