In 2010, Minnesota enacted a law that strictly prohibits contractors from offering or advertising to potential customers that they will pay for and/or rebate any portion of applicable insurance deductibles for home repairs. This also includes advertising anything of value as a means to encourage entrance into a contract to repair damages covered by an insurance claim. [State law (Minn. Stat. § 325E.66) prohibits contractors from offering to pay a customer’s insurance deductible or offering anything of value as an inducement to enter into a contract for home repairs that are to be paid for as a part of an insurance claim. Contractors who make such an offer are subject to public enforcement action by the Minnesota Department of Labor and Industry, including fines of up to $10,000 per violation.]
Since 2011, Legacy Restoration has completed over 4,000 insurance restoration projects and we have always used this law as a guiding principle to ethical business practices. However, homeowners are often approached by seemingly legitimate contractors and told it is perfectly legal to cover a deductible on insurance repairs. Interactions with contractors who illegally offer to cover deductibles through rebates, upgrades, etc., can cause some homeowners to expect their contractor to assist with insurance deductible costs.
In order to arm ethical contractors with information to clearly show homeowners that this practice is illegal and can result in a number of penalties for themselves and said contractors, an addition to this law went into effect on August 1, 2018. During the 2018 legislative session 325E.66 subd. 1 was amended by Chapter 209, Section 1. This amendment requires all contractors completing repairs related to an insurance claim to include a written notification detailing this law in their initial estimate along with information surrounding price agreeable contracts. Insurance companies will also be required to provide a similar written notice to homeowners in their initial claim correspondence. This change will arm ethical contractors, such as Legacy Restoration, with information to clearly show homeowners that this practice is simply illegal and can result in a number of penalties for themselves and said contractors.
*As a homeowner, you are responsible for paying insurance deductibles related to all storm repair work completed on your home and covered by insurance proceeds. If a contractor claims otherwise, consumers should report the incident to Department of Labor and Industry at (651) 284-5069 and Better Business Bureau at bbb.org or 1-800-646-6222.