Committee unanimously advances bill to require clearer policy‑limit notices to insured drivers

Summary

Third substitute SB74 would require policy‑limit demand letters to include sufficient information and plain‑language notice to insureds when claimants contact them directly; sponsors and stakeholders described it as a procedural 'guardrail' with bipartisan support and no change to coverage rights.

Senator Musselman presented third substitute SB74, a procedural bill focused on transparency when claimants send policy‑limit demand letters to insurers or directly to insured drivers. He said demands must include reasonable and sufficient information (description of the incident, injuries, medical bills, liability basis) and give at least 30 days for response, and that correspondence to unrepresented insureds must be copied to the insurer and use plain language.

The bill would also require insurers, when they receive such correspondence, to notify the insured whether the carrier will defend or indemnify and whether indemnity is limited to policy limits; if indemnification is limited, insurers must explain why and notify the insured of the right to independent counsel. Senator Musselman described the bill as a "policy guardrail" that does not change coverage or create a new cause of action.

Committee members expressed support; the sponsor and stakeholders said trial attorneys and insurers had collaborated on the language. The committee voted by roll call and unanimously favorably recommended the third substitute.