SB 434 Seeks To Eliminate the Issuance of Raze Orders In WI

David Miller is the owner of Miller Public Adjusters in Wisconsin and a National Board Advisor for the American Adjuster Association. 

Proposed Senate Bill 434 (SB 434) limits the discretion and autonomy of a municipality to issue a raze order for an insured dwelling that has damage caused by a covered peril under the insurance policy (covered damage).
Currently, a municipality may issue a raze order if the building is deemed unfit for human habitation and
unreasonable to repair. Senate Bill 434 claims it limits the authority of the municipality; however, its resulting
consequence reduces a homeowner’s ability to recover their property insurance benefits after covered damages.
Senate Bill 434 puts in place the following:

• Seeks to eliminate WI consumer rights and law called “Valued Policy Law” which assists homeowners and limits insurance companies from over-insuring properties, collecting premiums, and not paying out full coverage in the event their home is deemed “unreasonable-to-repair”
• Gives insurance companies increased and unfair control over the issuance of raze orders
• Eliminates rights from Wisconsin homeowners that have existed for over 100 years
• Creates onerous and unnecessary benchmarks that can not be met under real-life scenarios
• Changes the standard to determine whether a home is unreasonable-to-repair to 70% of the insurance policy limit from the current 50% of the assessed value
• Requires municipalities to become fully involved with the insurance claim process:
  • Subjects municipalities to unnecessary red tape and burdens them to perform duties and tasks that
    should not require their involvement
  • Requires municipalities to incur unnecessary time and expenses
  • Municipalities will be required to send certified letters, estimate damage, or review coverage to
    determine dwelling limits of a damaged building

If passed, Senate Bill 434 will allow insurance companies to increase the threshold limits of when a Raze Order is
appropriate, thereby increasing premiums for consumers while limiting recovery after covered damages. SB 434
creates an insurance loophole and in the event of a substantial loss, insurance companies will not have to pay the
full policy benefits to the consumer. The proposed bill also grants insurance companies unlawful control over
whether a municipality believes a home “unreasonable to repair”.

Groups Registered Supporting SB 434

American Family Insurance
American Property Casualty Insurance
National Association of Mutual Insurance Companies (NAMIC)

Groups Registered Opposing SB 434

American Adjusters Association
City of Milwaukee
WI Insurance Alliance

Please reach out to the Chair of the Insurance, Licensing, and Forestry Committee, Senator Mary Felzkowski and ask her to not schedule a public hearing on Senate Bill 434 at this time. Please provide reasons as to why this legislation needs further review, provide real-life examples as to why this only benefits the insurance industry and how the consumer would be hurt by this legislation. If possible, provide a middle ground as to how the laws governing raze orders might be adjusted.

Here is a list of all the co-sponsors of SB 434. Please send each of them an email as to why this legislation needs further review, real-life examples of how this only benefits the insurance industry, and how the consumer will be impacted.