Changes Made to the Regulation of Homeowner’s Insurance

CAR took a neutral position on HB-1225 Concerning the Homeowner’s Insurance Reform Act- HB-1225 during the 2013 Legistlative session.  This bill creates the “Homeowner’s Insurance Reform Act of 2013” and makes a number of changes to the regulation of homeowner’s insurance primarily for single-family homes used as a primary residence by the owner.  It requires insurers to provide to homeowners’s insurance policyholders a specific disclosure at least annually regarding policy limits, replacement value, and the importance of preparing an inventory of the contents of the home outbuildings.  HB-1225 was signed by Governor John Hickenlooper.

Other changes require that:

• insurers included additional living expense (ALE) coverage of not less than 12 months with an option to purchase a totla of 24 months of coverage;
• insurers make available extended replacement-cost coverage and law and ordinance coverage;
• the text of all homeowner’s insurance documents must not exceed the tenth-grade reading level by Janaury 1, 2015;
• insurers consider an estimate from a policyholder’s licensed contractor or architect as the basis for establishing the replacement cost;
• at renewal, insurers provide written notification to policyholders describing changes in insurance policy language;
• insurers make an electric or paper copy of the homeowner”s insurance documents available within three business days of the policyholder”s request; in the event of a total loss of a furnished dwelling, insurers offer a minimum of 30 percent of the value of the contents coverage without requiring a written inventory;
• if a policyholder receives the depreciated value of contents, the insurer make available to the policyholder the methodology used for determining the depreciated value;
• an insurer allow a policyholder up to 180 days after a total loss claim to submit an inventory of lost or damaged property, or in the event of a disaster, up to 270 days;
• an insurer allow a policyholder up to 180 days after the expiration of ALE to replace property and receive recoverable depreciation on that property;
• insurance agents selling homeowner’s insurance must complete at least three hours of continuing education in homeowner’s insurance coverage every two years; and
• at least annually, insurers provide policyholders with a specific disclosure form that clarifies that the policyholder is responsible for the adequacy of his or her replacement cost coverage adn for maintaining a home contents inventory.

Finally, on or after January 1, 2014, the bill voids any provision in a homeowner’s policy that requires the policyholder to sue the insurer in the case of any dispute within a shorter period of time than allowed for by the applicable statute of limitations.