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HB 2351

Amending the uniform arbitration act of 2000 to make certain agreements to appraise or arbitrate in contracts of insurance invalid and creating exceptions therefor.

2025-2026 Regular Session

HB 2351 bars pre‑dispute mandatory arbitration/appraisal in most post‑July 1, 2025 insurance contracts, leaving arbitration by policyholder voluntary after dispute.

Died in Committee
#civilprocedureandcivilactions #insurance
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Bill Summary · HB 2351

Summary — HB 2351 (2025) — Amendment to Kansas Arbitration Law for Insurance Contracts

Purpose

HB 2351 would amend K.S.A. 5-428 (part of Kansas’s adoption of the Uniform Arbitration Act) to limit the enforceability of pre‑dispute appraisal or arbitration clauses contained in contracts of insurance. The stated intent is to prevent automatic, irrevocable arbitration or appraisal requirements in most insurance policies issued or renewed after a specified date.

Key provisions

  • Amends K.S.A. 5-428 to add a new exception for insurance contracts:
    • An agreement in an insurance contract (entered into or renewed after July 1, 2025) that purports to require appraisal or arbitration of any existing or future controversy between the parties shall NOT be “valid, enforceable or irrevocable.”
    • Such a clause (except in contracts between insurance companies, including reinsurance contracts) will instead be treated as an offer by the insurer to enter binding or nonbinding arbitration — i.e., arbitration would require subsequent agreement by the policyholder.
  • Preserves existing procedural rules in 5-428 for other arbitration issues:
    • Courts determine whether an agreement to arbitrate exists and whether a controversy is subject to arbitration.
    • Arbitrators decide whether a condition precedent to arbitration has been fulfilled and whether an arbitration agreement is enforceable.
    • Arbitration proceedings may continue while a court resolves a challenge to arbitrability unless the court orders otherwise.
  • Repeals the current version of K.S.A. 5-428 and replaces it with the amended language.
  • Effective for contracts entered into or renewed after July 1, 2025; the act takes effect upon publication in the statute book.

Who would be affected

  • Policyholders: Would no longer be bound by pre‑dispute mandatory appraisal/arbitration clauses in most standard insurance contracts; they could accept arbitration after a dispute arises but would not be compelled to do so by a pre‑dispute clause.
  • Insurers: Would lose the ability to rely on unilateral, pre‑set arbitration/appraisal clauses to channel disputes away from courts for most retail insurance policies (except insurer‑to‑insurer and reinsurance contracts).
  • Reinsurers and inter‑insurer agreements: Explicitly exempt; arbitration clauses between insurers (including reinsurance) remain enforceable.
  • Courts and arbitration providers: Could see changes in caseloads and arbitration demand depending on post‑dispute choices by parties.

Fiscal impact & administrative notes

  • Kansas Division of the Budget fiscal note (Feb. 20, 2025) reports:
    • Negligible fiscal effect on the Judicial Branch (Office of Judicial Administration).
    • No fiscal effect on the Kansas Department of Insurance.
  • The bill explicitly applies only to contracts entered or renewed after July 1, 2025.

Legislative status (selected)

  • Filed/Introduced: February 3, 2025.
  • Referred to: House Committee on Judiciary.
  • Public hearing: April 28, 2025 (considered; testimony recorded; left pending in committee).
  • Companion/related: SB 3040 noted as a companion.

Practical implications (summary)

If enacted, HB 2351 would shift most insurance disputes toward litigation or voluntary post‑dispute arbitration by eliminating pre‑dispute, mandatory appraisal/arbitration clauses in consumer and commercial insurance policies issued or renewed after July 1, 2025 — while preserving such clauses for agreements between insurance companies and reinsurers.

Compiled from official sources — confirm details with the bill’s official record.

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