House File 417 - Introduced HOUSE FILE 417 BY COMMITTEE ON COMMERCE (SUCCESSOR TO HSB 33) A BILL FOR An Act relating to post-loss assignment of rights to 1 residential contractors for repair or services performed on 2 residential real estate covered by property and casualty 3 insurance, and making penalties applicable. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1231HV (2) 88 ko/rn

H.F. 417 Section 1. NEW SECTION . 515.137A Post-loss assignment of 1 rights or benefits to a residential contractor. 2 1. This section may be cited as the “Insured Homeowner’s 3 Protection Act” . 4 2. As used in this section, unless the context otherwise 5 requires: 6 a. “Catastrophe” means the same as defined in section 7 103A.71. 8 b. “Residential contractor” means the same as defined in 9 section 103A.71. 10 c. “Residential real estate” means the same as defined in 11 section 103A.71. 12 d. “Roof system” means the same as defined in section 13 103A.71. 14 3. A post-loss assignment by a named insured of rights 15 or benefits to a residential contractor under a property and 16 casualty insurance policy insuring residential real estate 17 shall be subject to all of the following requirements: 18 a. The assignment shall only authorize a residential 19 contractor to be named as a co-payee for the payment of 20 benefits under a property and casualty insurance policy 21 covering residential real estate. 22 b. The assignment shall include all of the following: 23 (1) An itemized description of the work to be performed. 24 (2) An itemized description of the materials, labor, and 25 fees for the work to be performed. 26 (3) A total itemized amount to be paid for the work to be 27 performed. 28 c. The assignment shall include a statement that the 29 residential contractor has made no assurances that the claimed 30 loss will be fully covered by an insurance contract and shall 31 include the following notice in capitalized fourteen point 32 type: 33 YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS YOU HAVE UNDER 34 YOUR INSURANCE POLICY. PLEASE READ AND UNDERSTAND THIS 35 -1- LSB 1231HV (2) 88 ko/rn 1/ 5

H.F. 417 DOCUMENT BEFORE SIGNING. 1 THE ITEMIZED DESCRIPTION OF THE WORK TO BE DONE SHOWN IN THIS 2 ASSIGNMENT FORM HAS NOT BEEN AGREED TO BY THE INSURER. THE 3 INSURER HAS THE RIGHT TO PAY ONLY FOR THE COST TO REPAIR OR 4 REPLACE DAMAGED PROPERTY CAUSED BY A COVERED PERIL. 5 d. The assignment shall include the following notice in 6 capitalized fourteen point type located in the immediate 7 proximity of the space reserved in the assignment for the 8 signature of the named insured: 9 YOU MAY CANCEL THIS ASSIGNMENT WITHOUT PENALTY WITHIN FIVE 10 (5) BUSINESS DAYS FROM THE LATER OF THE DATE THE ASSIGNMENT 11 IS EXECUTED OR THE DATE ON WHICH YOU RECEIVE A COPY OF THE 12 EXECUTED ASSIGNMENT. 13 YOU MUST CANCEL THE ASSIGNMENT IN WRITING AND THE 14 CANCELLATION MUST BE DELIVERED TO (name and address of 15 residential contractor as provided by the residential 16 contractor). IF MAILED, THE CANCELLATION MUST BE POSTMARKED 17 BEFORE THE FIVE (5) BUSINESS DAY DEADLINE. IF YOU CANCEL THIS 18 ASSIGNMENT, THE RESIDENTIAL CONTRACTOR HAS UP TO TEN (10) 19 BUSINESS DAYS TO RETURN ANY PAYMENTS OR DEPOSITS YOU HAVE MADE. 20 e. The assignment shall not impair the interest of a 21 mortgagee listed on the declarations page of the property 22 and casualty insurance policy which is the subject of the 23 assignment. 24 f. The assignment shall not prevent or inhibit an insurer 25 from communicating with the named insured or mortgagee listed 26 on the declarations page of the property and casualty insurance 27 policy that is the subject of the assignment. 28 g. A copy of the executed assignment shall be provided to 29 the insurer of the residential real estate within five business 30 days after execution of the assignment. 31 h. The named insured has the right to cancel the assignment 32 for any reason within five business days from the later of 33 the date the assignment is executed or the date on which the 34 named insured receives a copy of the executed assignment. The 35 -2- LSB 1231HV (2) 88 ko/rn 2/ 5

H.F. 417 cancellation must be made in writing. Within ten business 1 days of the date of the written cancellation, the residential 2 contractor shall tender to the named insured, the land owner, 3 or the possessor of the real estate, any payments, partial 4 payments, or deposits that have been made by such person. 5 4. Any written contract, repair estimate, or work order 6 prepared by a residential contractor to provide goods or 7 services to be paid from the proceeds of a property and 8 casualty insurance policy shall include in capitalized 9 fourteen point type the notice as provided in section 103A.71, 10 subsection 4, paragraph “a” , which shall be signed by the named 11 insured, and sent to the named insured’s insurance company 12 prior to payment of proceeds under the applicable insurance 13 policy. 14 5. a. A contract entered into with a residential contractor 15 is void if the residential contractor violates any provision of 16 this section. 17 b. A violation of this section by a residential contractor 18 is an unlawful practice pursuant to section 714.16. 19 EXPLANATION 20 The inclusion of this explanation does not constitute agreement with 21 the explanation’s substance by the members of the general assembly. 22 This bill relates to post-loss assignment of rights to 23 residential contractors for repair or services performed on 24 residential real estate covered by property and casualty 25 insurance. 26 The bill requires a post-loss assignment by a named insured 27 of rights or benefits to a residential contractor under a 28 property and casualty insurance policy insuring residential 29 real estate to only authorize the residential contractor as a 30 co-payee for the payment of benefits under the policy. 31 The post-loss assignment must include an itemized 32 description of, and the materials, labor, and fees for, the 33 work to be performed. The post-loss assignment must also 34 include a total itemized amount for the work to be performed. 35 -3- LSB 1231HV (2) 88 ko/rn 3/ 5

H.F. 417 The bill requires that the post-loss assignment include a 1 statement and a notice, in 14 point type, that the residential 2 contractor has not represented that the claimed loss will be 3 fully covered by insurance. The bill requires an additional 4 notice, as detailed in the bill, advising the named insured of 5 the named insured’s right to cancel the assignment and of the 6 process for canceling the assignment. 7 The assignment is prohibited from impairing the interest 8 of a named mortgagee on the property, or from preventing the 9 insurer from communicating with the named insured or a named 10 mortgagee. 11 The bill requires that after the post-loss assignment 12 is executed, a copy must be provided to the insurer of the 13 residential real estate within five business days. The named 14 insured has the right to cancel the assignment for any reason 15 within those five business days. If the named insured cancels 16 the assignment, the residential contractor must return any 17 payments made by the named insured, the landowner, or the 18 possessor of the real estate. 19 Any written contract, estimate, or work order prepared by 20 the residential contractor must include a notice, as detailed 21 in the bill, advising the named insured that the named insured 22 is responsible for payment to the residential contractor for 23 any goods or services provided by the contractor, even if 24 the named insured does not receive payment from a property 25 and casualty insurance policy. The notice also advises the 26 named insured that if the residential contractor advertises 27 or promises to rebate the named insured’s deductible, or 28 represents or negotiates, or offers to represent or negotiate 29 with the named insured’s property and casualty insurer 30 on behalf of the named insured, the named insured is not 31 responsible for payment to the contractor under the contract, 32 estimate, or work order. A copy of the document, signed by the 33 named insured, must be sent to the named insured’s insurance 34 company prior to the residential contractor being paid from the 35 -4- LSB 1231HV (2) 88 ko/rn 4/ 5

H.F. 417 proceeds of the property and casualty insurance. 1 It is an unlawful practice pursuant to Code section 714.16, 2 and the contract between the named insured and the residential 3 contractors is void, if a residential contractor violates any 4 requirement related to the post-loss assignment of rights or 5 benefits by the named insured to the residential contractor. 6 -5- LSB 1231HV (2) 88 ko/rn 5/ 5