Hawaii Act 256 forces a biennial replacement-cost prompt on homeowners policies
Hawaii Act 256 forces a biennial replacement-cost prompt on homeowners policies
2026-09-10 · Hawaii · Legislation
Hawaii has decided that underinsurance is a disclosure problem as much as a pricing one. Act 256 (2026) adds four new sections to article 10E of the insurance code under the heading “Replacement Cost Disclosure and Insurance to Value.” Governor Green signed it on July 14, 2026; it takes effect January 1, 2027.12
Read the scope first, because it is where most association readers will stop: this is a homeowners policy mandate. It is not a condominium master-policy fix, and it does not amend chapter 514B.
The biennial notice
“At least once every 2 years,” the Act says, “each insurance producer of homeowners insurance shall provide the policyholder with a written notice informing the policyholder that the policyholder may submit information regarding improvements made to the insured residential property, including the type of improvement and the costs of that improvement, for purposes of preparing an updated replacement cost estimate.”
One drafting choice stands out. The notice must be “delivered in paper format; provided that the insurance producer may allow responses to be submitted electronically.” Paper out, electronic back — a deliberate asymmetry, and a rare one in a 2026 statute.
The offer that has to be made
The producer must forward what the policyholder sends to the insurer, and the insurer “shall use the information to reevaluate the replacement cost.” Then the operative duty: “if the dwelling coverage limit is less than the replacement cost, the homeowners insurer shall offer the policyholder the option to purchase additional coverage… to increase the dwelling coverage limit to equal the replacement cost.”
That offer has three attached conditions. It must “include the premium for the increased coverage”; it must “remain open for 30 days”; and it must “be renewed annually.”
The penalty
“A fine of $250 for each violation.” Per violation, not per policyholder and not per year — which for a producer running a book of thousands of homeowners policies is the number that makes the biennial notice a systems project rather than a memo.
Where this actually reaches a community association
Three places, and none of them is the association’s own master policy.
The single-family owner in a planned community. A ch. 421J association’s members carry their own dwelling policies. From 2027 each of them gets a paper prompt every two years and, where they are short, a priced offer that has to stay open for thirty days and come back annually.
The condominium owner’s HO-6. Hawaii unit owners carry walls-in coverage that sits underneath the AOAO’s master policy. Whether a particular HO-6 is a “homeowners insurance” policy for the purposes of these new sections is a question the Act does not answer in terms, and the answer will matter to a large number of Hawaii owners. Treat that as unresolved rather than assumed.
The manager’s inbox. A biennial paper notice about improvements and replacement cost, arriving at every owner in the building on a rolling basis, generates questions that land on the resident manager and the managing agent before they land anywhere else — particularly the perennial one about where the master policy stops and the owner’s policy starts.
What it does not do, said plainly
It does not require anyone to buy more coverage. The mandate runs on the producer and the insurer — notice, re-evaluation, and an offer — and the policyholder is free to decline every time. It does not cap a premium. It does not require the insurer to write the additional limit at any particular price; the offer must state a premium, not a reasonable one.
And it does not touch HRS § 514B-143, the section that says what an association must carry. An AOAO that is underinsured to replacement cost on the master policy in December 2026 is in exactly the same position in January 2027.
Why Hawaii passed it now
The gap between a stated dwelling limit and what it now costs to rebuild in Hawaii is the state’s most expensive open question, and it is not hypothetical — three years after the Lahaina fire, associations are still describing insurance proceeds that cover a fraction of the rebuild. Act 256 attacks the smallest tractable corner of that: the owner who improved the property and never told the carrier, and the limit that has not been re-run since the policy was written.
What to do before January
For a board or manager, the useful move is not compliance — nothing here is the association’s duty — but expectation-setting. When the first paper notices land in 2027, owners will ask whether the association’s master policy already covers what the notice is about. Having a one-page answer ready about the split between the master policy and the owner’s policy in your declaration is worth more than the statute is.
What to watch
Whether the Insurance Division issues guidance on which policy forms count as “homeowners insurance” for these sections — the HO-6 question above turns on it — and whether the 2027 session is asked to extend an equivalent insure-to-value duty to association master policies, which is where the Hawaii exposure is largest and where Act 256 does not go.
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