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ALERT - Minnesota Statute Chapter 325E.66

Our friend Charlie Durenberger, Director of Licensing and Enforcement at the Minnesota Department of Labor and Industry shared the following letter contractors will be receiving, who are indirectly or directly offering to pay homeowners' deductibles. From a consumer protection standpoint, the Construction Codes and Licensing Division is sending a strong message to unscrupulous contractors who might use financial incentives to take advantage of unsuspecting homeowners.  

PLEASE BE AWARE OF INSURANCE FRAUD AND THE IMPACT ON YOUR COMMUNITY. These "fly by night" contractors will leave homeowners hanging when their shoddy work is in need of repair. The American Building Contractors team is finding many door hangers who have hand written an offer to pay for the deductibles in Coon Rapids, Blaine & Brooklyn Park.

443 Lafayette Road N. 

St. Paul, Minnesota 55155

www.dli.mn.gov
(651) 284-5005

1-800-DIAL-DLI
TTY: (651) 297-4198

June 16, 2017
QP
Contractor

Dear Mr. Contractor:

It has come to our attention that your firm may be engaging in a practice that constitutes a violation of state law.

Be advised that Minn. Stat. § 325E.66 prohibits residential building contractors from advertising or promising to pay or rebate, directly or indirectly, all or part of any insurance deductible, or from offering to compensate a customer for providing any service:

325E.66 INSURANCE CLAIMS FOR RESIDENTIAL CONTRACTING GOODS AND SERVICES.

Subdivision 1.Payment or rebate of insurance deductible. A residential contractor providing home repair or improvement services to be paid by an insured from the proceeds of a property or casualty insurance policy shall not, as an inducement to the sale or provision of goods or services to an insured, advertise or promise to pay, directly or indirectly, all or part of any applicable insurance deductible or offer to compensate an insured for providing any service to the insured. If a residential contractor violates this section, the insurer to whom the insured tendered the claim shall not be obligated to consider the estimate prepared by the residential contractor.

Subd. 2. Private remedy. If a residential contractor violates subdivision 1, the insured or the applicable insurer may bring an action against the residential contractor in a court of competent jurisdiction for damages sustained by the insured or insurer as a consequence of the residential contractor's violation.

Subd. 3. Public enforcement. The commissioner of labor and industry shall enforce this section under sections 326B.081 to 326B.085. Although we do not have evidence of a violation at this time, we wanted to make sure that you are aware of this statute and the potential consequences of conduct that violates this statute, including offering any type of discount or rebate in connection with insurance-funded repair work. A violation of Minn. Stat. § 325E.66 or any other statute that our department has authority to enforce may result in the suspension or revocation of the contractor’s license and the imposition of a monetary penalty of up to $10,000 per violation.

Additionally, the department has an assigned an investigator to canvass neighborhoods that have
been impacted by the storms that hit the Twin Cities on June 11, 2017 to look for unlicensed
contractors. This investigator, and likely others in the future, will also be interviewing
homeowners who have a contractor’s yard sign in their yard to determine whether the contractor
offered to pay the homeowner’s deductible or made any other offer of a discount or rebate.
If you have any questions about this letter or the statute referenced above, please do not hesitate
to contact me directly.

Sincerely,

CHARLIE DURENBERGER
Director of Licensing and Enforcement
Construction Codes and Licensing Division

Tel: (651) 284-5827
Fax: (651) 284-5746
E-mail: charles.durenberger@state.mn.us
CRD/id