A notable change recently occurred under Missouri law pertaining to a very particular but common situation: every instance in which contractors perform construction work on the exterior of buildings after losses covered by insurance.
A Missouri Revised Statute originally passed in 2011 applied to only residential contractors, but in 2014 the law was amended and now applies to both residential and commercial contractors. This revised law focuses on the relationship between the property owner, the contractor and an insurance company after a loss.
The statute is favorable to property owners and requires the contractor to follow various steps and avoid several historically common practices.
Perhaps the biggest change under the law involves the historically common practice of contractors working directly with the insurance company as a “quasi-representative” of the property owner. This statute specifically bans the practice. As a practical matter, the statutory language will complicate and delay the work of contractors, as they must now communicate with the insurance company only through the property owner.
In the event a contractor is working with a property owner who is not well-versed in construction language and procedure, a contractor must now spend more time communicating with and counseling the owner to ensure the scope and type of repair work meets the needs of the property owner and is acceptable to the insurance company.
Other changes:
• Contractors may not advertise or promise to pay all or any portion of an insurance deductible as an inducement to obtain business. The Missouri General Assembly has deemed this practice unfair and misleading.
• If an owner enters into a written contract with a contractor for goods or services which are to be paid for by a property or casualty insurance policy – such as wind or hail damage, etc. – the owner may cancel the contract by midnight of the fifth business day after the owner receives notice that some or all of the loss will not be covered by an insurance policy. This protects the owner and allows the owner to void a contract if it is later determined the insurance company will not pay for repairs.
• Before entering into a written contract with a property owner who suffered a loss, the contractor must provide a written notice in bold-faced, 10-point font stating: “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.
• The contractor also must provide a fully completed Notice of Cancellation form.
• The contractor is required, in the event of cancellation by the property owner, to refund all “payments, partial payments, or deposits made and any note or other evidence of indebtedness.”
Finally, the statute deems all actions contrary to the provision as an unfair practice under the Missouri Merchandising Practices Act. In the event a contractor is found liable, punitive damages and attorney’s fees may be awarded to the consumer.
Because the 2014 amendment expanded the 2011 law to include not only residential insurance losses but also commercial, all contractors must now be aware of the mandatory notification requirements and communication practices.
Kory Stubblefield is a member of Lowther Johnson Attorneys at Law LLC and focuses primarily on civil, commercial, construction, personal injury and insurance litigation. He can be reached at kory@lowtherjohnson.com.[[In-content Ad]]
