Forward by the Kato J. S. Mitchell
At Keller Williams Preferred Realty, we don’t believe we’re in the business of simply selling houses, we believe we’re helping people build wealth, security, and a legacy. When we train our agents, one of the very first things we emphasize is that they’re not just selling a piece of property. They’re selling an asset, and how our clients choose to use that asset determines its future value. Some of our clients raise their families in these homes, others grow old in them, and many build wealth by acquiring rental properties. Whatever the path, real estate—done wisely—becomes the cornerstone of long-term financial stability.
That’s why it astonishes me how often homeowners neglect to protect what they’ve worked so hard to build. One call I wish we didn’t receive that just makes me cringe, is from people who just paid off their mortgage. And with immense pride, they tell us, “I don’t need insurance anymore.” I get it—owning your home free and clear is a huge milestone. But dropping insurance after the mortgage is paid off? That’s like finally finishing building your dream car and deciding not to buy seatbelts.
The truth is, insurance isn’t just a requirement from your lender—it’s a vital tool to protect your asset and your financial future. Unfortunately, most people don’t understand it, so they give it little thought, and then if something goes wrong, they hope they are covered and that it won’t cost them too much out of pocket.
This article—and others in this series—was written to help you do exactly that. We want to give you the knowledge to understand your insurance policy, to spot the gaps that might leave you exposed, and to feel confident that you’ve made the best decision for you, your finances, and your future. Let’s walk through it together.
Understanding the Key Parts of Your Insurance Policy: What You Need to Know
When it comes to homeowners insurance, most people focus on having a policy in place, but far fewer take the time to understand how it actually works. The reality is, insurance isn’t just a one-size-fits-all product. The details matter. If you don’t fully understand what’s covered, how much you’ll need to pay out of pocket before insurance kicks in, or what’s excluded from your policy, you could be in for a very expensive surprise when disaster strikes.
There are three main parts of every homeowners insurance policy: coverage, deductibles, and exclusions. Think of them like the foundation, walls, and roof of a house—they all work together to determine how protected you really are.
Coverage: What’s Actually Protected?
At its core, your insurance policy is there to protect you from financial loss if something happens to your home or belongings. That sounds simple enough, but not all coverage is created equal.
A standard homeowners insurance policy typically includes four major protections. First, there’s dwelling coverage, which pays for repairs or rebuilding if your home is damaged by things like fire, hail, or windstorms. Then there’s personal property coverage, which helps replace things like furniture, electronics, and clothing if they’re stolen or destroyed. You also have liability coverage, which protects you if someone gets injured on your property and decides to sue. And finally, there’s additional living expenses coverage, which covers the cost of a hotel or temporary rental if your home becomes uninhabitable due to a covered event.
But here’s where things get tricky—your coverage can vary wildly depending on where you live and what insurance company you’re with. A homeowner in Denver might have great protection against wind and hail damage, but someone in a wildfire-prone area like Boulder might find that fire coverage comes with more restrictions or higher costs. If you live in an area that sees frequent flooding or occasional earthquakes, you won’t be covered for those disasters unless you specifically purchase extra policies.
I once worked with a couple who had just bought a home near the foothills, thrilled about their new place surrounded by nature. They assumed their homeowners policy had them covered for everything—until they saw their wildfire risk designation. Because they lived in a high-risk area, their insurance company required them to install fire-resistant roofing and clear brush from around their home before they could even qualify for coverage. Had they not checked, they might have been living in their dream home with a policy that wouldn’t pay out a dime if a fire broke out.
Deductibles: What Will You Pay Before Insurance Steps In?
Your deductible is the amount you must pay out of pocket before your insurance company starts covering the rest. Think of it as the “skin in the game” you have before your insurance kicks in.
A lot of people choose a policy with a low monthly premium because it seems like a great deal—until they file a claim and realize their deductible is sky-high. In Colorado, many low monthly premium policies often come with, higher deductibles. That means even if you’re technically “covered,” you might be paying thousands out of pocket before your insurance even starts to help.
Another client of mine learned this lesson the hard way. In 2013, a hailstorm hit his neighborhood, leaving his roof shredded. His insurance company approved the claim, but his deductible was $8,000—far more than he had expected. If he had taken a closer look at his policy when he first bought it, he might have chosen a plan with a slightly higher monthly premium but a more manageable deductible. His frustration, is that he said that his insurance agent (one we didn’t recommend) never explained how high the deductible was, and this caused him to deplete his savings account. He hadn’t been creating a separate account for things like deductibles like we coach all of our clients to do.
It’s not just fire and hail damage that come with separate deductibles. If you buy flood or earthquake insurance, those policies often have entirely different deductible structures. Flood insurance, for example, usually requires homeowners to pay a percentage of the home’s value rather than a flat amount, meaning the out-of-pocket costs can be substantial.
I never personally thought of getting a earthquake rider on my homeowner’s coverage. Frankly, I thought it was a bogus thing that my insurance agent was trying to “sell” me. Then I learned the facts. You know those rocky mountains? They got there by geological events in Colorado. In fact, Colorado still experiences a modest number of earthquakes each year, primarily of low magnitude. On average, the state records about 50 earthquakes annually with magnitudes of 2.0 or higher. Among these, approximately 9 are in the magnitude 3.0 to 3.9 range. Larger earthquakes are less frequent; for instance, magnitude 4.0 or greater quakes occur about once every 1.5 years. Historically, since 1867, Colorado has experienced over 700 tremors of magnitude 2.5 or higher. While most of these earthquakes are minor and may go unnoticed, the state remains mindful of its seismic activity, especially given the potential for larger, albeit infrequent, events.Volcano DiscoveryCoEmergency+2Great ShakeOut Earthquake Drills+2en.wikipedia.org+2
The most recent recorded earthquake in Colorado occurred on February 17, 2025, at 21:03 UTC. This earthquake had a magnitude of 2.4 and was located approximately 5.2 miles southwest of Blue River, Colorado, at a depth of 8 kilometers. earthquaketrack.com+1earthquake.usgs.gov+1
Prior to that, on February 16, 2025, at 22:16 UTC, a 2.2 magnitude earthquake struck near Weston, Colorado, approximately 8.7 miles south-southwest of the town, at a depth of 4 kilometers. earthquake.usgs.gov
It’s important to note that while these earthquakes were relatively minor, Colorado has experienced significant seismic events in the past. For instance, the largest known earthquake in Colorado’s recorded history was a magnitude 6.6 event that occurred west of Fort Collins. This earthquake caused minor damage in both Colorado and southern Wyoming. earthquake.usgs.gov
I’m not advocating you need to get earthquake insurance or any other type of insurance specifically. The point of this article is to help you become educated so that you can make the best choice for you.
Wildfire Insurance: A Must-Have for Colorado Homeowners
If you live in Colorado, fire insurance is something you can’t afford to overlook. In the last few years, we’ve seen billions of dollars in damage from wildfires that destroyed entire neighborhoods; some of which weren’t even in the mountains where most people think of fire-related risk. Yet, many homeowners assume their policy fully covers them.
Here’s where the trouble starts. Insurance companies are getting stricter about wildfire coverage. If you live in a high-risk area—anywhere near the foothills or in the mountains—your policy might come with higher deductibles, exclusions, or requirements for fire mitigation. Some companies won’t even renew policies unless you take proactive steps like clearing brush around your home or installing ember-resistant vents.
I had a client in Evergreen who received a notice from his insurance company telling him they wouldn’t renew his policy unless he created defensible space around his property. The problem? No one had ever told him he needed to do that. He had to scramble to meet the requirements to keep his coverage, and he was lucky his insurer gave him the option. Some companies are simply refusing to insure homes in high-risk areas at all.
If you’re not sure what your policy says about wildfires, now is the time to check. You don’t want to find out after a fire that you’re not covered the way you thought you were.
Exclusions: The Hidden Gaps in Your Coverage
Just as important as knowing what your insurance covers is knowing what it doesn’t cover. This is where a lot of homeowners get caught off guard.
Flooding is the biggest exclusion that catches people by surprise. Most people assume that if a sudden rainstorm floods their basement, their homeowners policy will take care of the damage. It may not. Standard policies do not cover any flood damage—whether it’s from heavy rain, rising rivers, or snowmelt. You need a separate flood insurance policy for that.
One of the biggest misconceptions I hear is, “I don’t need flood insurance because I don’t live in a flood zone.” I get it—if you’re not next to a river or near the coast, why would you think about flooding?
Well, let’s talk about what actually happens. In 2013, a historic flood hit Boulder, Colorado. It wasn’t caused by a river overflowing—it was from days of relentless rain. Thousands of homes, many of them nowhere near a designated floodplain, were suddenly filled with water. Homeowners called their insurance companies, only to hear, “Sorry, flood damage isn’t covered under your homeowners policy.”
Flood insurance isn’t just for people who live near water. If you’ve got a basement, you’re at risk. If you live in an area with heavy snowmelt in the spring, you’re at risk. Even new developments can create flood hazards where there weren’t any before, because when new streets and homes go up, the land can’t absorb water the way it used to. That’s why we always tell our clients—if you can’t afford to rebuild your home out of pocket, you need to think about flood insurance.
Like mentioned above, earthquakes fall into the same excluded category on most policies. While they’re not as common in Colorado as they are in places like California, they do happen. If an earthquake causes foundation cracks, structural damage, or even a total collapse, your standard homeowners policy won’t help unless you’ve specifically added earthquake coverage.
Another common exclusion that catches homeowners off guard is vacancy-related damage. If a home sits unoccupied for too long—typically 30 to 60 days—many insurance companies won’t cover things like theft, vandalism, or even fire damage. That means if you have a rental property, a vacation home, or if you’re leaving your house empty while it’s on the market, you may need vacant home insurance to stay protected.
A client of mine inherited a house from his grandmother and planned to renovate it before moving in. Because the process took longer than expected, the home was sitting empty for a few months. When a water pipe burst, flooding the kitchen and basement, his insurance company denied the claim, citing the vacancy clause in his policy. If he had purchased vacant home coverage, he would have been reimbursed for the repairs, but instead, he had to pay for everything out of pocket.
This is a huge risk for people with vacation homes, rental properties, or even homeowners who travel for extended periods. If a storm damages the roof while the home is empty and the damage isn’t discovered right away, the insurance company might refuse to pay for repairs. If a pipe bursts and floods the house, the claim could be denied.
I worked with a client who inherited a family home but wasn’t ready to move in yet. They assumed their homeowners policy would stay in effect while they figured out what to do with the property. When a break-in resulted in extensive damage, they filed a claim—only to learn that, because the home had been vacant for three months, the insurance company wouldn’t cover the losses.
If you own a property that sits vacant for any length of time, you need to make sure you have the right kind of coverage. Otherwise, you’re rolling the dice every day that it sits empty.
Why You Should Review Your Policy Regularly
Insurance isn’t something you can just “set and forget.” If you haven’t reviewed your policy in a while, now is the time to take a closer look. Are your coverage limits high enough to rebuild your home? Do you have the right deductible for your financial situation? Are you missing key coverages for floods, earthquakes, or wildfires? These are the questions you should ask before you ever need to file a claim.
Over the past decade, the cost of rebuilding homes has risen significantly due to factors such as inflation and increased labor expenses. Between October 2014 and October 2024, residential reconstruction costs surged by 63.7%, averaging an annual increase of approximately 6.37%. In 2022 alone, median square foot prices for new single-family detached homes increased by 18%, more than double the U.S. inflation rate of 8% that year. These rising costs have led to increased insurance premiums, as policies adjust to cover higher potential claim payouts. Homeowners should regularly review their insurance coverage to ensure it aligns with current rebuilding costs and adequately protects their investment.Robertson Ryan InsuranceNational Association of Home Builders+1Eye On Housing+1
The Preferred Insurance Network
The good news is you don’t have to figure this all out alone. Working with an experienced insurance agent who understands the nuances of fire coverage in Colorado, flood risks, earthquake riders, vacancy clauses, and high-value property protection can make all the difference in avoiding costly gaps in coverage. But here’s something we’ve learned after helping hundreds of clients navigate their insurance needs over the years, just having an agent isn’t enough.
For far too many of our clients, the frustration came not from a lack of effort on their part, but from the system itself. They bought the insurance. They trusted the agent. But years down the road, when something went wrong, they discovered they weren’t nearly as protected as they thought. Why? Because no one had done a proper review. No one had called to adjust coverage when construction costs rose, when wildfire risk increased, or when their property transitioned from primary home to rental or sat vacant for a while. The police sat in a drawer, untouched—and that false sense of security turned into real heartache.
As a brokerage, we couldn’t stand by and watch that happen. We made it our mission to find truly top-notch insurance agents to serve our clients the way they deserve—agents who are proactive, honest, and willing to explain fine print, not just sell the policy. But over time, we found it harder and harder to rely on the traditional insurance industry. Too many great agents were leaving the field, and too many companies had reduced service to a 1-800 number and a bot.
So, after years of searching for the right partners and coming up short, we decided to build it ourselves. That’s how the Preferred Insurance Network (PIN) was born.
We created PIN to give our clients the peace of mind that only comes from collaborating with trusted professionals who genuinely care. Our agents are highly trained, compassionate, and committed to doing annual reviews—not just when it’s time to renew, but when the market changes, when your life changes, or when the unexpected happens. We believe your insurance agent should care as much about your financial future as you do.
If your current agent hasn’t reached out to review your coverage in the last six months, it may be time to ask yourself: are they really looking out for you?
You’ve worked too hard, and invested too much, to leave your largest asset unprotected. So, let’s talk. We offer free, no-pressure policy reviews through our real estate and insurance teams. Whether you’re looking to buy your first home, protect a rental, ensure a mountain cabin, or just want to make sure your coverage keeps up with inflation and rising construction costs—we’re here to help.
We know this stuff because we live it, and we built an entire network to make sure our clients never have to feel alone or unprepared again.
So go ahead and reach out. Let’s make sure that the roof over your head—and the future you’re building beneath it—are fully protected.
The real estate market is shifting, and those who understand these dynamics will make better decisions. Make sure you are working with an agent who can provide more than just listing photos and open houses. Choose a professional who understands the bigger picture and can help you navigate these uncertain times successfully.
If you are considering selling, now is the time to plan. Contact us at Keller Williams Preferred Realty, LLC, for a free home consultation and a tailored strategy to maximize your home’s value while minimizing stress.
Thinking about selling in 2025? Let’s discuss your strategy. Call Keller Williams Preferred Realty, LLC, for expert advice and a proven plan to help you achieve the best possible outcome.
This article is based on data available as of February 21, 2025, and reflects forecasts from leading housing research firms and industry experts.
Author: Kato J. S. Mitchell – Operating Principal; Red Zebra Holdings, Westminster Asset Holdings, Operating Principal; Keller Williams Preferred Realty, LLC, & Lead Broker; The Mitchell Team @ Keller Williams Preferred Realty, LLC
Kato turned his top real estate sales team into a real estate empire. He has heavily invested in real estate in the Denver Metro Market and is Operating Principal of the largest real estate office north of I-70 in Colorado (Keller Williams Preferred Realty, LLC) Kato’s real estate team “The Mitchell Team @ Keller Williams” remains a strong competitor in the Denver Market where they specialize in complex distressed properties (divorces, foreclosures, REO, and probate/estate sales) as well as investment properties. “We help people manage wealth through real estate. Our first goal with clients is to increase their net worth past one million dollars quickly,” states Mitchell. Kato serves as a multi-year member of the Colorado Real Estate Commission’s Forms Committee assisting in the drafting of the contracts used by all Colorado Real Estate Agents. He was awarded the Dudley Award in 2004 for his national speaking tour. Kato was also awarded the Denver Business Journal’s “40 Under 40” in 2006. His real estate team: The Mitchell Team has been awarded the “5280 Magazine “Five Star Award for Excellence Winner” ten Years in a Row (2012 – 2021) for “Outstanding Customer Service” and Superior Quality as voted by their clients!” They are one of three companies in the state to receive that award more than six times. Most importantly, he is a husband & a father to three amazing children.
Meet Daniel Jovovich – Your Trusted Insurance Partner
With nearly a decade in insurance and a lifetime in business, I’m committed to helping my clients and the real estate professionals I work with find superior coverage at better rates. As an independent broker, I’m not tied to a single insurance company—giving me the flexibility to find the best policies for each unique situation. And that’s exactly what you’re looking for, isn’t it?
I grew up in Laramie, WY, but in 1993, my family moved to Granby, CO, where I co-founded a multi-million-dollar manufacturing business with my father. What started as a small operation supplying lumber to big-box stores like Home Depot grew into a three-division enterprise with over 40 employees. After we sold the company, I transitioned into the insurance industry, bringing the same customer-first mindset and entrepreneurial expertise that made my first business a success.
Helping Agents Create a Competitive Edge
I work side by side with top agents to offer customized insurance solutions that help their clients save money while securing better coverage. Why does this matter? Because in today’s real estate market, every dollar counts. Buyers and sellers are facing rising costs in both real estate and insurance—so when you can connect them to lower premiums and better protection, you become their go-to expert.
Unlike captive insurance agents, I work with multiple carriers, ensuring every client gets the best rate and coverage tailored to their needs. That means when you refer clients to me, you’re not just helping them close on a home—you’re setting them up for long-term financial security and peace of mind. And when you provide that kind of value, you build deeper relationships, earn repeat business, and get more referrals.
That’s how top agents separate themselves from the competition. And that’s the kind of advantage you want, isn’t it?
Beyond property and casualty insurance, I also provide health insurance, life insurance, and financial advisory services, ensuring my clients have comprehensive protection. You’ll find me between Leslie Mitchell’s office and the Lending office—stop by anytime!
Outside of work, I love golf, mountain biking, and spending time with my daughters (18 and 24) and my new grandchild.
Looking for an insurance expert who treats you like family? Let’s talk!
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