GREEN SHEET REDIGEST
HB 591 2021 Regular Session Firment
INSURANCE CLAIMS: Provides for certain claims settlement practices.
DIGEST
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. Requires that depreciation be reasonable and based on combination of objective
criteria and subjective assessment including the actual condition of the property prior to the
loss. Provides that proposed law does not create any civil action, create any cause of action
or penalty against an authorized insurer, its employees or vendors not otherwise provided in
law.
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))
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Prepared by Thomas L. Tyler. 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.
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Insurance to the engrossed
bill
1. Add provision proposed law does not create any civil action, create any cause of
action or penalty against an authorized insurer, its employees or vendors not
otherwise provided by law.
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Prepared by Thomas L. Tyler.