Hawaii-2022-SB2277-Amended

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 Hawai‘i-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 30, 2075.

THE SENATE	S.B. NO.	2277
THIRTY-FIRST LEGISLATURE, 2022		S.D. 2
STATE OF HAWAII