Why Waiving Hail Damage Insurance Deductible Is Illegal In Colorado
With storm season approaching, neighborhoods that will be affected by hail and wind damage inevitably be approached by numerous roofing companies promising to repair and replace their roofs with no out of pocket costs to the homeowner, assuring that their homeowner’s policy will cover the total cost of repairs. Waiving hail damage deductible is illegal in Colorado. In years past many homeowners have been deceived and swindled by roofing companies. In order to protect consumers Colorado Senate Bill 38 was enacted in 2012. This legislation improves the way residential roofing contractors do business in Colorado while providing some basic protection when the next hail storm hits. Roofing contractors must comply with the following provisions found in Senate Bill 38.
Senate Bill 38 – The Consumer Protection/Residential Roofing Bill
Residential roofing contracts must comply with provisions found in Senate Bill 38 – a written and signed contract is required between the property owner and the roofing contractor. The contract must include the following in order to comply with the Colorado Residential Roofing Bill. A contract not in compliance may be found to be unenforceable.
- Scope of work & materials to be provided.
- Estimated cost for same based on damages known at the time the contract is entered into.
- Approximate dates of service.
- Roofing contractor’s contact information.
- Identification of contractor’s surety & liability coverage insurer & their contact information.
- Contractor’s policy regarding cancellation of contract & refund of any deposit including a rescission clause allowing the property owner to rescind the contract for roofing services and obtain a full refund of any deposit within 72 hours after entering the contract.
- A statement that if the property owner plans to pay for the roofing services through an insurance claim, the contractor cannot pay, waive or rebate the homeowner’s insurance deductible in part or in whole.
- A statement that the contractor shall hold in trust any payment from the property owner until the contractor has delivered roofing materials to the jobsite or has performed a majority of the roofing work on the property.
- A statement that the property owner may rescind a contract for services, the payment for which will be made from the proceeds of a property insurance claim, within 72 hours after receiving notice from their insurer that the claim is denied in whole or in part.
Waiving hail damage deductible is illegal in Colorado
A roofing contractor may not pay, waive or provide a rebate towards an insurance deductible for a property owner. (Nor may a contractor advertise or promise to waive, pay or rebate same.) Roofing companies may offer to side step a homeowners deductible by masking the waiver as a rebate or marketing.
3-day Right of Rescission
Requires a contractor to return any payment or deposit made by the property owner in conjunction with the contract for roofing work within 10 days after rescission of a contract. A contractor may retain an amount of any payment made by the property owner to compensate for actual work performed however, as long as the work is completed in a workmanlike manner consistent with standard roofing practices.
Under the provisions of SB38 – Residential Roofing Bill, waiving hail damage deductible is illegal in Colorado and can be construed as insurance fraud. Unknowing homeowners enticed by contractors “covering their deductible” become and unknowing participant in fraudulent activity. Under Colorado law, such interference by a contractor, with contractual agreement between an insurer and insured, is considered property insurance abuse or fraud, depending on the specific facts. The crime is charged as a Class 2 misdemeanor which can carry a potential sentence oof 3-12 months imprisonment, a fine of $250 to $1,000, or a combination of imprisonment and fines.
Read the bill in its entirety here.
Senate Bill 38 holds roofing contractors to new standards. While this bill was largely aimed at storm chasing roofing companies, the rules affect roofing and restoration contractors doing business is Colorado.