Senate Bill 1057 — Insured Homeowner Protection Act

Senate Bill 1057 — Insured Homeowner Protection Act

by
Parrish Miller
February 7, 2021

Bill Description: Senate Bill 1057 expands the regulation of contracts between homeowners and residential contractors providing them with goods or services.

Amendment Analysis: The amendment to Senate Bill 1057 does not change the rating.

Rating: -3

Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market?

Senate Bill 1057 creates Chapter 66, Title 41, Idaho Code, to impose new regulations on residential contractors providing goods and services to homeowners whose homeowner insurance is paying for such goods and services. Among the new regulations, prohibitions, and mandates included in this new chapter are the following: 

One. A homeowner agreeing to purchase goods or services from a residential contractor must be allowed to cancel the contract up to five business days after signing the purchase contract. 

Two. A homeowner agreeing to purchase goods or services from a residential contractor must be allowed to cancel the contract up to five business days after receiving written notice that his or her insurance company has denied all or part of the claim.

Three.If a homeowner wishes to cancel a contract, the cancellation need not be in a specific form. Even an email will suffice, and the residential contractor is required to provide a refund within 10 days. 

Four. The contract with the residential contractor must include a statement about cancellations. More specifically, it must include this exact statement in "capitalized 14-point type," as follows:

"YOU MAY CANCEL THIS ASSIGNMENT WITHOUT PENALTY BEFORE MIDNIGHT ON THE LATER OF THE FIFTH BUSINESS DAY AFTER YOU EXECUTED THE ASSIGNMENT OR AFTER YOU RECEIVED WRITTEN NOTICE FROM YOUR INSURER THAT ALL OR PART OF THE CLAIM OR CONTRACT IS NOT A COVERED LOSS UNDER THE INSURANCE POLICY. YOU MUST CANCEL THE ASSIGNMENT IN WRITING AND THE CANCELLATION MUST BE DELIVERED TO: [INSERT THE ADDRESS OF THE RESIDENTIAL CONTRACTOR'S PLACE OF BUSINESS]. IF MAILED, THE CANCELLATION IS EFFECTIVE UPON DEPOSIT IN THE UNITED STATES MAIL, POSTAGE PREPAID, AS LONG AS IT IS CORRECTLY ADDRESSED TO THE RESIDENTIAL CONTRACTOR."

(-1)

Five. Senate Bill 1057 forbids a residential contractor from promising to rebate a portion of an insurance deductible as a way to encourage the sale of goods or services. It also says that the contract must include the following notice in "capitalized 14-point type": 

"IT IS A VIOLATION OF THE INSURANCE LAWS OF IDAHO TO REBATE ANY PORTION OF AN INSURANCE DEDUCTIBLE AS AN INDUCEMENT TO THE INSURED TO ACCEPT A RESIDENTIAL CONTRACTOR'S PROPOSAL TO REPAIR DAMAGED PROPERTY. REBATE OF A DEDUCTIBLE INCLUDES GRANTING AN ALLOWANCE OR OFFERING A DISCOUNT AGAINST THE FEES TO BE CHARGED FOR WORK TO BE PERFORMED OR PAYING THE INSURED HOMEOWNER THE DEDUCTIBLE AMOUNT SET FORTH IN THE INSURANCE POLICY. THE INSURED HOMEOWNER IS PERSONALLY RESPONSIBLE FOR PAYMENT OF THE DEDUCTIBLE. CHAPTER 13, TITLE 41, IDAHO CODE, AND RELATED IDAHO CRIMINAL STATUTES PROHIBIT THE RESIDENTIAL CONTRACTOR FROM OFFERING THE INSURED HOMEOWNER A REBATE OF THE DEDUCTIBLE OR OTHERWISE OFFERING AN ALLOWANCE OR DISCOUNT TO COVER THE COST OF THE DEDUCTIBLE. VIOLATIONS MAY BE PUNISHABLE BY CIVIL OR CRIMINAL PENALTIES."

Six. Before beginning any work, a residential contractor is required to "furnish the insured and insurer with an itemized description of the work to be done and the materials, labor, and fees for repair or replacement of the damaged residential real estate and the total itemized amount agreed to be paid for the work to be performed."

This notice must be included in "capitalized 14-point type":

"YOU ARE AGREEING TO ASSIGN CERTAIN RIGHTS YOU HAVE UNDER YOUR INSURANCE POLICY. THE ITEMIZED DESCRIPTION OF THE WORK TO BE DONE SHOWN IN THIS ASSIGNMENT FORM HAS NOT BEEN AGREED TO BY THE INSURER. PLEASE READ AND UNDERSTAND THIS DOCUMENT BEFORE SIGNING. THE INSURER MAY ONLY PAY FOR THE COST TO REPAIR OR REPLACE DAMAGED PROPERTY CAUSED BY A COVERED PERIL, SUBJECT TO THE TERMS OF THE POLICY."

The government should not be micromanaging the terms of a private contract between market participants. 

 (-1)

Does it violate the spirit or the letter of either the U.S. Constitution or the Idaho Constitution? Examples include restrictions on speech, public assembly, the press, privacy, private property, or firearms. Conversely, does it restore or uphold the protections guaranteed in the U.S. Constitution or the Idaho Constitution?

Senate Bill 1057 does not limit itself merely to forcing interminable paragraphs of garish text into private contracts. It also explicitly prohibits a policyholder from voluntarily waiving any of the rights invented by this new chapter of code. 

The right of contract is a foundational right and a prerequisite to a functioning free market. Prohibiting any voluntary terms in a contract violates this fundamental right. 

(-1)

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