Senate committee advances bill allowing homeowners to buy lower stated-value home insurance policies

Representative Brog told the Senate Commerce Committee that House Bill 356 creates a "stated value" homeowners insurance option intended to make coverage more affordable for homeowners with limited incomes or high replacement costs. Under the bill as amended, an owner-occupied home without a mortgage could be insured at any stated amount; for homes with a mortgage the bill would allow an owner to select an amount not less than fair market value (as defined in amendments using assessor data) and would require insurers to provide a stated-value option when requested by a consumer.

Sponsor and committee discussion focused on consumer protection and the practical effects of buying less-than-replacement coverage. Senator Abraham asked whether homeowners who buy $70,000 of coverage on a $100,000 home would actually receive that full amount for a partial or total loss. Supporters said the policy form and claims adjustment details would determine actual payouts, and that the bill requires prominent consumer disclosures and Department of Insurance outreach to explain risks. Commissioner Tim Temple and the Department cautioned the panel about consumer confusion and implementation logistics, noting there is no master database of all covered policies and that rulemaking and form development would take time.

Industry witnesses and insurance trade groups opposed a mandatory requirement that all carriers offer the product. Rodney Braxton of the Insurance Council of Louisiana and Kevin Cunningham of the American Property Casualty Insurance Association said requiring all licensed insurers to create and file a new product would increase administrative costs for insurers and regulators, costs that would be distributed back to policyholders. Several agent groups and industry associations said the stated-value product already exists in limited form —Citizens Property Insurance offers a version for a small number of policyholders— but uptake has been very low because the premium savings at common midpoints are modest compared with the coverage forgone.

Senators discussing the bill raised concerns about traction on claims, mortgage-holder protections, judicial liens and the potential for increased blight if owners take limited payments and walk away after a catastrophe. Representative Brog and backers pointed to examples where citizens faced premiums that were unaffordable and argued that a carefully regulated stated-value option offers a middle path between full replacement-cost insurance and being uninsured.

During the hearing Senator Abraham offered an amendment to change wording from "shall" to "may" —making offering a stated-value policy optional for insurers. That amendment passed on a roll call, 6 yeas to 3 nays, after an earlier version had failed on a tie vote. With that change and further technical edits the committee reported the bill favorably as amended.

Action: The committee adopted the amendment changing the mandatory offering to optional (roll call 6–3) and moved HB 356 favorably as amended. The Department of Insurance warned that implementing forms, ratings and consumer notifications would likely require months and additional agency work.