House Study Bill 33 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON CARLSON) A BILL FOR An Act relating to residential contractors and repair or 1 services performed on residential real estate covered 2 by property and casualty insurance, and making penalties 3 applicable. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1231YC (2) 88 ko/rn
H.F. _____ Section 1. Section 103A.71, Code 2019, is amended to read 1 as follows: 2 103A.71 Residential contractors. 3 1. This section may be cited as the “Insured Homeowner’s 4 Protection Act” . 5 1. 2. As used in this section , unless the context otherwise 6 requires : 7 a. “Catastrophe” means a natural occurrence including but 8 not limited to fire, earthquake, tornado, windstorm, flood, or 9 hail storm, which damages or destroys residential real estate. 10 b. a. “Residential contractor” means a person in the 11 business of contracting to repair or replace residential 12 roof systems or perform any other exterior repair, exterior 13 replacement, or exterior reconstruction work resulting from a 14 catastrophe on residential real estate or a person or offering 15 to contract with an owner or possessor of residential real 16 estate to carry out such work. do any of the following: 17 (1) Repair or replace a roof system or perform any other 18 exterior repair, replacement, construction, or reconstruction 19 work on residential real estate. 20 (2) Perform interior or exterior cleanup services on 21 residential real estate. 22 (3) Arrange for, manage, or process the work referred to in 23 subparagraph (1) or (2). 24 (4) Serve as a representative, agent, or assignee of the 25 owner or possessor of residential real estate. 26 c. b. “Residential real estate” means a new or existing 27 building, including a detached garage, constructed for 28 habitation by one to four families. 29 d. c. “Roof system” means and includes roof coverings, roof 30 sheathing, roof weatherproofing, and roof insulation. 31 2. 3. A residential contractor shall not advertise or 32 promise to rebate any insurance deductible or any portion 33 thereof as an inducement to the sale of goods or services. A 34 promise to rebate any insurance deductible includes granting 35 -1- LSB 1231YC (2) 88 ko/rn 1/ 6
H.F. _____ any allowance or offering any discount against the fees to be 1 charged or paying a person directly or indirectly associated 2 with the residential real estate any form of compensation, 3 except for items of nominal value. A residential contractor 4 may display a sign or any other type of advertisement on a 5 person’s premises provided the person consents to the display 6 and the person receives no compensation from the residential 7 contractor for the placement of the sign or advertising. 8 3. 4. A residential contractor shall not represent or 9 negotiate on behalf of, or offer or advertise to represent or 10 negotiate on behalf of, an owner or possessor of residential 11 real estate on any insurance claim in connection with the 12 repair or replacement of a roof systems system , or the 13 performance of any other exterior repair, exterior replacement, 14 or exterior reconstruction work on the residential real estate. 15 4. a. A residential contractor contracting to provide 16 goods or services to repair damage resulting from a catastrophe 17 shall provide the person with whom it is contracting a fully 18 completed duplicate notice in at least ten-point bold type 19 which shall contain the following statement: 20 NOTICE OF CONTRACT OBLIGATIONS AND RIGHTS 21 You may be responsible for payment to (insert name of 22 residential contractor) for the cost of all goods and services 23 provided whether or not you receive payment from any property 24 and casualty insurance policy with respect to the damage. 25 Pursuant to Iowa law your contract with (insert name of 26 residential contractor) to provide goods and services to 27 repair damage resulting from a naturally occurring catastrophe 28 including but not limited to a fire, earthquake, tornado, 29 windstorm, flood, or hail storm is void and you have no 30 responsibility for payment under the contract if (insert name 31 of residential contractor) either advertises or promises to 32 rebate all or any portion of your insurance deductible, or 33 represents or negotiates, or offers to represent or negotiate, 34 on your behalf with your property and casualty insurance 35 -2- LSB 1231YC (2) 88 ko/rn 2/ 6
H.F. _____ company on any insurance claim relating to the damage you have 1 contracted to have repaired. Your signature below acknowledges 2 your understanding of these legal obligations and rights. 3 ........... 4 Date 5 ........... 6 Signature 7 b. The notice shall be executed by the person with 8 whom the residential contractor is contracting prior to or 9 contemporaneously with entering into the contract. 10 5. A post-loss assignment by a named insured of rights 11 or benefits to a residential contractor under a property and 12 casualty insurance policy insuring residential real estate 13 shall be subject to all of the following requirements: 14 a. The assignment shall only authorize a residential 15 contractor to be named as a co-payee for the payment of 16 benefits under a property and casualty insurance policy 17 covering residential real estate. 18 b. The assignment shall include all of the following: 19 (1) An itemized description of the work to be performed. 20 (2) An itemized description of the materials, labor, and 21 fees for the work to be performed. 22 (3) A total itemized amount to be paid for the work to be 23 performed. 24 c. The assignment shall include a statement that the 25 residential contractor has made no assurances that the claimed 26 loss will be fully covered by an insurance contract and shall 27 include the following notice in capitalized fourteen point 28 type: 29 YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS YOU HAVE UNDER 30 YOUR INSURANCE POLICY. PLEASE READ AND UNDERSTAND THIS 31 DOCUMENT BEFORE SIGNING. 32 THE ITEMIZED DESCRIPTION OF THE WORK TO BE DONE SHOWN IN THIS 33 ASSIGNMENT FORM HAS NOT BEEN AGREED TO BY THE INSURER. THE 34 INSURER HAS THE RIGHT TO PAY ONLY FOR THE COST TO REPAIR OR 35 -3- LSB 1231YC (2) 88 ko/rn 3/ 6
H.F. _____ REPLACE DAMAGED PROPERTY CAUSED BY A COVERED PERIL. 1 d. The assignment shall not impair the interest of a 2 mortgagee listed on the declarations page of the property 3 and casualty insurance policy which is the subject of the 4 assignment. 5 e. The assignment shall not prevent or inhibit an insurer 6 from communicating with the named insured or mortgagee listed 7 on the declarations page of the property and casualty insurance 8 policy that is the subject of the assignment. 9 f. A copy of the executed assignment shall be provided to 10 the insurer of the residential real estate within five business 11 days after execution of the assignment. 12 g. The named insured has the right to cancel the assignment 13 for any reason within five business days from the date the 14 assignment is executed. The cancellation must be made in 15 writing. Within ten business days of the date of the written 16 cancellation, the residential contractor shall tender to the 17 named insured, the land owner, or the possessor of the real 18 estate, any payments, partial payments, or deposits that have 19 been made by such person. 20 6. Any written contract, repair estimate, or work order 21 prepared by a residential contractor to provide goods or 22 services to be paid from the proceeds of a property and 23 casualty insurance policy shall include the following notice 24 in capitalized fourteen point type, which shall be signed by 25 the named insured, and sent to the named insured’s insurance 26 company prior to payment of proceeds under the applicable 27 insurance policy: 28 IT IS A VIOLATION OF THE INSURANCE LAWS OF IOWA TO REBATE 29 ANY PORTION OF AN INSURANCE DEDUCTIBLE AS AN INDUCEMENT TO THE 30 INSURED TO ACCEPT A RESIDENTIAL CONTRACTOR’S PROPOSAL TO REPAIR 31 DAMAGED PROPERTY. REBATE OF A DEDUCTIBLE INCLUDES GRANTING 32 ANY ALLOWANCE OR OFFERING ANY DISCOUNT AGAINST THE FEES TO 33 BE CHARGED FOR WORK TO BE PERFORMED OR PAYING THE INSURED 34 POLICYHOLDER THE DEDUCTIBLE AMOUNT SET FORTH IN THE INSURANCE 35 -4- LSB 1231YC (2) 88 ko/rn 4/ 6
H.F. _____ POLICY. THE INSURED POLICYHOLDER IS PERSONALLY RESPONSIBLE FOR 1 PAYMENT OF THE DEDUCTIBLE. 2 5. 7. A contract entered into with a residential contractor 3 is void if the residential contractor violates subsection 2 , 3 , 4 or 4 any provision of this section . 5 6. 8. a. A residential contractor violating this section 6 is subject to the penalties and remedies prescribed by this 7 chapter . 8 b. A violation of subsection 2 3 or 3 4 by a residential 9 contractor is an unlawful practice pursuant to section 714.16 . 10 EXPLANATION 11 The inclusion of this explanation does not constitute agreement with 12 the explanation’s substance by the members of the general assembly. 13 This bill relates to residential contractors and repair 14 or services performed on residential real estate covered by 15 property and casualty insurance. 16 Current law requires a residential contractor contracting to 17 provide goods or services on residential real estate to provide 18 notice to the person with whom they are contracting that such 19 person will be responsible for the cost of all goods and 20 services provided, regardless if the person receives payment 21 from any property and casualty insurance. The notice must also 22 provide that the contract is void if the contractor promises 23 to rebate any portion of the person’s insurance deductible, or 24 negotiates, or offers to negotiate, with the person’s insurance 25 company. 26 The bill requires that the notification prohibiting a 27 contractor’s rebate of a deductible be included in any written 28 contract, repair estimate, or work order, and be signed by the 29 named insured. A copy of such notification must be sent to the 30 named insured’s insurer prior to the payment of any proceeds 31 under the applicable insurance policy. 32 The bill requires a notice regarding responsibility for the 33 cost of all goods and services be included in any post-loss 34 assignment of rights and benefits by a named insured to a 35 -5- LSB 1231YC (2) 88 ko/rn 5/ 6
H.F. _____ residential contractor under a property and casualty insurance 1 policy that covers residential real estate. The assignment 2 must also include an itemized description of the work to be 3 performed, and of the cost of the materials, labor, and fees 4 for the goods or services to be provided. 5 A copy of the assignment must be provided to the insurer 6 within five business days after execution. The assignment 7 cannot prevent the insurer from communicating with the 8 named insured or mortgagee listed on the declarations page 9 of the policy that is the subject of the assignment. The 10 named insured can cancel the assignment for any reason 11 within five business days from the date of execution of the 12 assignment. Within 10 business days of the date of the written 13 cancellation, the residential contractor must return to the 14 named insured, the owner, or the possessor of the residential 15 real estate, any payments or deposits that have been made by 16 such person. 17 A residential contractor who violates a provision of the 18 bill is subject to penalties and remedies pursuant to Code 19 chapter 103A. In addition, a contractor who advertises a 20 rebate or promises to rebate a named insured’s deductible to 21 induce a sale, or represents or negotiates with an insurer 22 on behalf of a named insured, commits a consumer fraud and 23 is subject to criminal and civil penalties pursuant to Code 24 section 714.16. 25 -6- LSB 1231YC (2) 88 ko/rn 6/ 6