First Regular Session
Seventy-fourth General Assembly
STATE OF COLORADO
REREVISED
This Version Includes All Amendments
Adopted in the Second House
LLS NO. 23-0133.01 Yelana Love x2295
HOUSE BILL 23-1174
House Committees Senate Committees
Business Affairs & Labor Business, Labor, & Technology
Appropriations Appropriations
A BILL FOR AN ACT
C
ONCERNING HOMEOWNER 'S INSURANCE, AND, IN CONNECTION101
THEREWITH, REQUIRING CERTAIN REPORTS RELATED TO THE102
COST OF RECONSTRUCTING A HOME, INCREASING THE NOTICE103
REQUIREMENT BEFORE AN INSURER CAN CANCEL OR REFUSE TO104
RENEW A HOMEOWNER 'S INSURANCE POLICY, CREATING105
GUARANTEED REPLACEMENT COST COVERAGE IN HOMEOWNER 'S106
INSURANCE, AND MAKING AN APPROPRIATION .107
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov
.)
SENATE
3rd Reading Unamended
May 7, 2023
SENATE
Amended 2nd Reading
May 6, 2023
HOUSE
3rd Reading Unamended
April 21, 2023
HOUSE
Amended 2nd Reading
April 18, 2023
HOUSE SPONSORSHIP
Amabile and Brown, Boesenecker, Dickson, Herod, Joseph, Kipp, Lieder, Lindsay,
Lindstedt, Mabrey, Martinez, McCluskie, McCormick, Michaelson Jenet, Ricks, Sharbini,
Story, Titone, Velasco, Weissman, Willford
SENATE SPONSORSHIP
Baisley and Roberts, Cutter, Danielson, Fenberg, Gardner, Hansen, Jaquez Lewis,
Kirkmeyer, Kolker, Liston, Marchman, Pelton B., Priola, Smallwood, Sullivan, Will
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law. The bill requires the commissioner of insurance (commissioner)
to prepare an annual report on the cost of rebuilding homes in Colorado
in the event of a total loss. An insurer that issues or renews more than
25% of its homeowner's insurance policies in a particular region of the
state at a cost that is at least 10% less than the estimate set forth in the
commissioner's annual report is required to report certain information to
the commissioner.
Current law prohibits an insurer from canceling or refusing to
renew a policy of homeowner's insurance unless the insurer mails notice
to the insured at least 30 days in advance of the effective date of the
cancellation of or refusal to renew the policy. The bill increases the notice
requirement to 60 days in advance of the action.
The bill creates guaranteed replacement cost coverage in
homeowner's insurance, which pays the full cost to repair or replace a
damaged or destroyed structure, even if the amount exceeds the policy
limits. The bill specifies the factors an insurer must consider when
determining the replacement costs of a dwelling and requires insurers to
disclose certain information regarding the replacement costs before
issuing or renewing a homeowner's insurance policy.
The bill requires an insurer to offer an applicant guaranteed
replacement cost coverage before offering extended replacement cost
coverage, law and ordinance coverage, or inflation protection coverage,
which is defined as coverage that provides automatic adjustments of the
coverage amount on the dwelling or structure being insured to protect
against the impact of inflation.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. In Colorado Revised Statutes, add 10-1-144 as2
follows:3
10-1-144. Cost to
reconstruct a home - annual report -4
homeowner's insurance affordability study - rules. (1) (a) T HE5
COMMISSIONER SHALL CONTRACT WITH AN INDEPENDENT THIRD PARTY TO6
PREPARE AN ANNUAL RESIDENTIAL RECONSTRUCTION CONSUMER7
INFORMATION REPORT ON THE COST OF RECONSTRUCTING HOMES IN8
COLORADO, TAKING INTO ACCOUNT THE REGION OF THE STATE , THE9
HOME TYPES BY DESIGN STRUCTURE , DIFFERENT HOME CUSTOMIZATION10
1174-2- TYPES, AND THE FACTORS INCLUDED IN SECTION 10-4-110.8 (8). THE1
COMMISSIONER SHALL COMPLETE THE REPORT BY APRIL 1, 2025, AND BY2
A
PRIL 1 OF EACH YEAR THEREAFTER BASED ON DATA FROM THE3
PRECEDING CALENDAR YEAR .4
(b) T
HE DIVISION SHALL POST THE ANNUAL REPORT PREPARED5
PURSUANT TO THIS SUBSECTION (1) ON THE DIVISION'S WEBSITE BY APRIL6
15
OF EACH YEAR.7
(2) AFTER A STAKEHOLDER PROCESS, THE COMMISSIONER MAY8
CONTRACT WITH AN INDEPENDENT THIRD PARTY TO EVALUATE POLICIES9
TO ADDRESS THE AFFORDABILITY OF HOMEOWNER 'S INSURANCE.10
(3) T
HE COMMISSIONER MAY PROMULGATE RULES TO IMPLEMENT11
THIS SECTION.12
SECTION 2. In Colorado Revised Statutes, 10-4-110.7, amend13
(3) as follows:14
10-4-110.7. Cancellation or nonrenewal - homeowner's15
insurance policies. (3) No
AN insurer shall NOT cancel or refuse to16
renew a policy of homeowner's insurance unless such insurer mails, by17
first-class mail to the named insured, at the last address shown in the18
insurer's records, at least thirty SIXTY days in advance, a notice of its19
intended action pursuant to section 10-4-110 that specifically states the20
reasons for proposing to take such action; pursuant to section 10-4-110;21
except that, where cancellation is for nonpayment of premium,
THE22
INSURER SHALL PROVIDE at least ten days' notice of cancellation23
accompanied by the reasons therefor shall be given
FOR TAKING SUCH24
ACTION.25
SECTION 3. In Colorado Revised Statutes, 10-4-110.8 amend26
(6)(a), (8), and (15); and add (3)(d.7) and (9.5) as follows:27
1174
-3- 10-4-110.8. Homeowner's insurance - prohibited and required1
practices - estimates of replacement value - additional living expense2
coverage - copies of policies - personal property contents coverage -3
inventory of personal property - requirements concerning total loss4
scenarios resulting from wildlife disasters - definitions - rules. (3) As5
used in this section, unless the context otherwise requires:6
7
(d.7) "I
NFLATION PROTECTION COVERAGE " MEANS COVERAGE8
THAT PROVIDES AUTOMATIC ADJUSTMENTS OF THE COVERAGE AMOUNT ON9
THE DWELLING OR STRUCTURE BEING INSURED TO PROTECT AGAINST THE10
IMPACT OF INFLATION.11 (6) (a) (I) Before issuance or renewal of a replacement-cost12
homeowner's insurance policy whose dwelling limit is equal to or greater13
than the estimated replacement cost of the residence, the insurer shall14
make available to an applicant the opportunity to obtain extended15
replacement-cost coverage and law and ordinance coverage. At a16
minimum, the insurer shall make available OFFER law and ordinance17
coverage in an amount of insurance equal to ten TWENTY percent of the18
limit of the insurance for the dwelling and extended replacement-cost19
coverage in an amount of insurance that is at least twenty FIFTY percent20
of the limit of the insurance for the dwelling. Information provided must21
be accompanied by an explanation of the purpose, terms, and cost of these22
coverages. This paragraph (a) SUBSECTION (6)(a) does not apply to any23
homeowner's insurance policy that already includes GUARANTEED24
REPLACEMENT COST COVERAGE, INFLATION PROTECTION COVERAGE,25
extended replacement-cost coverage, and OR law and ordinance coverage26
in amounts greater than or equal to the amounts specified in this27
1174
-4- paragraph (a) SUBSECTION (6)(a).1
(II) NO LATER THAN JANUARY 1, 2025, AND AS PRESCRIBED BY THE2
COMMISSIONER BY RULE, THE INSURER SHALL:3
(A) LIST ON THE DECLARATION PAGE OF THE POLICY, IN BOLD AND4
IN TWELVE-POINT TYPE, WHETHER A CONSUMER PURCHASED OR REJECTED5
THE ADDITIONAL COVERAGES LISTED IN THIS SUBSECTION (6)(a); AND6
(B) PROVIDE THE PREMIUM COST ASSOCIATED WITH THE REJECTED7
ADDITIONAL COVERAGES LISTED IN THIS SUBSECTION (6)(a) IN A SEPARATE8
NOTICE WITH THE APPLICATION OR RENEWAL OF THE POLICY .9
(8) The insurer must consider subject to the insurer's underwriting10
requirements, an estimate from a licensed contractor or licensed architect11
submitted by the policyholder as the basis for establishing the12
replacement cost of a dwelling. THE FOLLOWING FACTORS AS A BASIS FOR13
ESTABLISHING THE RECONSTRUCTION COST OF A DWELLING :14
(a) T
HE
RECONSTRUCTION COST ESTIMATED FROM THE ANNUAL15
REPORT PREPARED PURSUANT TO SECTION 10-1-144;16
(b) T
HE
RECONSTRUCTION COST ESTIMATING SOFTWARE USED AND17
THE SOFTWARE ESTIMATE;18
(c) S
PECIFIC
RECONSTRUCTION EXPENSES , INCLUDING:19
(I) L
ABOR, BUILDING MATERIALS, AND SUPPLIES;20
(II) A
CONTRACTOR'S OVERHEAD AND PROFIT;21
(III) D
EMOLITION AND DEBRIS REMOVAL ;22
(IV) COST OF PERMITS AND ARCHITECT'S PLANS AND FEES; AND23
(V) F
EATURES OF THE
STRUCTURE, INCLUDING:24
(A) T
HE
FOUNDATION TYPE;25
(B) T
HE TYPE OF FRAME;26
(C) R
OOFING MATERIALS AND TYPE OF ROOF ;27
1174
-5- (D) SIDING MATERIALS AND TYPE OF SIDING;1
(E) S
QUARE FOOTAGE;2
(F) N
UMBER OF STORIES;3
(G) A
NY WALL HEIGHTS THAT ARE NOT STANDARD ;4
(H) I
NTERIOR FEATURES AND FINISHES, SUCH AS THE HEATING AND5
AIR CONDITIONING SYSTEM, WALLS, FLOORING, CEILING, FIREPLACES,6
KITCHEN, AND BATHROOMS;7
(I) T
HE AGE OF THE ORIGINAL
STRUCTURE OR THE YEAR OF THE8
ORIGINAL STRUCTURE'S CONSTRUCTION; AND9
(J) T
HE SIZE AND TYPE OF ANY ATTACHED GARAGE ; AND10
(d) A
N ESTIMATE FROM A CONTRACTOR OR AN ARCHITECT11
LICENSED PURSUANT TO ARTICLE 120 OF TITLE 12,
IF SUBMITTED BY THE12
POLICYHOLDER.13
(9.5) (a) AT APPLICATION AND RENEWAL OF A REPLACEMENT COST14
HOMEOWNER'S INSURANCE POLICY FOR A DWELLING THAT IS ISSUED OR15
RENEWED ON AND AFTER JANUARY 1, 2025, THE INSURER SHALL:16
(I) PROVIDE THE APPLICANT OR POLICYHOLDER WITH AN ESTIMATE17
OF THE COST NECESSARY TO RECONSTRUCT THE COVERED STRUCTURE;18
(II) DISCLOSE TO THE APPLICANT OR POLICYHOLDER , IN A FORM19
AND MANNER PRESCRIBED BY THE COMMISSIONER BY RULE :20
(A) HOW THE ESTIMATE WAS CALCULATED , TAKING INTO ACCOUNT21
THE FACTORS LISTED IN SUBSECTION (8) OF THIS SECTION; AND22
(B) THE RECONSTRUCTION COSTS FOR HOMES AS DETAILED IN THE23
ANNUAL REPORT REQUIRED IN SECTION 10-1-144 FOR THE SAME24
GEOGRAPHIC AREA OF THE INSURED 'S HOME;25
(III) PROVIDE COPIES OF ANY GENERATED ESTIMATES FROM ANY26
SOFTWARE OR TOOLS OR SERVICES USED BY THE INSURER TO ESTABLISH27
1174
-6- THE RECONSTRUCTION COSTS; 1
(IV) PROVIDE THE APPLICANT OR POLICYHOLDER WITH THE WEB2
ADDRESS OF, OR A LINK TO, THE REPORT PREPARED PURSUANT TO SECTION3
10-1-144; AND4
(b) AN INSURER OTHERWISE SUBJECT TO THIS SUBSECTION (9.5)5
DOES NOT HAVE TO COMPLY WITH THE REQUIREMENTS OF THIS6
SUBSECTION (9.5) IF:7
(I) WITHIN THE TWO YEARS PRIOR TO THE OFFER OF RENEWAL OF8
THE HOMEOWNER'S INSURANCE POLICY, THE POLICYHOLDER HAS9
REQUESTED AND THE INSURER HAS PROVIDED COVERAGE LIMITS GREATER10
THAN THE LIMITS PREVIOUSLY SELECTED BY THE POLICYHOLDER ; OR11
(II) IN CONNECTION WITH ITS ANNUAL OFFER TO RENEW THE12
POLICY, THE INSURER HAS OFFERED THE POLICYHOLDER, ON AN13
EVERY-OTHER-YEAR BASIS, THE RIGHT TO RECALCULATE THE14
RECONSTRUCTION COST ESTIMATE AND THE POLICY INCLUDES INFLATION15
PROTECTION COVERAGE.16
(15) The commissioner may adopt rules as necessary for wildfire17
disasters that the governor declares pursuant to section 24-33.5-704 and18
for the implementation of subsections (13) and (14) of this section. TO19
IMPLEMENT THIS SECTION, INCLUDING RULES REGARDING:20
(a) T
HE INFORMATION THAT INSURERS MUST CONSIDER IN21
ESTIMATING
RECONSTRUCTION COSTS;22
(b) T
HE USE OF
RECONSTRUCTING COST ESTIMATOR TOOLS AND23
SERVICES; AND24
(c) T
HE REQUIREMENTS TO PROVIDE INFORMATION IN THE25
SUMMARY DISCLOSURE FORM TO CONSUMERS THAT EXPLAINS26
REPLACEMENT COST COVERAGE , ACTUAL CASH VALUE COVERAGE , AND27
1174
-7- THE ABILITY OF CONSUMERS TO PURCHASE AFFORDABLE COVERAGE .1
SECTION 4. Appropriation. (1) For the 2023-24 state fiscal2
year, $109,955 is appropriated to the department of regulatory agencies3
for use by the division of insurance. This appropriation is from the4
division of insurance cash fund created in section 10-1-103 (3), C.R.S. To5
implement this act, the division may use this appropriation as follows:6
(a) $64,139 for personal services, which amount is based on an7
assumption that the division will require an additional 0.8 FTE; 8
(b) $7,750 for operating expenses; and9
(c) $38,066 for the purchase of legal services.10
(2) For the 2023-24 state fiscal year, $38,066 is appropriated to the11
department of law. This appropriation is from reappropriated funds12
received from the department of regulatory agencies under subsection13
(1)(c) of this section and is based on the assumption that the department14
of law will require an additional 0.2 FTE. To implement this act, the15
department of law may use this appropriation to provide legal services for16
the department of regulatory agencies.17
SECTION 5. Act subject to petition - effective date. Section18
10-4-110.8 (8), Colorado Revised Statutes, as amended in section 3 of19
this act, takes effect January 1, 2025, and the remainder of this act takes20
effect at 12:01 a.m. on the day following the expiration of the ninety-day21
period after final adjournment of the general assembly; except that, if a22
referendum petition is filed pursuant to section 1 (3) of article V of the23
state constitution against this act or an item, section, or part of this act24
within such period, then the act, item, section, or part will not take effect25
unless approved by the people at the general election to be held in26
1174
-8- November 2024 and, in such case, will take effect on the date of the1
official declaration of the vote thereon by the governor; except that2
section 10-4-110.8 (8), Colorado Revised Statutes, as amended in section3
3 of this act, takes effect January 1, 2025.4
1174
-9-