Know Your Customer’s Rights Regarding Storm Chasers

By: Judd A. Genda & Robert C. Proctor | Axley Brynelson, LLP

Hail damage claims in Wisconsin have become a cottage industry. When a hailstorm hits, contractors canvass neighborhoods offering to inspect roofs and provide free estimates. These contractors usually tell the homeowner that their home insurance will cover the roof replacement. As a result of all of the hail damage claims, homeowners insurance is changing. Many homeowner’s policies will no longer cover roofs older than 20 years. Other limitations include obtaining replacement cost coverage for roofs older than 5 years.  When a home improvement company contacts your customer to provide an estimate to repair the damage to their home in Wisconsin, your customer has statutory protections and rights, providing them with a sense of security and confidence.

In 2014, Wisconsin passed essential protections for homeowners to know about—Wis. Stat. §100.65. This law ensures fair practices and transparency when hiring a residential contractor to repair or replace a roof system or to perform any other exterior repair, replacement, construction, or reconstruction for a single-family or two-unit residential property.

No Rebating Deductibles:  Section 100.65 prohibits contractors from promising to pay or rebate any portion of a property insurance deductible.

Right to Cancel:  A customer who entered into a contract to provide roof or other exterior repairs on a residential home has the right to cancel the contract within three business days after the customer receives notice that the insurance carrier has denied the claim in whole or in part.

Return of Payments:  Where a customer has timely terminated a contract because their insurance claim has been denied in whole or in part, the contractor must return any money paid within 10 days of receiving the notice of cancellation, except for compensation for authorized emergency repairs.

Consumer Statement:  Before entering into a written contract to provide roof or other exterior repairs on a residential home, the contractor must deliver a written statement to the homeowner. The statement must include notice to the homeowner that the homeowner has three business days to cancel the contract if they are notified by their insurer that the claim under the property insurance policy has been denied in whole or in part.  The contractor must also provide the consumer a form in duplicate, that is attached to the contract, is easily detachable, and that the homeowner can use to cancel the contract.

No Private Adjusting:  The contractor may not represent, negotiate, or advertise to negotiate on behalf of a consumer any insurance claim related to the exterior repair of their home. This subsection does not prohibit a residential contractor, with the express consent of the insured, from doing any of the following: (i) discussing damage to the property with the insured or an insurance company's representative; or (ii) providing the insured with an estimate for repair, replacement, construction, or reconstruction of the insured's property, submitting the estimate to the insured's insurance company, and discussing options for the repair, replacement, construction, or reconstruction with the insured or an insurance company representative.

Penalties:  Section 100.65 provides penalties of not less than $500 nor more than $1,000 for each violation.

Storm damage to the exterior of residential properties is more prevalent today. Wisconsin Statute §100.65 promotes fairness and protects your insureds from predatory contractors.