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February 23, 2023 HB 23-1174
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 23-0133
Rep. Amabile
Date:
Bill Status:
Fiscal Analyst:
February 23, 2023
House Business Affairs & Labor
Matt Bishop | 303-866-4796
matt.bishop@coleg.gov
Bill Topic: HOMEOWNER'S INSURANCE UNDERINSURANCE
Summary of
Fiscal Impact:
☐ State Revenue
☒ State Expenditure
☒ State Diversion
☐ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
The bill requires insurers to offer guaranteed replacement cost coverage to
homeowners, and requires the Division of Insurance to publish an annual report on
replacement costs. It increases state expenditures, which requires a General Fund
diversion, on an ongoing basis beginning in FY 2023-24.
Appropriation
Summary:
For FY 2023-24, the bill requires an appropriation of $139,427 to the Department of
Regulatory Agencies.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
State Fiscal Impacts Under HB 23-1174
Budget Year
FY 2023-24
Out Year
FY 2024-25
Revenue - -
Expenditures Cash Funds $139,427 $377,417
Centrally Appropriated $7,435 $5,576
Total Expenditures $146,862 $382,993
Total FTE 0.7 FTE 2.2 FTE
Diversions General Fund ($146,862) ($382,993)
Cash Funds $146,862 $382,993
Net Diversion $0 $0
Other Budget Impacts - -
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February 23, 2023 HB 23-1174
Summary of Legislation
The bill requires insurance companies to offer guaranteed replacement cost coverage to homeowners.
If the homeowner rejects this coverage, the insurer must offer extended replacement coverage, law
and ordinance coverage, and inflation protection coverage. The bill specifies what factors must be
considered in determining replacement value. The Division of Insurance (DOI) in the Department of
Regulatory Agencies must promulgate rules to implement these requirements.
DOI must contract with an independent third-party to prepare an annual report on the cost of
rebuilding homes in Colorado. The first report is due April 1, 2024. Beginning July 1, 2024, certain
insurers must report to DOI on properties it insures for a coverage amount at least 10 percent below
the estimate in the annual report.
Under current law, an insurer cannot cancel or refuse to renew a homeowner’s insurance without
notifying them at least 30 days in advance. The bill extends this notification deadline to 60 days.
State Diversion
The bill diverts $146,862 from the General Fund in FY 2023-24 and $382,993 in FY 2024-25. This occurs
because the bill increases costs in the Department of Regulatory Agencies, Division of Insurance,
which is funded with premium tax revenue that would otherwise be credited to the General Fund.
State Expenditures
The bill increases state expenditures in the Department of Regulatory Agencies by $146,862 in
FY 2023-24 and $382,993 in FY 2024-25, paid from the Division of Insurance Cash Fund. Expenditures
are shown in Table 2 and detailed below.
Table 2
Expenditures Under HB 23-1174
FY 2023-24 FY 2024-25
Department of Regulatory Agencies
Personal Services $32,327 $24,245
Legal Services $57,100 $353,172
Contractor $50,000 -
Centrally Appropriated Costs
1
$7,435 $5,576
FTE – Personal Services 0.4 FTE 0.3 FTE
FTE – Legal Services 0.3 FTE 1.9 FTE
Total Cost $146,862 $382,993
Total FTE 0.7 FTE 2.2 FTE
1
Centrally appropriated costs are not included in the bill's appropriation. Page 3
February 23, 2023 HB 23-1174
Department of Regulatory Agencies. The bill increases expenditures to generate the annual report,
facilitate reporting requirements with insurers, and update rules.
Staff. Managing the contract with the third party, updating the report annually, and facilitating
the reporting process for insurers requires 0.4 FTE in FY 2022-23 and 0.3 FTE in subsequent years.
Legal services. DORA requires legal support to execute the contract and conduct rulemaking in
FY 2023-24, estimated at 540 hours. In subsequent years, DORA requires an estimated 3,340 hours
of additional legal services for general counsel and representation due to the anticipated disputes
between insurers and homeowners related to DOI’s replacement cost benchmarks published in
the annual report, and the high level of confidential consumer data DOI receives from insurers.
Contractor. The cost to solicit a contract for the annual report is estimated at $50,000 in FY 2023-24.
The fiscal note assumes that the contractor will create the methodology and the first report, and
that DORA staff will update the report in subsequent years without additional contractor expense.
Centrally appropriated costs. Pursuant to a Joint Budget Committee policy, certain costs associated
with this bill are addressed through the annual budget process and centrally appropriated in the Long
Bill or supplemental appropriations bills, rather than in this bill. These costs, which include employee
insurance and supplemental employee retirement payments, are shown in Table 2.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming no
referendum petition is filed.
State Appropriations
For FY 2023-24, the bill requires an appropriation of $139,427 from the Division of Insurance Cash
Fund to the Department of Regulatory Agencies, and 0.4 FTE. Of this, $57,100 is reappropriated to
the Department of Law, with 0.3 FTE.
State and Local Government Contacts
Information Technology Law Regulatory Agencies
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit: leg.colorado.gov/fiscalnotes.