HB2013

SECTION 1. Chapter 431, Hawaii Revised Statutes, is amended by adding a new part to article 10E be appropriately designated and to read as follows:

"Part . PERSONAL PROPERTY INSURANCE and disaster loss

§431:10E-A Purpose; scope; effective date. (a) The purpose of this part is to regulate personal property insurance coverage during times of disaster and provide certain consumer protections for policyholders in the event of a total loss of an owner-occupied residence, including the contents of the owner-occupied residence, when the loss occurs as a result of a disaster.

(b) The requirements under this part shall apply during any state of emergency declared by the governor pursuant to chapter 127A in the event of a disaster that occurs on or after the effective date of this Act and shall apply to all homeowners insurance policies offered, delivered, issued, or renewed on or after the effective date of this Act to the maximum extent provided by law.

§431:10E-B Definitions. As used in this part:

"Disaster" has the same meaning as in section 127A-2.

"State of emergency" has the same meaning as in section 127A-2.

§431:10E-C Personal property insurance; limits; requirements. (a) In offering, delivering, issuing, or renewing a homeowners insurance policy, an insurer shall comply with the minimum requirements under this part concerning personal property coverage offered under a homeowners insurance policy in effect during any state of emergency declared by the governor in the event of a disaster.

(b) For purposes of this part, a policyholder may receive up to the full policy limit of personal property insurance coverage by submitting a written inventory pursuant to section 431:10E-D.

§431:10E-D Home inventory process. (a) An insurer offering a homeowners insurance policy with personal property insurance coverage shall establish a process to assist a policyholder complete a home inventory. At a minimum, the home inventory process shall include:

(1) A spreadsheet template or an electronic form for itemization of losses, which can be readily completed by the policyholder; provided that:

(A) The insurer shall accept any reasonable form of documenting a loss provided by the policyholder that includes information about the items lost; and

(B) The information required to be provided by the policyholder under this paragraph shall be limited to:

(i) A description of the item;

(ii) The year or estimated date of acquisition;

(iii) The brand and model, if available; and

(iv) The item's general condition on the date of loss;

(2) A checklist that can be used as a reference on a room-by-room basis of items commonly found in a room or household; provided that the insurer shall disclose that a policyholder may supplement the home inventory submitted to the insurer with additional items that were in the owner-occupied residence at the time of loss; and

(3) A method for policyholders to add items to a home inventory. For purposes of this paragraph, the insurer shall:

(A) Retain all submitted information;

(B) Upon making any changes to the submitted home inventory, provide a copy to the policyholder with identification and rationale supporting the specific changes made; and

(C) Provide, in plain language, instructions for the policyholder as to how to compare the changes with the original submitted line item home inventory, in case of a line item dispute by the policyholder.

(b) The insurer shall:

(1) Assist the policyholder in preparing, compiling, and processing the home inventory without unreasonable substantiation requirements, barriers, or delays;

(2) Consider inventories or other documentation provided by policyholders, including but not limited to videos, pictures, or records of items prepared or taken prior to the loss;

(3) Permit consolidation of like items and shall not require each item to be identified separately; provided that for items that have unique attributes or properties that would affect their valuation may be individually listed;

(4) Consider alternative sources for calculating valuation; provided that for one-of-a-kind items, the insurer may request additional documentation or substantiation not otherwise required for valuation of general household items;

(5) Develop a reasonable methodology to estimate the value of consumables, such as perishable and non-perishable food, cleaning supplies, and toiletries, lost without requiring itemization. Consumables shall be paid at the cost to replace a similar item;

(6) Utilize a reasonableness standard to permit replacement with a substantially similar or comparable item, if the item cannot be usefully replaced by an identical item; and

(7) Accept a policyholder's home inventory and good faith estimates, unless there is reasonable suspicion, which shall be articulated to the policyholder, to question the validity of the inventory and valuation estimates; provided that:

(A) If there is reasonable suspicion on the part of the insurer, the policyholder shall be given an opportunity to provide additional information upon request by the insurer;

(B) The insurer shall consider additional information provided by the policyholder to support the valuation of an item or items; and

(C) If an insurer requires additional information about an item included in the home inventory, the insurer shall request that additional information about within ten days of its submission.

(1) An interview process in which the insurer develops an inventory by asking the policyholder questions on a room-by-room basis and provides the completed inventory for the policyholder to modify and approve;

(2) A list of available vendors to assist the policyholder in compiling and organizing a written inventory with acceptable documentation and substantiation; or

(3) A mechanism to assist policyholders in establishing an expected value for the inventory.

§431:10E-E Methodology and appeals. (a) The insurer shall disclose its methodology for determining the depreciated value of items on the home inventory developed pursuant to section 431:10E-D. This disclosure shall be in sufficient detail to enable a reasonable person to determine whether preparation of an inventory would permit recovery of additional sums.

(b) The depreciation method shall not rely solely on a blanket calculation across the entire inventory and shall take into account the age and condition of each item on the inventory to determine its depreciated value.

(d) The insurer shall provide policyholders with a meaningful opportunity to challenge the depreciation amount for any item or items. Presentation by the policyholder of information that would affect the depreciation of an item shall be considered in good faith by the insurer.

(e) The insurer shall bear the burden of proving the applied depreciation in any dispute between an insurer and policyholder regarding the amount of applied depreciation.

(f) The insurer shall have a documented process for policyholders to appeal or challenge the insurer's valuation or determination of applied depreciation. The documented process shall include a description of the process and what information the insurer used in its valuation or determination, and shall adhere to the following timeline:

(1) Upon a receipt of a policyholder's challenge to a valuation or applied depreciation, the insurer shall have the challenge reviewed by a claims supervisor who has not been otherwise involved in the particular claim;

(2) The insurer shall issue a written decision in regard to all matters challenged by the policyholder within thirty days of the date the challenge is submitted; provided that if the insurer fails to issue a decision within thirty days of submission, then the policyholder's challenge shall be considered to be determined in the policyholder's favor; and

(3) For any dispute in which all or part of the challenge is determined in the policyholder's favor, payment of the resolved item or items shall be issued within thirty days of the determination.

(g) Interest on unpaid covered and undisputed items shall begin to accrue on the sixty-first day after receipt of the inventory.

§431:10E-F Payments without inventory. (a) If a homeowners insurance policyholder experiences a total loss of the contents of their owner-occupied residence as the result of a disaster, the insurer shall:

(1) Offer the policyholder a minimum of seventy-five per cent of the personal property insurance coverage limit stated in the homeowner's insurance policy's declaration page, without requiring a written inventory of the contents;

(2) Notify the policyholder that accepting the offered payment amount does not alter the benefits available under the policy, and additional money may be available if the policyholder submits a home inventory pursuant to the requirements under section 431:10E-D;

(3) Provide payment for covered costs related to debris removal within sixty days of receiving an invoice, receipt, or other documentation of the debris removal; provided that if the debris removal is conducted by or in coordination with a government entity, then the insurer shall provide payment within a reasonable time frame; and

(4) Provide payment for any covered loss of trees, shrubs, and landscaping within thirty days of receiving documentation showing the number and nature of the damaged or destroyed features.

(b) If the policyholder submits a home inventory of personal property losses that exceeds the amount paid under subsection (a), the insurer shall:

(1) Request any additional information regarding disputed items in the home inventory within thirty days of its receipt; and

(2) Provide payment for any covered and undisputed items within thirty days of receiving the home inventory.

§431:10E-G Timeline extension during state of emergency. (a) In the aftermath of a state of emergency declared by the governor pursuant to chapter 127A, if a homeowners insurance policy requires policyholders to repair, rebuild, or replace damaged property to receive full replacement cost coverage, the insurer shall:

(1) Allow the policyholder thirty-six months, beginning on the date the insurer provides the initial payment for actual cash value of the damage or loss, to submit receipts and invoices for replacement costs; and

(2) Provide the option for policyholders to extend the time period for two additional six months if the policyholder experiences unavoidable delays in obtaining construction permits, lacks necessary construction materials, faces a shortage of available contractors, or encounters other circumstances beyond their control.

(b) Nothing in this section shall be construed to prohibit an insurer from allowing additional time for collecting full replacement costs or additional living expenses.

§431:10E-H Advanced payments. In the event of a covered loss resulting from a state of emergency where a homeowners insurance policyholder experiences a total loss of the contents of their owner-occupied residence, the insurer shall, upon request, provide advanced payment of no less than six months of living expenses. Additional payment for additional living expenses shall be payable upon proper proof following the advance period.

§431:10E-I Claims practices. (a) After receiving a claim under an issued policy, an insurer shall provide to the policyholder:

(1) Appropriate contact information that allows for direct contact with either an employee of the insurer or a representative who can escalate complaints or inquiries to an insurer's employee; and

(2) At least one means of communication with the assigned agent during regular business hours.

(b) If a policyholder is assigned a third or subsequent adjuster within a six-month period, a written status report shall be provided. The report shall include:

(1) A summary of decisions or actions related to the claim;

(2) The amount of losses to structures or contents both paid and outstanding;

(3) Any reports generated after consultation with design or construction professionals;

(4) The coverage amount for losses to structures or contents; and

(5) Any disputed items."

SECTION 2. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 3. This Act shall take effect on July 1, 2024.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2013
THIRTY-SECOND LEGISLATURE, 2024
STATE OF HAWAII