SB2960

SECTION 1. The legislature finds that Hawaii faces extraordinary challenges in disaster recovery because of its geographic location, high housing costs, limited rental inventory, and dependence on imported materials. These factors cause significant delays in rebuilding and replacing homes after catastrophic events.

The legislature further finds that the 2023 Maui wildfires destroyed thousands of homes and displaced thousands of individuals, revealing not only the vulnerability of the State, but also the urgent need for modernized insurance policies that reflect Hawaii's unique realities in rebuilding. In Hawaii, disaster recovery frequently takes five years or longer, due to severe underinsurance gaps, material shortages and shipping delays, workforce limitations, and complex permitting and financing processes.

The legislature further finds that residents often face unavoidable delays that prevent timely rebuilding, including government-imposed construction moratoriums, permit backlogs, labor shortages, and global supply chain disruptions. Current insurance timelines are insufficient for Hawaii's long-term recovery needs. Policyholders risk losing benefits simply because they ran out of time, not because they failed to act.

The legislature notes that California and Oregon provide extended time frames for collecting replacement cost value payments.

The purpose of this Act is to ensure that Hawaii residents receive adequate protection from their homeowners insurance policies by establishing a fair and realistic time frame for policyholders to access benefits, while keeping homeowners insurer liability capped at existing policy limits.

Specifically, this Act requires homeowners insurers to:

(1) Allow policyholders thirty-six months following a loss due to declared disaster or emergency to submit documentation to recover the full replacement cost value of a covered dwelling or structure;

(2) Offer policyholders six-month extensions of the thirty-six month period for good cause;

(3) Give policyholders one year following the completion of repairs, rebuilding, or replacement to recover the full replacement cost value of covered personal property; and

(4) After a loss due to declared disaster or emergency, disclose to each policyholder the relevant timelines and the opportunity for extension in certain circumstances.

SECTION 2. Chapter 431, Hawaii Revised Statutes, is amended by adding a new part to article 10E to be appropriately designated and to read as follows:

"PART . EXTENDED REPLACEMENT COST RECOVERY

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

"Actual cash value" means the cost to repair, rebuild, or replace damaged property, less the depreciation properly applicable to the damaged property.

"Good cause" means circumstances beyond the control of the policyholder, including:

(1) Permit or inspection delays;

(2) A shortage of qualified contractors or labor;

(3) Material shipping or supply chain disruptions;

(4) Financing or insurance payment delays;

(5) Government-imposed construction moratoriums; or

(6) Emergency orders; a subsequent declared disaster; or an emergency declared by the President of the United States, the governor, or a county government.

"Homeowners insurance" has the same meaning as in section 431:14-110.8.

"Homeowners insurer" has the same meaning as in section 431:14-110.8.

"Policyholder" means the person named as the insured under the homeowners insurance.

"Replacement cost value" means the amount necessary to repair, rebuild, or replace damaged property with materials of like kind and quality, without deduction for depreciation, including the cost of:

(1) Labor and materials;

(2) Overhead and profit;

(3) Demolition and debris removal;

(4) Architectural and engineering fees;

(5) Permits and inspections; and

(6) Other necessary costs.

§431:10E- Minimum time frame to capture dwelling replacement cost value. In the event of the total or partial loss of a covered dwelling or other insured structure as a result of a declared disaster or emergency, a policyholder shall have at least thirty-six months from the date the policyholder receives the first actual cash value payment from the homeowners insurer to submit documentation and collect the full replacement cost value. The homeowners insurer shall not limit or deny the policyholder's right to recover full replacement cost value during this thirty-six-month period.

§431:10E- Extensions for good cause. If the policyholder cannot complete the repair, rebuilding, or replacement within the thirty-six-month period for good cause, the homeowners insurer shall grant a six-month extension to the thirty-six-month period upon the written request of the policyholder. The policyholder may request up to four additional six-month extensions for a total recovery period of no more than sixty months from the date the policyholder received the first actual cash value payment from the homeowners insurer. The homeowners insurer shall approve an extension request if the delay is for good cause. A homeowners insurer in its discretion may grant a policyholder additional extensions, totaling more than sixty months from the date the policyholder received the first actual cash value payment from the homeowners insurer.

§431:10E- Personal property replacement cash value time frame. In the event of the total or partial loss of a covered dwelling or other insured structure as a result of a declared disaster or emergency, the policyholder shall have at least one year after the completion of the repair, rebuilding, or replacement of the dwelling or other structure to submit documentation to collect the full replacement cost value of the personal property.

§431:10E- Notice requirements. A homeowners insurer shall provide clear, written notice of the replacement cash value time frames to a policyholder no later than thirty days after the homeowners insurer is notified of a declared disaster or emergency affecting the insured property. The notice shall include explanations of:

(1) The thirty-six-month minimum time frame for dwelling replacement cost value;

(2) The availability of six-month extensions for good cause with examples of events constituting good cause;

(3) The process for requesting extensions; and

(4) The one-year time frame for personal property replacement cost value."

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2960
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII