THE SENATE

S.B. NO.

601

THIRTY-FIRST LEGISLATURE, 2021

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to roofing contractors.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1. The legislature finds that there are individuals referred to as "storm chasers" in the roofing industry who make unsolicited offers to homeowners to repair their houses or roofs after significant weather events, predicated on the homeowners receiving insurance proceeds for the repairs. Many of these offers promise homeowners new roofs or roof systems at no cost to the homeowner, convincing homeowners to sign binding contracts to replace the entire roof. In cases where there has been substantial damage that would require a new roof, there is not usually a problem with these types of contracts. However, often a subsequent inspection is performed by a qualified insurance adjuster, who may determine that the roof sustained only minimal or no damage and limits the claim to the cost to repair the damage, rather than the cost to replace the entire roof. In these situations, homeowners find themselves responsible for the cost of an entire roof replacement with minimal or no insurance coverage.

Accordingly, the purpose of this Act is to:

(1) Prohibit roofing contractors from advertising or promising to pay or rebate a property insurance deductible, or any portion thereof, to induce an insured homeowner to purchase goods or services;

(2) Allow an insured to rescind a contract with a roofing contractor within five business days of receiving notice from their insurer that all or any part of the claim or contract is not a covered loss under the insured's property or casualty insurance policy;

(3) Require roofing contractors to deliver certain forms to consumers advising them of their legal right to rescind the contract;

(4) Require roofing contractors to return funds to a consumer in certain circumstances;

(5) Prohibit roofing contractors from representing or negotiating, or offering or advertising to represent or negotiate, on behalf of an insured any insurance claim in connection with the repair or replacement of roof systems, or the performance of any other exterior repair, replacement, construction, or reconstruction work; and

(6) Allowing the contractors license board to revoke, suspend, or refuse to renew a contractor's license if the licensee performs as a public adjuster without a public adjuster license.

SECTION 2. Chapter 444, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"444-   Roofing contractors; promises to pay or rebate insurance deductible; inducement of sale of goods or services; right to rescind. (a) A roofing contractor shall not advertise or promise to pay or rebate a property insurance deductible, or any portion thereof, to induce an insured to purchase goods or services.

(b) An insured who has entered into a written contract with a roofing contractor to provide goods and services to be paid from the proceeds of a property or casualty insurance policy claim may rescind the contract at any time prior to midnight on the fifth business day after the insured has been notified by the insurer that all or any part of the claim or contract is not a covered loss under the insured's property or casualty insurance policy. Rescission shall be evidenced by the insured providing written notice of rescission to the roofing contractor at the address stated in the contract. Notice of rescission, if provided by mail, shall be effective upon deposit in the United States mail, postage prepaid and properly addressed. Notice of rescission shall not take a particular form and is sufficient so long as it indicates, by any form of written expression, the intention of the insured not to be bound by the contract.

(c) Prior to entering into a contract with an insured for goods and services to be paid from the proceeds of a property or casualty insurance policy claim, the roofing contractor shall:

(1) Furnish the insured in bold-face type of a minimum size of ten-point font, a statement in substantially the following form:

"You may rescind this contract at any time before midnight on the fifth business day after you have been notified by your insurer that all or any part of the claim or contract is not a covered loss under your insurance policy. See attached notice of rescission form for an explanation of this right."; and

(2) Furnish each insured a fully completed form in duplicate, captioned "NOTICE OF RESCISSION", which shall be attached to the contract but easily detachable, and which shall contain boldface type of a minimum size of ten points, the following statement:

"NOTICE OF RESCISSION

If you are notified by your insurer that all or any part of the claim or contract is not a covered loss under your insurance policy, you may rescind the contract by mailing or delivering a signed and dated copy of this rescission notice or any other written notice to (name of contractor) at (address of contractor's place of business) at any time prior to midnight on the fifth business day after you received such notice from your insurer. If you rescind, any payments made by you under the contract, except for certain emergency work already performed by the contractor, will be returned to you within ten business days following receipt by the contractor of your rescission notice.

I hereby RESCIND this CONTRACT.

_____________ (date)

_________________________________

(insured's signature)"

(d) Within ten days after an insured has rescinded a contract pursuant to this section, the roofing contractor shall tender to the insured any payments, partial payments, or deposits made and any note or other evidences of indebtedness. If, however, the roofing contractor has performed any emergency services, acknowledged by the insured in writing to be necessary to prevent damage to the residential property, the roofing contractor is entitled to the reasonable value of such services. Any provision in a contract for goods and services to be paid from the proceeds of an insurance claim for anything except emergency services shall not be enforceable against an insured who has rescinded a contract pursuant to this section.

(e) A roofing contractor shall not represent or negotiate, or offer or advertise to represent or negotiate, on behalf of an insured any insurance claim in connection with the repair or replacement of roof systems, or the performance of any other exterior repair, replacement, construction, or reconstruction work.

(f) Any violation of this section by a roofing contractor shall be deemed an unfair method of competition and an unfair or deceptive act or practice pursuant to chapters 480 and 481B, and shall be subject to those chapters, as well as the provisions of this chapter.

(g) For purposes of this section:

"Insured" means any named insured, any additional insured, any vendor, any lessor, or any other party identified as an insured under a property or casualty insurance policy.

"Promise to pay or rebate" means granting any allowance against the fees to be charged or paying to the insured any form of compensation, gift, prize, bonus, coupon, credit, referral fee, or other item of monetary value for any reason, including but not limited to permitting the roofing contractor to display a sign or any other type of advertisement at the insured's residential property.

"Roofing contractor" means a person, including but not limited to a person that is a nonresident roofing contractor, independent contractor, or subcontractor engaged in the business of roofing, gutter, downspout, or siding services for a fee or who offers to engage in or solicits roofing-related services, including construction, installation, renovation, repair, maintenance, alteration, or waterproofing. The term "roofing contractor" does not include a person engaged in the demolition of a structure or the cleanup of construction waste and debris that contains roofing material, nor a person providing roofing services to a residential building for more than four units, nor a person engaged in building a new home or housing development."

SECTION 3. Section 444-17, Hawaii Revised Statutes, is amended to read as follows:

"444-17 Revocation, suspension, and renewal of licenses. In addition to any other actions authorized by law, the board may revoke any license issued pursuant to this section, or suspend the right of a licensee to use a license, or refuse to renew a license for any cause authorized by law, including:

(1) Any dishonest, fraudulent, or deceitful act as a contractor that causes substantial damage to another;

(2) Engaging in any unfair or deceptive act or practice as prohibited by section 480-2;

(3) Abandonment of any construction project or operation without reasonable or legal excuse;

(4) Wilful diversion of funds or property received for prosecution or completion of a specific construction project or operation, or for a specified purpose in the prosecution or completion of any construction project or operation, and the use thereof for any other purpose;

(5) Wilful departure from, or wilful disregard of plans or specifications in any material respect without consent of the owner or the owner's duly authorized representative, that is prejudicial to a person entitled to have the construction project or operation completed in accordance with those plans and specifications;

(6) Wilful violation of any law of the State, or any county, relating to building, including any violation of any applicable rule of the department of health, or of any applicable safety or labor law;

(7) Failure to make and keep records showing all contracts, documents, records, receipts, and disbursements by a licensee of all the licensee's transactions as a contractor for a period of not less than three years after completion of any construction project or operation to which the records refer or to permit inspection of those records by the board;

(8) When the licensee being a partnership or a joint venture permits any partner, member, or employee of the partnership or joint venture who does not hold a license to have the direct management of the contracting business thereof;

(9) When the licensee being a corporation permits any officer or employee of the corporation who does not hold a license to have the direct management of the contracting business thereof;

(10) Misrepresentation of a material fact by an applicant in obtaining a license;

(11) Failure of a licensee to complete in a material respect any construction project or operation for the agreed price if the failure is without legal excuse;

(12) Wilful failure in any material respect to comply with this chapter or the rules adopted pursuant thereto;

(13) Wilful failure or refusal to prosecute a project or operation to completion with reasonable diligence;

(14) Wilful failure to pay when due a debt incurred for services or materials rendered or purchased in connection with the licensee's operations as a contractor when the licensee has the ability to pay or when the licensee has received sufficient funds therefor as payment for the particular operation for which the services or materials were rendered or purchased;

(15) The false denial of any debt due or the validity of the claim therefor with intent to secure for a licensee, the licensee's employer, or other person, any discount of the debt or with intent to hinder, delay, or defraud the person to whom the debt is due;

(16) Failure to secure or maintain workers' compensation insurance, unless the licensee is authorized to act as a self-insurer under chapter 386 or is excluded from the requirements of chapter 386;

(17) Entering into a contract with an unlicensed contractor involving work or activity for the performance of which licensing is required under this chapter;

(18) Performing service on a residential or commercial air conditioner using CFCs without using refrigerant recovery and recycling equipment;

(19) Performing service on any air conditioner after January 1, 1994, without successful completion of an appropriate training course in the recovery and recycling of CFC and HCFC refrigerants, which included instruction in the proper use of refrigerant recovery and recycling equipment that is certified by Underwriters Laboratories, Incorporated;

(20) Violating chapter 342C;

(21) Failure to pay delinquent taxes, interest, and penalties assessed under chapter 237 that relate to the business of contracting, or to comply with the terms of a conditional payment plan with the department of taxation for the payment of such delinquent taxes, interest, and penalties; [and]

(22) Knowingly or intentionally employing a person to perform work under a contract subject to chapter 104 who is not eligible to work in the United States under federal law[.]; and

(23) Performing as a public adjuster as defined in section 431.9-105 without the insurance license required by section 431.9-201."

SECTION 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2021.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Roofing Contractors; Insurance; Right to Rescind

 

Description:

Prohibits roofing contractors from offering to pay, in any monetary form, an insured's insurance deductible as an incentive to encourage the insured to hire the contractor. Allows insureds to rescind contracts with roofing contractors within five business days of receiving notification from an insurer that all or any part of a claim or contract is not a covered loss under the insured's insurance policy. Allows the Contractors License Board to revoke, suspend, or refuse to renew a contractor's license if the contractor performs as a public adjuster without a public adjuster license.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.