Senate Study Bill 1161 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON CHAPMAN) A BILL FOR An Act relating to post-loss assignment of rights to 1 residential contractors for repair or services performed on 2 residential real estate covered by property and casualty 3 insurance. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1231XC (4) 88 ko/rn

S.F. _____ Section 1. NEW SECTION . 515.137A Post-loss assignment of 1 rights or benefits to a residential contractor. 2 1. This section may be cited as the “Insured Homeowner’s 3 Protection Act” . 4 2. As used in this section, unless the context otherwise 5 requires: 6 a. “Catastrophe” means the same as defined in section 7 103A.71. 8 b. “Residential contractor” means the same as defined in 9 section 103A.71. 10 c. “Residential real estate” means the same as defined in 11 section 103A.71. 12 d. “Roof system” means the same as defined in section 13 103A.71. 14 3. A post-loss assignment by a named insured of rights 15 or benefits to a residential contractor under a property and 16 casualty insurance policy insuring residential real estate 17 shall be subject to all of the following requirements: 18 a. The assignment shall only authorize a residential 19 contractor to be named as a co-payee for the payment of 20 benefits under a property and casualty insurance policy 21 covering residential real estate. 22 b. The assignment shall include all of the following: 23 (1) An itemized description of the work to be performed. 24 (2) An itemized description of the materials, labor, and 25 fees for the work to be performed. 26 (3) A total itemized amount to be paid for the work to be 27 performed. 28 c. The assignment shall include a statement that the 29 residential contractor has made no assurances that the claimed 30 loss will be fully covered by an insurance contract and shall 31 include the following notice in capitalized fourteen point 32 type: 33 YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS YOU HAVE UNDER 34 YOUR INSURANCE POLICY. PLEASE READ AND UNDERSTAND THIS 35 -1- LSB 1231XC (4) 88 ko/rn 1/ 4

S.F. _____ DOCUMENT BEFORE SIGNING. 1 THE ITEMIZED DESCRIPTION OF THE WORK TO BE DONE SHOWN IN THIS 2 ASSIGNMENT FORM HAS NOT BEEN AGREED TO BY THE INSURER. THE 3 INSURER HAS THE RIGHT TO PAY ONLY FOR THE COST TO REPAIR OR 4 REPLACE DAMAGED PROPERTY CAUSED BY A COVERED PERIL. 5 d. The assignment shall not impair the interest of a 6 mortgagee listed on the declarations page of the property 7 and casualty insurance policy which is the subject of the 8 assignment. 9 e. The assignment shall not prevent or inhibit an insurer 10 from communicating with the named insured or mortgagee listed 11 on the declarations page of the property and casualty insurance 12 policy that is the subject of the assignment. 13 f. A copy of the executed assignment shall be provided to 14 the insurer of the residential real estate within five business 15 days after execution of the assignment. 16 g. The named insured has the right to cancel the assignment 17 for any reason within five business days from the date the 18 assignment is executed. The cancellation must be made in 19 writing. Within ten business days of the date of the written 20 cancellation, the residential contractor shall tender to the 21 named insured, the land owner, or the possessor of the real 22 estate, any payments, partial payments, or deposits that have 23 been made by such person. 24 4. Any written contract, repair estimate, or work order 25 prepared by a residential contractor to provide goods or 26 services to be paid from the proceeds of a property and 27 casualty insurance policy shall include in capitalized 28 fourteen point type the notice as provided in section 103A.71, 29 subsection 4, paragraph “a” , which shall be signed by the named 30 insured, and sent to the named insured’s insurance company 31 prior to payment of proceeds under the applicable insurance 32 policy. 33 5. A contract entered into with a residential contractor is 34 void if the residential contractor violates any provision of 35 -2- LSB 1231XC (4) 88 ko/rn 2/ 4

S.F. _____ this section. 1 EXPLANATION 2 The inclusion of this explanation does not constitute agreement with 3 the explanation’s substance by the members of the general assembly. 4 This bill relates to post-loss assignment of rights to 5 residential contractors for repair or services performed on 6 residential real estate covered by property and casualty 7 insurance. 8 The bill requires a post-loss assignment by a named insured 9 of rights or benefits to a residential contractor under a 10 property and casualty insurance policy insuring residential 11 real estate to only authorize the residential contractor as a 12 co-payee for the payment of benefits under the policy. 13 The post-loss assignment must include an itemized 14 description of, and the materials, labor, and fees for, the 15 work to be performed. The post-loss assignment must also 16 include a total itemized amount for the work to be performed. 17 The bill requires that the post-loss assignment include a 18 statement that the residential contractor has not represented 19 that the claimed loss will be fully covered by insurance and an 20 additional notice, in 14 point type, as detailed in the bill. 21 The assignment is prohibited from impairing the interest 22 of a named mortgagee on the property, or from preventing the 23 insurer from communicating with the named insured or a named 24 mortgagee. 25 The bill requires that after the post-loss assignment 26 is executed, a copy must be provided to the insurer of the 27 residential real estate within five business days. The named 28 insured has the right to cancel the assignment for any reason 29 within those five business days. If the named insured cancels 30 the assignment, the residential contractor must return any 31 payments made by the named insured, the landowner, or the 32 possessor of the real estate. 33 Any written contract, estimate, or work order prepared by 34 the residential contractor must include a notice, as detailed 35 -3- LSB 1231XC (4) 88 ko/rn 3/ 4

S.F. _____ in the bill, advising the named insured that the named insured 1 is responsible for payment to the residential contractor for 2 any goods or services provided by the contractor, even if 3 the named insured does not receive payment from a property 4 and casualty insurance policy. The notice also advises the 5 named insured that if the residential contractor advertises 6 or promises to rebate the named insured’s deductible, or 7 represents or negotiates, or offers to represent or negotiate 8 with the named insured’s property and casualty insurer 9 on behalf of the named insured, the named insured is not 10 responsible for payment to the contractor under the contract, 11 estimate, or work order. A copy of the document, signed by the 12 named insured, must be sent to the named insured’s insurance 13 company prior to the residential contractor being paid from the 14 proceeds of the property and casualty insurance. 15 -4- LSB 1231XC (4) 88 ko/rn 4/ 4