THE SENATE |
S.B. NO. |
2277 |
THIRTY-FIRST LEGISLATURE, 2022 |
S.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO CONTRACTOR PRACTICES.
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 construction industry who make unsolicited offers to insured property owners to repair their insured premises after significant weather events, predicated on the insured receiving insurance proceeds for their repairs. Many of these predator contractors offer promises to property owners for covered repairs and improvements at no cost to the property owner, baiting them to sign binding contracts to perform extensive work. Often a subsequent inspection of the property is performed by a qualified and Hawaii-licensed insurance adjuster, who may determine that the property sustained only minimal damage and therefore limits the claim to the cost of the actual damages incurred to the property. In certain cases, property owners find themselves being held responsible for the cost of entire rebuilding projects, with little to no actual insurance proceeds.
Accordingly, the purpose of this Act is to:
(1) Prohibit a contractor from paying or rebating, or promising to pay or rebate, a policyholder's property or casualty insurance deductible, or any portion thereof;
(2) Prohibit a contractor from representing or negotiating, or offering or advertising to represent or negotiate, on behalf of an insured or claimant in connection with the repair or reconstruction work associated with any insurance claim;
(3) Allow an insured to rescind a contract with a contractor within five business days after the date the contract is executed;
(4) Require a contractor to furnish a property owner with a written five-business-day right of rescission form advising the property owner of the legal right to rescind the contract within the allotted time; and
(5) Require a contractor to return funds to an insured homeowner within five business days of receipt of an executed right of rescission notice.
SECTION 2. Chapter 444, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:
"§444- Payment
or rebate of insurance deductible; negotiation of insurance claim; prohibition. (a) A contractor shall not pay or
rebate, or promise to pay or rebate, a policyholder's insurance deductible, or
any portion thereof.
(b) A
contractor shall not represent or negotiate, or offer or advertise to represent
or negotiate, on behalf of an insured or a claimant any insurance claim in
connection with the repair or reconstruction work associated with the insurance
claim.
(c) A
contractor shall not advertise, solicit, offer to handle, handle, or perform
public adjusting services unless licensed under and in compliance with chapter
431. The contractor shall only discuss
or explain a written estimate for repair or reconstruction to a property with
the insured who has suffered a loss or damages covered by a property or
casualty insurance policy. A contractor
shall not act as an intermediary or as a third-party consultant in any manner
between the insured and the insurer.
(d)
Any violation of this section by a 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 the penalties under this chapter and
chapters 480 and 481B.
(e)
For purposes of this section:
"Advertise"
includes but is not limited to any printed advertisement in newspapers,
magazines, flyers, bulk mailers, websites, electronic mail, or internet domains;
signage of any type; television, radio, or oral discussions; or broadcasting by
any other means.
"Insured" means any named insured,
any additional insured, any vendor, any lessor, any claimant, or any other party
identified as an insured under a property or casualty insurance policy.
"Pay or rebate" means to grant any
allowance against the fees to be charged or pay 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
contractor to display a sign or any other type of advertisement at the
insured's residential property.
"Promise to pay or rebate" means pledging
to grant any allowance against the fees to be charged or pledging to pay 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 contractor to display a sign or any other type of
advertisement at the insured's residential property.
§444- Right to rescind. (a)
An insured who has entered into a written contract with a 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 date the contract is executed. Rescission shall be evidenced by the insured
providing written notice of rescission to the contractor at the address stated
in the contract. Notice of rescission shall be made by means of certified mail, return
receipt requested. 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.
(b) Before 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 contractor shall:
(1) Furnish the
insured, in not less than ten-point boldface type, a statement in substantially
the following form:
"You may rescind this
contract at any time before midnight on the fifth business day after the date
the contract is executed. 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, that shall contain, in not less than ten-point boldface type, the
following statement:
"NOTICE OF
RESCISSION
You may rescind this
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 the date the contract is executed. If you rescind, any payments made by you
under the contract, except for bona fide emergency mitigation work already
performed by the contractor, will be returned to you within five business days
following receipt by the contractor of your rescission notice.
I hereby RESCIND this CONTRACT.
_____________ (date)
_________________________________
(insured's signature)"
(c) Within five business days after an insured
has rescinded a contract pursuant to this section, the contractor shall tender to the insured any payments, partial
payments, or deposits made and any note or other evidences of
indebtedness. If the contractor has
performed any bona fide emergency mitigation work, acknowledged by the insured
in writing to be necessary to mitigate any further damages to the property, the
contractor shall be entitled to the reasonable value of the bona fide emergency
mitigation work. Any provision in a contract
for goods and services to be paid from the proceeds of an insurance claim for
anything except bona fide emergency mitigation work shall not be enforceable
against an insured who has rescinded a contract pursuant to this section."
SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
SECTION 4. New statutory material is underscored.
SECTION 5. This Act shall take effect on July 1, 2022.
Report Title:
Contractors; Property or Casualty Insurance; Unfair Methods of Competition; Unfair or Deceptive Acts or Practices; Right to Rescind
Description:
Prohibits contractors from offering to pay or rebate, or promising to pay or rebate, an insured's property or casualty insurance deductible. Prohibits contractors from representing or negotiating, or offering or advertising to do so, on behalf of an insured in an insurance claim. Specifies violations are unfair methods of competition and unfair or deceptive acts or practices. Allows insureds to rescind contracts with the contractors within five business days after the date the contract is executed. Requires contractors to provide certain forms to an insured, prior to entering into a contract. (SD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.