Senate Bill Report — SB 6244, Insurance Policy Sublimits on the Declarations Page (January 22, 2020)

Summary

This is a Senate Bill Report on SB 6244, as of January 22, 2020, for the Senate Committee on Financial Institutions, Economic Development & Trade, with committee activity listed as 1/23/20. The bill is titled An act relating to notification of insurance policy sublimits on the policy's declarations page. Under the Summary of Bill, any rider, endorsement, or application made a part of an insurance policy must be noted clearly and unambiguously on the declarations page. The description must include whether it expands or restricts coverage from the base policy, and state whether it creates or enforces a sublimit. The fiscal note entry reads Requested on January 18, 2020.

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                             SENATE BILL REPORT
                                   SB 6244

                                      As of January 22, 2020

Title: An act relating to notification of insurance policy sublimits on the policy's declarations
    page.

Brief Description: Requiring sublimits to insurance coverage to be noted on the policy
   declarations page.

Sponsors: Senators Wellman, Das, Hasegawa, Wilson, C. and Saldaña.

Brief History:
   Committee Activity: Financial Institutions, Economic Development & Trade: 1/23/20.

                                      Brief Summary of Bill
          Ÿ Requires any rider, endorsement, or application made part of an insurance
            policy to be noted on the declarations page, with certain information on
            the coverage included in its description.


SENATE  COMMITTEE                  ON      FINANCIAL          INSTITUTIONS,           ECONOMIC
DEVELOPMENT & TRADE

    Staff: Kellee Gunn (786-7429)

    Background: The Insurance Contract. An insurance policy is a contract between the insured
    and the insurance company, and details what the company agrees to do in exchange for the
    premium paid by the insured. The contract also describes the insured's responsibilities and
    general terms of coverage. The contract is divided into a declarations page, and the policy
    itself.

    The Declarations Page. The declarations page—commonly referred to as a dec sheet—
    includes basic details of the insurance contract and typically includes the policy number, the
    effective dates, the address of the insured property, the mortgage holder, the coverages,
    coverage limits, the premium, and any discounts.

    The Insurance Policy. The insurance policy is the entire insurance contract, and includes the
    insuring agreements, definitions, and conditions. For a homeowner's insurance policy, a
––––––––––––––––––––––
    This analysis was prepared by non-partisan legislative staff for the use of legislative
    members in their deliberations. This analysis is not a part of the legislation nor does it
    constitute a statement of legislative intent.

Senate Bill Report                              -1-                                          SB 6244
    description of the property coverage and the loss it covers, as well as liability coverage, will
    be provided. There may be an exclusions section of the policy, which outlines specific
    coverages or perils not covered by the policy. Typically flood and earthquake coverage are
    excluded from homeowners and renter's policies unless purchased as an endorsement or rider.
    An endorsement or rider addresses issues or items not in the original, contract and can be
    added to a homeowner or renters' policy, life insurance policy, or auto insurance policy.

    Insurance policies may also have limits of coverage providing the insured the largest dollar
    amount covered for different types of losses. A policy may even have sublimits to the limit
    of coverage. An example of this would be for a policy to have a certain dollar limit for
    personal property, of which only a fraction of the limit would cover certain items, such as
    computers.

    No insurance policy or application form may be issued, delivered, or used in Washington
    State unless it has been filed with the Office of the Insurance Commissioner, except in certain
    instances.

    Summary of Bill: Any rider, endorsement, or application attached to and made a part of an
    insurance policy must be noted clearly and unambiguously on the declarations page of that
    policy form. The description of the rider, endorsement, or application must include whether
    it expands or restricts coverage from the base policy, and state whether it creates or enforces
    a sublimit within its coverage in its description.

    Appropriation: None.

    Fiscal Note: Requested on January 18, 2020.

    Creates Committee/Commission/Task Force that includes Legislative members: No.

    Effective Date: Ninety days after adjournment of session in which bill is passed.




Senate Bill Report                              -2-                                         SB 6244


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