DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part of the
legislative instrument. The keyword, one-liner, abstract, and digest do not constitute part of the law
or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 591 Original 2021 Regular Session Firment
Abstract: Provides relative to certain claims settlement practices.
Proposed law defines "property" and "depreciation" as it relates to proposed law.
Proposed law provides that insurance policies covering damaged property and allow for depreciation
must provide notice that depreciation may be deducted, and if depreciation is applied, the insurer
shall provide a written explanation as to how the depreciation was calculated.
Proposed law provides that insurers shall not require that repairs, replacement, restoration, or
remediation be made to an insured's property by a particular preferred vendor or recommended
contractor when making payment on a residential or commercial property claim.
Proposed law provides that insurers shall not recommend the use of a particular preferred vendor or
recommended contractor without informing the insured or claimant that the insured or claimant is
under no obligation to use the preferred vendor or recommended contractor to complete repairs,
replacement, restoration, or remediation of the insured's property.
Proposed law provides that in the adjustment or settlement of first-party losses under fire and
extended coverage policies, insurers are required to include general contractor's overhead and profit
in payments for losses when the services of a general contractor are reasonably foreseeable.
Proposed law provides that the deduction of prospective contractor overhead, prospective contractor
profit, and sales tax in determining the actual cash value of an adjustment or settlement is not
allowed on replacement cost policies or on actual cash value policies.
Proposed law provides that the following shall apply to policies providing for the adjustment and
settlement of first-party losses based on replacement cost:
(1)Any consequential physical damage incurred in making a repair or replacement, not
otherwise excluded by the policy, shall be included in the loss.
(2)If a loss requires replacement of items and the replaced items do not match in quality, color,
or size, the insurer shall replace all items in the area so as to conform to a reasonably uniform
appearance.
Proposed law provides that insurers issuing insurance policies providing for the adjustment and settlement of losses on an actual cash value basis on residential fire and extended coverage shall
determine actual cash value based on the replacement cost of the property at time of loss less
depreciation.
Proposed law provides that in cases in which the insured's property has nominal or no economic
value or a value disproportionate to replacement cost, the determination of actual cash value as set
forth in proposed law is not required. In such cases, the insurer shall provide, upon the insured's
request, a written explanation of the basis for limiting the amount of recovery along with the amount
payable under the policy
(Adds R.S. 22:1892(B)(6) and (E)-(I))