RELATING TO PROPERTY INSURANCE.

SB2960

THE SENATE

S.B. NO.

2960

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to property insurance
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.
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The
legislature finds that Hawaii faces extraordinary challenges in disaster
recovery because of its geographic location, high housing costs, limited rental
inventory, and dependence on imported materials.
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These factors cause significant delays in
rebuilding and replacing homes after catastrophic events.

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The legislature further finds that the 2023
Maui wildfires destroyed thousands of homes and displaced thousands of individuals,
revealing not only the vulnerability of the State, but also the urgent need for
modernized insurance policies that reflect Hawaii's unique realities in
rebuilding.
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In Hawaii, disaster recovery
frequently takes five years or longer, due to severe underinsurance gaps,
material shortages and shipping delays, workforce limitations, and complex
permitting and financing processes.

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The legislature further finds that residents
often face unavoidable delays that prevent timely rebuilding, including
government-imposed construction moratoriums, permit backlogs, labor shortages,
and global supply chain disruptions.
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Current
insurance timelines are insufficient for Hawaii's long-term recovery needs.
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Policyholders risk losing benefits simply
because they ran out of time, not because they failed to act.

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The legislature notes that California and
Oregon provide extended time frames for collecting replacement cost value
payments.

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The purpose of this Act is to ensure that
Hawaii residents receive adequate protection from their homeowners insurance policies
by establishing a fair and realistic time frame for policyholders to access benefits,
while keeping homeowners insurer liability capped at existing policy limits.

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Specifically, this Act requires homeowners
insurers to:

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(1)
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Allow policyholders thirty-six months following a loss due
to declared disaster or emergency to submit documentation to recover the full
replacement cost value of a covered dwelling or structure
;

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(2)
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Offer
policyholders six-month extensions of the thirty-six month period for good
cause;

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(3)
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Give
policyholders one year following the completion of repairs, rebuilding, or
replacement to recover the full replacement cost value of covered personal
property; and

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(4)
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After
a loss due to declared disaster or emergency, disclose to each policyholder the
relevant timelines and the opportunity for extension in certain circumstances.

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SECTION 2.
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Chapter 431, Hawaii Revised Statutes, is amended by adding a new part to
article 10E to be appropriately designated and to read as follows:

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PART
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EXTENDED REPLACEMENT COST RECOVERY

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�431:10E-
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Definitions.

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As used in this part:

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"Actual cash value" means the
cost to repair, rebuild, or replace damaged property, less the depreciation
properly applicable to the damaged property.

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"Good cause" means circumstances
beyond the control of the policyholder, including:

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(1)
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Permit
or inspection delays;

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(2)
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A
shortage of qualified contractors or labor;

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(3)
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Material
shipping or supply chain disruptions;

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(4)
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Financing
or insurance payment delays;

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(5)
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Government-imposed
construction moratoriums; or

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(6)
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Emergency
orders; a subsequent declared disaster; or an emergency declared by the
President of the United States, the governor, or a county government.

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"Homeowners insurance" has the
same meaning as in section 431:14-110.8.

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"Homeowners insurer" has the same
meaning as in section 431:14-110.8.

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"Policyholder" means the person named
as the insured under the homeowners insurance.

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"Replacement cost value" means
the amount necessary to repair, rebuild, or replace damaged property with
materials of like kind and quality, without deduction for depreciation,
including the cost of:

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(1)
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Labor
and materials;

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(2)
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Overhead
and profit;

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(3)
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Demolition
and debris removal;

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(4)
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Architectural
and engineering fees;

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(5)
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Permits
and inspections; and

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(6)
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Other
necessary costs.

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�431:10E-
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Minimum time frame to capture dwelling
replacement cost value.
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In the event
of the total or partial loss of a covered dwelling or other insured structure
as a result of a declared disaster or emergency, a policyholder shall have at
least thirty-six months from the date the policyholder receives the first
actual cash value payment from the homeowners insurer to submit documentation
and collect the full replacement cost value.
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The homeowners insurer shall not limit or deny the policyholder's right
to recover full replacement cost value during this thirty-six-month period.

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�431:10E-
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Extensions for good cause.
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If the policyholder cannot complete the repair,
rebuilding, or replacement within the thirty-six-month period for good cause,
the homeowners insurer shall grant a six-month extension to the thirty-six-month
period upon the written request of the policyholder.
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The policyholder may request up to four
additional six-month extensions for a total recovery period of no more than
sixty months from the date the policyholder received the first actual cash
value payment from the homeowners insurer.
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The homeowners insurer shall approve an
extension request if the delay is for good cause.
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A homeowners insurer in its discretion may grant
a policyholder additional extensions, totaling more than sixty months from the
date the policyholder received the first actual cash value payment from the homeowners
insurer.

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�431:10E-
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Personal property replacement cash value time
frame.
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In the event of the total or
partial loss of a covered dwelling or other insured structure as a result of a
declared disaster or emergency, the policyholder shall have at least one year
after the completion of the repair, rebuilding, or replacement of the dwelling
or other structure to submit documentation to collect the full replacement cost
value of the personal property.

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�431:10E-
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Notice requirements.
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A homeowners insurer shall provide clear,
written notice of the replacement cash value time frames to a policyholder

no
later than thirty days after the homeowners insurer is notified of a declared
disaster or emergency affecting the insured property.
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The notice shall include explanations of:

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(1)
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The
thirty-six-month minimum time frame for dwelling replacement cost value;

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(2)
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The
availability of six-month extensions for good cause with examples of events
constituting good cause;

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(3)
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The
process for requesting extensions; and

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(4)
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The
one-year time frame for personal property replacement cost value."

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SECTION 3.
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This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

Property
Insurance; Disaster Recovery; Replacement Cost Value; Actual Cost Value;
Payment Time Frames

Description:

Establishes
a minimum time frame of 36 months following loss due to declared disaster or
emergency for the policyholder to submit documentation to recover full
replacement cost value of covered dwelling or structure.
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Allows extensions for good cause.
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Establishes a minimum time frame of one year
from completion of covered dwelling or structure for the policyholder to submit
documentation to recover full replacement cost value of covered personal
property.
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Requires homeowners insurers
to give timely notice to policyholders to explain the time frames and
extensions.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.