Health Insurance

Senate Invoice 12-038 Could Have Unintended Penalties for Colorado Householders and Public Adjusters

Among the many new proposed laws making its manner via the Colorado legislature this yr is Colorado Senate Invoice No. 38, “Regarding Measures To Defend Shoppers Who Have interaction A Roofing Contractor To Carry out Roofing Companies On Residential Property.” The invoice is sponsored by Democratic Senator Lois Tochtrop and Republican Home Consultant Glenn Vaad.


In its current type, the invoice requires residential roofing contractors to signal a written contract with prospects which embody the next particulars:

  • The prices of the companies;
  • The roofing contractor’s contact data;
  • Identification of the roofing contractor’s surety and legal responsibility protection insurer and their contact data, if relevant;
  • The roofing contractor’s coverage relating to cancellation of the contract and refund of any deposit, together with a rescission clause permitting the consumer to rescind the contract and procure a full refund of any deposit inside 72 hours after coming into the contract; and
  • A written assertion that if the consumer plans to make use of the proceeds of a property or casualty insurance coverage coverage to pay for the roofing work, the roofing contractor can’t pay, waive, rebate, or promise to pay, waive, or rebate all or a part of any deductible relevant to the declare for fee for roofing work on the coated residential property.

See Invoice No. 38, Invoice Abstract.

The Invoice makes an attempt to offer shoppers further protections in opposition to unscrupulous roofing corporations. Sure necessities within the invoice are tied to the home-owner’s property insurer—and that insurer’s determination relating to protection or denial of the home-owner’s roof harm declare. Particularly,

An individual who enters right into a contract with a roofing contractor to carry out roofing work on his or her residential property and who submits a declare to his or her property and casualty insurer for fee for the roofing work could rescind the contract for the roofing work if the insurer denies the declare in complete or partly, so long as the individual notifies the roofing contractor inside 72 hours after the declare is denied. The roofing contractor should refund any moneys paid by the shopper inside 10 days after receipt of the cancellation discover.

The Invoice additionally prohibits roofing corporations from making any supply or promise to cowl or reimburse the home-owner’s insurance coverage deductible.

When residential roofing work will likely be paid from the proceeds of a property and casualty insurance coverage coverage overlaying the residential property, the roofing contractor is prohibited from paying, waiving, rebating, or providing or promising to pay, waive, or rebate all or a part of any deductible that applies to the declare.

The written contract necessities and the proper to rescind parts of the Invoice seem to attain the target of client safety (albeit logistical nightmares for even probably the most sincere {and professional} roofing corporations). Nevertheless, the Invoice is problematic, and actually dangerous to shoppers in the case of the implications for roofing corporations that violate the prohibition on presents or guarantees to pay/waive/rebate the home-owner’s deductible. The Invoice states,


Subsection (2) (a) above is dangerous to shoppers for a number of causes: (1) it instantly impacts the protections afforded to shoppers below C.R.S. 10-3-1115 and -1116, and unhealthy religion widespread regulation, by releasing insurers from their responsibility to carry out a well timed and thorough investigation of the loss, which frequently features a cheap evaluation and consideration of all harm estimates put forth by the insured home-owner; and (2) it forces the insured home-owner to endure the implications of the unscrupulous roofer’s actions.

Furthermore, subsection (2) (b) above locations an enormous burden on the home-owner to prosecute not solely their roof damages declare in opposition to their insurer, however as well as tackle an second motion in courtroom to pursue damages in opposition to a roofing firm that prompted the non-payment of their roof harm declare.

Think about the next doubtless situation:

Grandma suffers horrible hail harm to her roof. Grandma submits a declare to her insurer for the roof harm. Insurer responds that the roof could or might not be coated (the adjuster noticed some put on and tear on the roof) and Grandma should submit an estimate of hail harm to the insurer in order that insurer can examine and modify the declare.

Roofer involves Grandma’s door the following day soliciting the roof restore work. Grandma’s roof is leaking and extra hail and rain is predicted within the coming week. Grandma indicators a contract with the roofer, partly as a result of she desperately wants a brand new roof, and partly as a result of the roofer presents to rebate her insurance coverage deductible by way of reductions within the roofer’s invoice.

Grandma submits the roofer’s scope of labor and bill to her insurer requesting fast protection for the harm and an ACV fee so Grandma can get the roofer began working instantly. The insurer learns from Grandma that the roofer supplied to reimburse Grandma for her insurance coverage deductible, thus the insurer (primarily based on the above Invoice) refuses to even think about the roofer’s estimate.

Now, despite the fact that Grandma can rescind her contract with the roofer, Grandma’s roof leak is worse, rain and hail proceed to leak inflicting further harm to her inside, and she or he now has no insurance coverage protection (and never even the prospect of receiving a advantages verify anytime quickly), and no roofer signed as much as begin the work. Worst of all, she now has to tackle the burden and price of hiring a public adjuster or a lawyer to pursue a declare in opposition to her insurance coverage firm, in addition to file a separate motion in opposition to the roofer for his violation of the above Invoice provisions. Grandma has neither the cash nor the sources to seek out the right lawyer to pursue these two separate actions.

Because the Invoice is worded now, it locations far too heavy a burden on the home-owner. The home-owner is left in a place the place she could should battle each her insurer and the roofer, and nonetheless have an unrepaired roof. It could make extra sense to put the burden of going after the unscrupulous roofer completely on the insurer (i.e., the one occasion on this equation with ample cash and sources).


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