September 16, 2014

HB 13-1225: Creating the “Homeowner’s Insurance Reform Act of 2013″ and Changing Regulations Regarding Homeowner’s Insurance

On February 7, 2013, Rep. Claire Levy and Sen. John Kefalas introduced HB 13-1225 – Concerning Additional Protections for Homeowner’s Insurance Policyholders in Colorado, and, in Connection Therewith, Enacting the “Homeowner’s Insurance Reform Act of 2013.” This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill makes the following changes to the laws regulating homeowner’s insurance for owner-occupied single-family homes other than mobile homes, condominiums, and manufactured homes:

  • Requires insurers to offer extended replacement cost coverage and law and ordinance coverage, with an explanation of the terms of this coverage;
  • Requires insurers to include at least one year of additional living expense coverage and to offer a total of 24 months of additional living expense coverage, with an explanation of the terms of this coverage;
  • Requires homeowner’s insurance policies, endorsements, and summary disclosure forms be written in plain language and revised by Jan. 1, 2015, to comply with this requirement;
  • Requires an insurer to consider an estimate from a licensed contractor or licensed architect submitted by the policyholder as the basis for establishing the replacement cost;
  • Specifies that policyholders have the right to a written notification, at renewal, describing changes in their insurance contract language that are applicable to the renewal period;
  • Requires insurers to provide an electronic or paper copy, as specified by the policyholder, of the policyholder’s insurance policy, including the declaration page and endorsements, within three business days after a request from an insured;

With respect to contents coverage in total loss claims, requires insurers to:

  • Offer to pay 30 percent of contents coverage reflected in the policy declaration, subject to policy limitations, without requiring a contents inventory;
  • Provide the basis for depreciation when applicable; and
  • Allow the policyholder up to 180 days after a total loss claim to submit an inventory of lost or damaged property, or 270 days if the Governor declares a disaster that results in the total loss of multiple dwellings; and
  • Allow a policyholder up to 180 days after expiration of alternative living expense coverage to replace property and receive recoverable depreciation on that property.

Requires a summary disclosure to be given to policyholders annually, including statements that:

  • The policyholder is responsible for selecting the amount of coverage;
  • The policyholder is responsible for assessing improvements to the home and notifying the insurer;
  • The policyholder may purchase additional coverage with appropriate documentation; and
  • The policyholder should update the inventory of contents regularly and store the inventory off-site.

Implements a continuing education requirement for insurance producers offering homeowner’s insurance policies to take at least three hours of continuing education on homeowner coverages during a two-year period.

Prohibits the enforcement of terms in homeowner’s insurance policies that require policyholders to sue insurers in cases of disputes within a shorter period of time than allowed for by the applicable statute of limitations.

The bill passed out of the House on March 18 and is assigned to the Local Government Committee in the Senate.

Since this summary, the Senate Committee on Local Government heard testimony and had committee discussion.

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