Committee approves HB 233 to curb liens and add short cancellation window after storm claims

The House Standing Committee on Banking and Insurance voted to report House Bill 233 favorably after testimony from the bill sponsor and insurance-industry witnesses.

Representative Wade Williams, sponsor of HB 233, introduced the bill and a committee substitute that staff had prepared to incorporate cross-references to other statutes. The substitute was adopted before the committee debated the bill.

Ann Marie Franklin of Kentucky Farm Bureau Insurance testified in support and framed the bill as a consumer-protection measure after severe weather. "We've had tornadoes, windstorms, ice storms, flooding, you name it. And the insurance agencies, insurance companies in the state of Kentucky along, with our our good men and women in the contracting world, have been there to, respond to those events. However, we found, that there's unfortunately always bad characters who want to come take advantage of people, in some of the most vulnerable situations. And that's kinda what, House Bill 2 33 does. It's a consumer protection bill above all else," Franklin said.

Franklin summarized the bill's main provisions: it expands existing statutes to cover contractors beyond tree-removal companies when work arises from a property and casualty insurance claim; it creates a five-day cancellation period for contracts entered after notice from an insurer that services may not be covered by the policy; and it prohibits a mechanic's lien from being placed on an insured following a financial dispute between the insurer and the contractor (while allowing mechanic's liens outside the statute's scope).

Representative Smith clarified scope: the protection applies only to contractors working under a property and casualty insurance claim, not to unrelated private work. Representative Ball asked about the bill's $5,000 civil penalty and whether it should be indexed to inflation; a staff or witness response said the amount was "industry standard" in consultation with the attorney general's office but acknowledged indexing had not been included in the draft.

Representative Hancock, speaking from insurance-industry experience, gave a recent example: "I just had it happen within the past few weeks, where Christmas Eve, insured had their headwater. So we sent a contractor out to clean up the water. It ended up not being a covered loss, and then they're on the line to pay these extra, these extraordinary, horribly high bills." Hancock said the five-day period offers an extra layer of protection for policyholders.

A motion to pass HB 233 as amended by the committee substitute was made by Representative Pollock and seconded by Representative Lockett. The committee adopted the bill and Chair Meredith announced, "House Bill 2 33 as amended by the committee substitute does pass with favorable expression. Same on the House floor."

Votes at a glance: HB 233 — Motion: pass and report favorably to the House floor (as amended by committee substitute); Mover: Representative Pollock; Second: Representative Lockett; Outcome: passed by roll call (members recorded voting yes included Representative Ault, Representative Bauman, Representative Camille, Representative Lockett, Representative Pollock, Representative Rudy, Representative Smith, Chair Meredith and others recorded during roll call).

Key details: the bill covers contractors performing work tied to property and casualty insurance claims, establishes a five-day cancellation window following insurer notice that work may not be covered, prohibits mechanic's liens on insureds within that dispute context, and sets a $5,000 civil penalty (not indexed to inflation in current draft). The bill moves to the full House for further consideration.