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SB 55

Requiring DOH Commissioner to develop formula for allocating road funds among districts

2025 Regular Session Introduced by Mike Oliverio

Requires residential insurers to pay the replacement cost minus depreciation up front, then release the remaining recoverable depreciation after repairs, up to policy limits.

To Transportation and Infrastructure
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Bill Summary · SB 55

SB 55 — Insurance Payment of Depreciation

Status: Action postponed indefinitely
Introduced: (filed) Aug 21, 2025
Subject: Insurance — property (residential)

Main purpose

Require residential property insurers to align claim payments with replacement‑cost policy terms by (1) making an initial payment equal to replacement cost less depreciation (i.e., the actual cash value) and (2) paying any recoverable depreciation (the remainder up to replacement cost or policy limits) once repairs or replacement are completed.

Key provisions

  • Insurers must initially pay "100% of replacement cost minus depreciation" when settling a covered loss on residential property.
  • After the insured completes repairs or replacement, the insurer must promptly pay the remaining amount necessary to bring the settlement up to the full replacement cost (subject to the policy limit).
  • Conforms claim‑payment practice to existing Insurance Code language that requires coverage for repair or replacement "without deduction for depreciation."
  • No specific changes to policy premium, deductibles, or coverage limits are included in the text excerpted in the fiscal/legal analysis.
  • Administrative/regulatory implementation: insurers will need to update policy forms and file amended forms with the insurance regulator (Office of the Superintendent of Insurance or equivalent).

Who is affected

  • Primary beneficiaries: residential property policyholders (homeowners and renters with replacement‑cost coverage) — they would be ensured of receiving recoverable depreciation after completing repairs, reducing the risk that withheld depreciation prevents replacement.
  • Insurers and third‑party administrators: required to adjust claims handling and policy forms; may incur modest administrative costs to file amended forms and update processes.
  • Contractors/repair vendors: potential indirect effects on timing of payments and proofs of completion required by insurers.

Fiscal and administrative impact

  • Fiscal notes report no direct state appropriation or significant fiscal impact to the insurance regulator; administrative impacts to insurers are expected but modest (form‑filing and process updates). Regulator (OSI) anticipates some workload to review amended forms — possibly a small portion of an FTE, within normal operations.
  • Example from analysis: if a 2018 couch depreciated to $1,000 and a comparable new couch costs $2,500, the insurer would initially pay the $1,000 (replacement cost less depreciation) and then pay the remaining $1,500 after the insured replaces the couch, up to policy limits.

Timing / procedure

  • The bill’s effective date language in the fiscal analysis: no explicit date in the bill text would mean it takes effect 90 days after adjournment (example date cited: June 20, 2025). However, the legislative status provided with this request is “action postponed indefinitely,” so the bill is not currently advancing.

Practical implications / considerations

  • Protects policyholders who carry replacement‑cost coverage by clarifying payment timing for recoverable depreciation.
  • May require insurers to adjust claims workflows (verification of repairs, final inspections, documentation standards) to release deferred depreciation.
  • Could reduce disputes about whether and when depreciation is recoverable, but may increase administrative exchanges to verify completed repairs.

If you want, I can:
- Draft a one‑page “what this means for homeowners” explainer, or
- Compare this bill’s language to current state Insurance Code and typical insurer practices so you can see precisely what would change.

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

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