Idaho's House Bill No. 900 would mandate maximum insurance recovery on state property claims - and tighten how settlements get done.
The bill, introduced by the Ways and Means Committee during the Sixty-eighth Legislature's Second Regular Session in 2026, lays out a detailed framework for how the state handles private insurance claims on state-owned property. If enacted, the law would take effect on and after July 1, 2026, under an emergency declaration.
The bill centers on a straightforward premise: before the state accepts any settlement offer or payout exceeding $100,000 for damage to or loss of state property, it must first complete a series of steps designed to ensure the state is pursuing the maximum possible recovery from its insurance coverage.
That starts with documentation. The state would be required to procure law enforcement reports, surveillance footage, or eyewitness statements confirming any third-party liability, where applicable. From there, the bill calls for an assessment of damages conducted by a state engineer, certified appraiser, or independent adjuster. Valuations must be based on prevailing market replacement costs at the time of the loss, regardless of whether the state utilizes internal inventory or state-contracted pricing to carry out the repair.
The scope of what counts as part of a claim is also spelled out. Recoverable soft costs, including architectural and engineering fees, project management oversight, specialized permit fees, and the cost of temporary relocation or bypass measures required to maintain state services during the repair period, must all be included. If the repair of state property triggers a mandatory upgrade to meet current building, safety, or environmental codes, those costs must be documented and included as a mandatory component of the claim.
The bill also requires the state to review its insurance policy limits and exclusions to ensure it is pursuing the maximum possible recovery across all possible payout scenarios. It must also verify that no other secondary insurance or bonds are available to cover the loss.
Once these steps are completed, the director must provide a report of the findings to the affected agency director or administrator and any state board or commission with administrative authority over the affected agency. That report stays out of public view – the bill adds a new exemption under Idaho's public records law, shielding the document from disclosure until a settlement is reached or the claim is otherwise closed. Legislators, however, may review a copy of the report with the expectation that it remains confidential during that period.
The transparency requirements kick in when a proposed final settlement agreement arrives from the insurance company. The director must report the proposed agreement to the state controller for publication at least 14 days before accepting it. If the accepted final settlement agreement differs from the proposed version, the director must notify the state controller and report the updated settlement agreement for publication as well.
There is also a sign-off requirement built into the process. No settlement agreement can be finalized and no release signed by the director without written concurrence from the affected agency director, administrator, board, or commission confirming that the payout meets the maximum amount of funds available to the state. If the director and the affected agency cannot reach agreement on the adequacy of a settlement, the matter gets referred to the State Board of Examiners for final determination.
The bill goes a step further for settlements that trigger broader consequences. If acceptance of a settlement agreement creates conditions for other operational changes for an agency – including the sale of the damaged property or the transfer of state activities to another location – the affected agency must hold a public hearing. The published agenda must include the proposed operational changes, the agency must present those changes and accept public comment, and the legislature must be notified of any operational changes adopted within seven days of the decision.
Affected agencies also retain the right to perform or contract for an independent appraisal or engineering assessment of the damage to ensure the settlement is sufficient to restore the property to its prior utility and value.
On the administrative side, the bill amends existing law on agreement reporting, formally defining "state agency" as any state officer, department, division, bureau, or agency of the state of Idaho, and adding a new requirement for all state agencies to report proposed final insurance settlement agreements to the state controller.
For insurers writing coverage on Idaho state property, the takeaway is clear: the state is putting a structured, codified process behind its claims strategy, with the emphasis at every step on maximum recovery. Adjusters and carriers working these accounts should expect more detailed documentation, market-based valuations, and a more deliberate settlement timeline with built-in public scrutiny.
The bill, if passed, would take effect on July 1, 2026.
