HB 885: RELATING TO INSURANCE.

A BILL FOR AN ACT

RELATING TO INSURANCE.

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

     SECTION 1.  The legislature finds that the availability of condominium property insurance policies within the State's condominium insurance marketplace has decreased in recent years, and the cost of obtaining insurance in this market has increased substantially.  Recent events, including wildfires in both Hawaii and California, have threatened to further destabilize this market.

     The legislature further finds that the California state department of insurance established the safer from wildfires program in 2022.  Under this program, property owners who make certain upgrades to their properties to increase the properties' resilience to wildfires become eligible for discounts on their property insurance premiums.  This program creates a material incentive for property owners to increase the disaster resiliency of their homes.

     The legislature finds that establishing a similar program in Hawaii targeted toward condominium associations would encourage associations to make improvements that increase building resiliency.  This would result in a decreased likelihood for damage and subsequent insurance claims, while also providing relief to condominium associations and their residents from the skyrocketing cost of insurance.

     Accordingly, the purpose of this Act is to establish a program that requires property insurers to offer discounts to condominium associations if the associations make certain upgrades or take specific actions to reduce the association's risk profile.

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

"Part   .  CONDOMINIUMS; discounts for

risk mitigatioNS PROGRAM

     §431:10E-     Definitions.  As used in this part:

     "Association" has the same meaning as in section 514B-3.

     "Condominium" has the same meaning as in section 514B-3.

     "Program" means the discounts for risk mitigations program established by this part.

     "Property insurer" means any entity providing property insurance in the State under this chapter.

     §431:10E-     Risk mitigation upgrades; insurance premiums; discounts for condominium associations.  (a)  There is established the discounts for risk mitigation program, which shall be administered by the insurance commissioner as provided in this part.

     (b)  Under the program, a property insurer that provides property insurance to an association pursuant to section 514B‑143(a)(1) shall offer discounts on the association's annual insurance premium if the association makes certain upgrades to the property being insured or takes other specific actions to reduce the association's risk profile.  A property insurer shall provide discounts to an association that:

     (1)  Clears vegetation, debris, mulch, and other combustible materials from the immediate surroundings of the buildings being insured;

     (2)  Uses only noncombustible materials in improvements within five feet of the buildings being insured, including fences and gates;

     (3)  Removes combustible structures around the buildings being insured;

     (4)  Creates a defensible space between the buildings being insured and the immediate surroundings;

     (5)  Installs a fire-resistant roof;

     (6)  Installs enclosed eaves;

     (7)  Installs fire-resistant vents;

     (8)  Installs or requires unit owners to install multipane windows, including dual pane windows or functional shutters, which, when closed, cover the entire window and do not have openings;

     (9)  Installs at least six inches of noncombustible vertical clearance at the bottom of the exterior surface of the building, measured from the ground up;

    (10)  Installs or requires unit owners to install impact‑resistant windows;

    (11)  Installs flood barriers and sandbags;

    (12)  Installs drainage improvements;

    (13)  Installs sprinkler systems;

    (14)  Installs seismic improvements;

    (15)  Implements a plan for annual structural inspections;

    (16)  Implements a plan for annual roof maintenance;

    (17)  Implements a plan for annual sealing and waterproofing maintenance;

    (18)  Implements a plan for annual heating, ventilation, and air conditioning maintenance;

    (19)  Implements a plan for annual plumbing maintenance; and

    (20)  Implements a plan for annual fire and safety system maintenance; or

    (21)  Completes any other upgrades or other actions to reduce the association's risk profile, as specified by the insurance commissioner in rules adopted pursuant to chapter 91.

     (d)  The commissioner shall adopt rules pursuant to chapter 91 necessary to implement this part.  At a minimum, the rules shall:

     (1)  Establish the amount of the discount a property insurer must provide for each of the upgrades or other actions specified in subsection (c);

     (2)  Specify any requirements that an association must meet to qualify for the actions specified in subsection (c); and

     (3)  Specify other upgrades or other actions for which a property insurer shall offer a discount, pursuant to subsection (c)(21), and the amount of the discount."

     SECTION 3.  If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 4.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 5.  This Act shall take effect on July 1, 2025.

Report Title:

Insurance Commissioner; Condominiums; Property Insurance; Discounts; Risk Mitigation Upgrades

Description:

Establishes a program that requires property insurers to offer discounts to condominium associations that make certain upgrades or take other specific actions to increase the building's resilience or reduce the association's risk profile.  Requires the insurance commissioner to adopt rules to implement the program.

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