Contact 2: Homeowner Protection

Posted on: 10:11 pm, May 1, 2012, by

ST. LOUIS, MO (KTVI)– The extent of the damage caused by the weekend hail storm surprised a lot of people. Many homeowners are scrambling for a contractor to fix busted skylights, battered roofs and siding.

Before you sign on the dotted line know your rights.  Homeowners lose hundreds of thousands of dollars every year to storm chasers.  But a new Missouri law could stop contractor scams before they get off the ground.

Long time local contractors like Jim Compton of Compton roofing says he fought for passage of the law  to protect consumers, “Contractors have come in and made a lot of promises, got the check, signed people up and then left town with the money.  We want to prevent that.”

Missouri lawmakers said enough is enough.  Last summer Missouri Governor Jay Nixon signed the law that revises state statute, according to Compton. “This gives a homeowner, if he’s in fact pressured into signing a contract he didn`t really feel comfortable with, the chance to cancel it.  In a five-day turn,” said Nixon.

Previously, a person had only three days to cancel.   According to Compton, the pressure to sign could be attributed to an unusually close relationship between adjustor and contractor.

When you get the idea that it looks like a collusion situation, they pair up and they come in together. That is no longer allowed in the state of Missouri.

Another provision states contractors can’t make special offers to get you to sign.
“If you got somebody knocking on your door telling you you got all kinds of incentives all kinds of deductions, all kinds of special treatment, free upgrades buyer beware, its insurance fraud, buyer beware and it`s not allowed in the state of Missouri.”

The adjustor is supposed to appraise the damage and hand over the report to the homeowner.   The homeowner then has the opportunity to select the contractor of their choice.

Jim Camoriano, a representative from State Farm Insurance says call your agent before you let anyone on your roof and don’t pay anything up front, “You also want to ask them what`s their name, their business address, their phone number, ask for certificates of insurance, if they have liability, workers comp those kind of things.”

As we’ve said, in most cases there’s less urgency to hire a contractor following the weekend hail storm.  So take your time and ask questions. Know that you have legal backup.

You can get the exact language of the new law by reviewing state statues.   Let us know if you have consumer issues.  Call the Contact2 call center Mon through Thursday between 11 and 1pm   the number is 800 782-2222.   Protect your investment and your wallet.

Below you will find helpful links to information concerning contractors and the new law.

http://www.rsca-inc.org/
Roofing & Siding Contractors Alliance Inc.    FIND THE RIGHT CONTRACTOR

http://stlouis.bbb.org/
Better Business Bureau   St. Louis   FIND THE RIGHT CONTRACTOR

http://insurance.mo.gov/consumers/home/index.php
Missouri Dept of Insurance:  Do you have enough insurance coverage on your home?

http://www.moga.mo.gov/statutes/chapters/chap407.htm
Work and services for insured persons, contractors not to induce sales–cancellation of contracts, requirements, contractor duties–violations, penalty.

407.725. 1. As used in this section, the following terms mean:
(1) “Residential contractor”, a person or entity in the business of contracting or offering to contract with an owner or possessor of residential real estate to repair or replace roof systems or perform any other exterior repair, replacement, construction, or reconstruction work on residential real estate;
(2) “Residential real estate”, a new or existing building constructed for habitation by one to four families, including detached garages;
(3) “Roof system”, includes roof coverings, roof sheathing, roof weatherproofing, and insulation.
2. A residential contractor shall not advertise or promise to pay or rebate all or any portion of any insurance deductible as an inducement to the sale of goods or services. As used in this section, a promise to pay or rebate includes granting any allowance or offering any discount against the fees to be charged or paying the insured or any person directly or indirectly associated with the property any form of compensation, gift, prize, bonus, coupon, credit, referral fee, or other item of monetary value for any reason.
3. A person who has entered into a written contract with a residential contractor to provide goods or services to be paid under a property and casualty insurance policy may cancel the contract prior to midnight on the fifth business day after the insured party has received written notice from the insurer that all or any part of the claim or contract is not a covered loss under the insurance policy. Cancellation shall be evidenced by the insured party giving written notice of cancellation to the residential contractor at the address stated in the contract. Notice of cancellation, if given by mail, shall be effective upon deposit into the United States mail, postage prepaid and properly addressed to the residential contractor. Notice of cancellation need not take a particular form and shall be sufficient if it indicates, by any form of written expression, the intention of the insured party not to be bound by the contract.
4. Before entering a contract referred to in subsection 3 of this section, the residential contractor shall:
(1) Furnish the insured party a statement in boldface type of a minimum size of ten points, in substantially the following form:
You may cancel this contract at any time before midnight on the fifth business day after you have received written notification from your insurer that all or any part of the claim or contract is not a covered loss under the insurance policy. See attached notice of cancellation form for an explanation of this right.; and
(2) Furnish each insured a fully completed form in duplicate, captioned “NOTICE OF CANCELLATION”, which shall be attached to the contract but easily detachable, and which shall contain, in boldface type of a minimum size of ten points, the following statement:
NOTICE OF CANCELLATION If you are notified by your insurer that all or any part of the claim or contract is not a covered loss under the insurance policy, you may cancel the contract by mailing or delivering a signed and dated copy of this cancellation 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 have received such notice from your insurer. If you cancel, 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 cancellation notice.
I HEREBY CANCEL THIS TRANSACTION
____________________________
(date) ____________________________
(insured’s signature). _____________________
5. Within ten days after a contract referred to in subsection 3 of this section has been cancelled, the contractor shall tender to the owner or possessor of residential real estate any payments, partial payments, or deposits made and any note or other evidence of indebtedness. If, however, the contractor has performed any emergency services, acknowledged by the insured in writing to be necessary to prevent damage to the premises, the contractor shall be entitled to the reasonable value of such services. Any provision in a contract referred to in subsection 3 of this section that requires the payment of any fee for anything except emergency services shall not be enforceable against the owner or possessor of residential real estate who has cancelled a contract pursuant to this section.
6. A residential contractor shall not represent or negotiate, or offer or advertise to represent or negotiate, on behalf of an owner or possessor of residential real estate on 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.
7. Any violation of this section by a residential contractor shall be considered an unfair practice pursuant to the Missouri merchandising practices act as codified in this chapter.