This isn’t about what happened on October 29. It’s about another storm, the rising tide of states that regulate contracts for repair of storm damage. A little more than a year ago, no state had special rules for insurance repair contracts. Now there are thirteen (by date enacted):

  • May 24, 2011– Minnesota Statutes § 326B.811
  • June 30, 2011 – Missouri Revised Statutes § 407.725
  • July 1, 2011 – Official Code of Georgia Annotated § 10-1-393.12
  • August 26, 2011 – Oklahoma Statutes Title 59 § 1151.21
  • January 1, 2012 – Illinois Compiled Statutes, Title 815, § 513/18
  • April 10, 2012 – Arizona Revised Statutes § 32-1158.02
  • May 22, 2012 – Louisiana Revised Statutes § 37:2175.1
  • July 1, 2012 – Indiana Code Annotated § 24-5-11-10
  • July 1, 2012 – Tennessee Code Annotated § 62-6-601
  • July 1, 2012 – South Dakota Codified Laws § 37-24-51
  • July 12, 2012 – Kentucky Revised Statutes § 367.620
  • July 19, 2012 – Nebraska Revised Statutes § 44-8603
  • August 1, 2012 – Alabama Code § 8-36-2

If you repair storm damage in any of these states, your residential contracts have to comply with the new law. All thirteen states:

  • Require a notice in the contract if any part of the work may be covered by insurance.
  • Give an owner the right to cancel the job if any part of the claim is denied.
  • Require a full refund within ten days if the job is cancelled.
  • Impose serious penalties for failure to comply.

Storm repair law is different in each of these thirteen states. But the following four states are typical:

Arizona – Covers all repairs to a residence damaged by a “catastrophic storm” in a “specific area.” The owner has three days to cancel after an insurance claim is denied. Work can’t start until the three-day period has expired. The contract has to include a copy of the repair estimate showing damage to be repaired or not repaired and any emergency repairs already completed. If repair of the roof is included, the contract has to describe the work and how the roof was inspected. The contractor is barred from negotiating settlement of the insurance claim. The penalty for non-compliance is revocation or suspension of a contractor’s license.

Kentucky – Applies only to repair of the roof system. The owner has five days to cancel after any part of the insurance claim is denied. The contract has to include a detachable notice of cancellation in duplicate. Prohibits any payment before the end of the cancellation period. Work done to prevent further damage is exempt. The contractor is barred from negotiating settlement of the insurance claim. Prohibits reimbursement of the insurance deductible.

Louisiana – Applies only to repair of the roof system. The owner has three days to cancel after any part of the insurance claim is denied. The contract has to include a detachable notice of cancellation in duplicate. Exempts emergency work if acknowledged in writing by the owner. Prohibits doing any work before the contract is signed. Violation of the law risks a fine of up to $1,000 plus costs and attorney fees.

Missouri – Applies only to repair of the roof system. Prohibits any offer to rebate the deductible. The owner has five days to cancel after any part of the insurance claim is denied. Exempts emergency work if acknowledged in writing by the owner. The contract has to include a detachable notice of cancellation in duplicate. A contractor who doesn’t comply can be slapped with an injunction, restraining order and a civil penalty up to $1,000.

And Now Comes Sandy

Expect to see similar laws enacted in many of the 24 states affected. If your state hasn’t acted yet, stay tuned.
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