Yesterday, Representative Clare Levy introduced in the Colorado House of Representatives House Bill 13-1225 ("HB 1225") entitled the Homeowner’s Insurance Reform Act of 2013. The provisions of the bill, aimed at providing information and protections to homeowners, are quite extensive and include the following:
● Requires insurers to offer extended replacement 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, notifications, and summary disclosure forms be written in plain language and revised by January 1, 2015, to comply
with this requirement;
● 2 years after initial issuance of a homeowner’s insurance policy and no more than every 2 years thereafter, requires an insurer to provide policyholders with an updated
estimate of replacement cost based on a construction inflation index and revalidate the replacement-cost estimate based on contact with the policyholder no more than every
● Requires an insurer to consider an estimate from a homeowner’s licensed contractor or licensed architect 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
● Requires insurers to provide an electronic or paper copy of the policyholder’s insurance policy, including the declaration page and endorsements, within 3 business days
after a request from an insured;
● With respect to contents coverage in total loss claims, requires insurers to:
○ Offer to pay 25% 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; 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.
● Upon request from a policyholder, requires an insurer to provide the components of the replacement-cost estimate for the insured 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 3 hours of continuing education on
homeowner coverages during a 2-year period.
● Makes void as against public policy 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.
CAI’s Colorado Legislative Action Committee ("CLAC") is currently reviewing the bill to determine whether action by CLAC is appropriate.
Keep your eye on this blog for updates on HB 1225 as it proceeds through the legislative process.