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PA Home Improvement Consumer Protection Act
Bulletin – Thursday, March 5, 2009
Pennsylvania recently passed the Home Improvement Consumer Protection Act that will have significant effects on the way home improvement contractors conduct their business. The new law is set to go into effect July 1 2009. Unfortunately it does not appear that the new law has been well publicized. Some of the key provisions of the law are outlined below.
KEY PROVISIONS:
To date, we have only had one of our insurance companies begin to address the issue. However, we do anticipate that most insurance companies will have to make decisions on how they will address the registration issue. Will they only write contractors that are registered? How will they change their applications? Will the insurance company request a copy of the registration and supporting information? At this point, we do not have answers to these questions, but will keep you up to date as the information becomes available to us. You may want to contact your contracting clients and urge them to begin the registration and other compliance processes sooner, rather than later.
Contractors that become engaged in monetary disputes with a home owner over the quantity or quality of work will be at a severe legal disadvantage if the dispute enters the legal system and the contractor is found to not be in compliance with the new law. Monetary disputes between a homeowner and contractor generally are not covered under the contractor’s General Liability policy. However, associated bodily injury or property damage claims that are coupled with the monetary dispute could possibly
trigger coverage.
The new law will certainly have long term effects on the contracting industry in Pennsylvania. It may well have lasting impacts on the insurance industry as well.
KEY PROVISIONS:
- All home improvement contractors must register with the Bureau of Consumer Protection
- Proof of liability insurance for at least $50,000 Personal Injury and $50,000 property damage is
needed at the time of registration - All of the contractors advertising and paperwork must reflect the registration number, including
Business cards, estimates, proposal forms and contracts - Contractors must use written contracts for nearly all work performed, including written change
orders.
To date, we have only had one of our insurance companies begin to address the issue. However, we do anticipate that most insurance companies will have to make decisions on how they will address the registration issue. Will they only write contractors that are registered? How will they change their applications? Will the insurance company request a copy of the registration and supporting information? At this point, we do not have answers to these questions, but will keep you up to date as the information becomes available to us. You may want to contact your contracting clients and urge them to begin the registration and other compliance processes sooner, rather than later.
Contractors that become engaged in monetary disputes with a home owner over the quantity or quality of work will be at a severe legal disadvantage if the dispute enters the legal system and the contractor is found to not be in compliance with the new law. Monetary disputes between a homeowner and contractor generally are not covered under the contractor’s General Liability policy. However, associated bodily injury or property damage claims that are coupled with the monetary dispute could possibly
trigger coverage.
The new law will certainly have long term effects on the contracting industry in Pennsylvania. It may well have lasting impacts on the insurance industry as well.