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 Engrossed 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 a mediation process if the insurer and insured disagree on the amount of a loss.
Proposed law provides required language to be included in every residential property insurance
policy outlining the mediation process.
(Adds R.S. 22:1892(B)(6) and (E)-(H))
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Insurance to the original bill:
1. Delete proposed law concerning insurers issuing policies providing adjustment and
settlement of losses on an actual cash value basis on residential fire and extended
coverage.
2. Delete the model language that must be included in all residential property insurance
policies and replace it with new model language that provides a mediation process for
situations in which insurers and insureds do not agree upon the amount of a loss.
3. Make technical changes.