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January 23, 2024 HB 24-1083
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Fiscal Note
Drafting Number:
Prime Sponsors:
LLS 24-0192
Rep. Willford; Brown
Sen. Cutter
Date:
Bill Status:
Fiscal Analyst:
January 23, 2024
House Business & Labor
Brendan Fung | (303-866-4781)
brendan.fung@coleg.gov
Bill Topic: CONSTRUCTION PROFESSIONAL INSURANCE COVERAGE TRANSPARENCY
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☒ State Diversion
☐ TABOR Refund
☒ Local Government
☐ Statutory Public Entity
The bill commissions a study of construction liability insurance and requires builders
and sellers of new residences to disclose insurance information. It creates a General
Fund diversion and increases state expenditures from FY 2024-25 to FY 2026-27. It
may increase state revenue and state and local workload on an ongoing basis
beginning in FY 2024-25.
Appropriation
Summary:
For FY 2024-25, the bill requires an appropriation of $567,142 to the Department of
Regulatory Agencies.
Fiscal Note
Status:
The fiscal note reflects the introduced bill.
Table 1
State Fiscal Impacts Under HB 24-1083
Budget Year
FY 2024-25
Out Year
FY 2025-26
Out Year
FY 2026-27
Revenue
- - -
Expenditures Cash Funds $567,142 $60,472 $30,236
Centrally Appropriated $12,796 $12,796 $6,398
Total Expenditures $579,938 $73,268 $36,634
Total FTE 0.6 FTE 0.6 FTE 0.3 FTE
Diversions General Fund ($579,938) ($73,268) ($36,634)
Cash Funds $579,938 $73,268 $36,634
Net Diversion $0 $0 $0
Other Budget Impacts - - -
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January 23, 2024 HB 24-1083
Summary of Legislation
The bill requires the Division of Insurance in the Department of Regulatory Agencies (DORA) to
conduct or commission a study of construction liability insurance for construction professionals
and submit a report to the General Assembly by December 31, 2026. The report must include:
insurers offering construction liability policies in the state, including to residential property
developers;
rates and the basis for rates charged by insurers, to include five years of data, where
available;
risk factors, classifications, and coverage descriptions that insurers use to set rates;
a comparison of rates charged in other states in the region for similar residential projects;
policy coverage terms;
limitations or exclusions from coverage; and
the appropriate policy limits for a residential project with regard to the size and cost of
construction.
The bill also requires builders and sellers of new residences to provide the purchasers and the
county clerk and recorder’s office with information regarding the property’s construction liability
insurance coverage. The bill creates a civil cause of action for purchasers of a new residence to
file suit against sellers that violate these provisions.
State Revenue
The bill may increase revenue to the Judicial Department beginning in FY 2024-25 from an
increase in civil case filings. The fiscal note assumes that builders and sellers of new residences
will comply with the law and any increase will be minimal. Revenue from filing fees is subject to
TABOR.
State Diversion
This bill diverts General Fund to the Division of Insurance Cash Fund from FY 2024-25 through
FY 2026-27. This revenue diversion occurs because the bill increases costs in the Division of
Insurance in the Department of Regulatory Agencies, which is funded with premium tax revenue
that would otherwise be credited to the General Fund.
State Expenditures
The bill increases state expenditures in DORA by about $580,000 in FY 2024-25, $73,000 in
FY 2025-26, and about $37,000 in FY 2026-27 paid from the Division of Insurance Cash Fund.
Expenditures are shown in Table 2 and detailed below.
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January 23, 2024 HB 24-1083
Table 2
Expenditures Under HB 24-1083
FY 2024-25 FY 2025-26 FY 2026-27
Department of Regulatory Agencies
Personal Services $59,704 $59,704 $29,852
Operating Expenses $768 $768 $384
Capital Outlay Costs $6,670 - -
Contract Study $500,000 - -
Centrally Appropriated Costs
1
$12,796 $12,796 $6,398
Total Cost $579,938 $73,268 $36,634
Total FTE 0.6 FTE 0.6 FTE 0.3 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Department of Regulatory Agencies. Starting in FY 2024-25, expenditures in DORA will
increase to collect data and hire an actuarial contractor to conduct a statewide construction
liability insurance study.
Staff. DORA requires 0.4 FTE Actuary II beginning in FY 2024-25 to request, review, and
analyze carrier data that is not currently required to be filed with the division, and to collect
and analyze insurance rates in other states in the region. Additionally, 0.2 FTE Actuary II will
hire and manage the contractor for the study. Staffing costs conclude in December 2026,
upon delivery of the study.
Contract study. DORA requires an estimated $500,000 to hire an actuarial firm to conduct
market research on construction liability insurers, determine appropriate policy limits,
analyze coverage limits and exclusions, run data analyses of rates, and generate a report.
Based on the level of detail required by the bill, the fiscal note assumes that a contractor will
perform 1,250 hours of work at an estimated $400 per hour. Actual costs will be determined
through the contracting process.
Judicial Department. Trial courts in the Judicial Department may experience an increase in
workload to the extent that additional civil cases are filed under the bill. The fiscal note assumes
that builders and sellers of new residences will comply with the law and any increase will be
minimal.
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. Page 4
January 23, 2024 HB 24-1083
Local Government
Starting in FY 2024-25, workload for the county clerk and recorder’s office will increase to track
insurance coverage information provided by builders and sellers of new residences. This
workload is expected to be minimal.
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming
no referendum petition is filed, and applies to sales occurring on or after this date.
State Appropriations
For FY 2024-25, the bill requires an appropriation of $567,142 and 0.6 FTE from the Division of
Insurance Cash Fund to the Department of Regulatory Agencies. Of this amount, $500,000
requires roll-forward spending authority through FY 2026-27.
State and Local Government Contacts
Counties County Clerks Information Technology
Judicial 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 the General Assembly website.