SB 38 | Understanding the Law
On June 6, 2012 Governor Hickenlooper signed into law SB38. This is The new statute requires that the written contract must include provisions (1) stating that the roofing contractor shall hold in trust any payment from the property owner until the roofing contractor has delivered materials or has performed a majority of the work; (2) identifying the contractor’s surety and liability coverage insurer if applicable; (3) stating the contractor’s cancellation and refund policy, including a 72 hour right of rescission; (4) stating that the contract may be rescinded within 72 hours after the property owner receives written notice that its insurance claim has been denied; and (5) stating that that contractor cannot pay or waive an insurance deductible.
Many of the items in this law were simply putting into writing the appropriate, ethical and legal standards that roofers should have been operating under prior to the enactment of this legislation. Unfortunately, there remain many stories of roofers and contractors wordsmithing and trying to lead homeowners astray on the public policy regarding this legislation. It remains a violation under statute for homeowners to defraud insurance companies by not paying deductibles and it is clear that any attempt to disguise the payment of deductibles by renaming this payment is a violation. As the Colorado Roofing Assocation describes this more fully. The INTENT of the law is to eliminate the practice of paying, waiving or rebating an insurance deductible for a homeowner. This law was already in Colorado statute prior to SB38 passing (18-13-119.5, C.R.S.), and such interference by a 3rd party with the contractual agreement between an insurer and an insured is considered property insurance abuse or fraud. In attempting to follow the INTENT of the law, any offers that could be construed as waiving or rebating that deductible amount ($500, $1000) would appear to now be against the law. It is obviously rare when a contractor out and out says that they are ‘paying’ the deductible, but if the offer in question would appear to be exactly that, then we would suggest both contractor and homeowner err on the side of caution and not make such an offer. For example advertising & yard sign rebates, coupons, gift certificates, merchandise that reflect deductible amounts of $500, $1000 or more could easily be construed as rebating or waiving the deductible.