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BLOG: BBB Warns Against Insurance Deductible Rebates from Contractors

The BBB and the MN Department of Labor and Industry are alerting consumers to a law which was enacted in 2010, prohibiting contractors from promising to pay or rebate applicable insurance deductibles.

When severe thunderstorms roll through the area, many homeowners find themselves calling their insurance companies to determine if damage to their homes is covered by their homeowners’ policies. The Better Business Bureau of Minnesota and North Dakota (BBB) wants to make sure Minnesota homeowners are aware of a rule in place to protect them when they begin the process of finding a contractor to make repairs.

In particular, the BBB and the Construction Codes and Licensing Division (CCLD) of the Minnesota Department of Labor and Industry are alerting consumers to a Minnesota law which was enacted in 2010, prohibiting contractors from advertising or promising to pay or rebate all or part of any applicable insurance deductibles.

“The reason this law was passed was to protect consumers and insurance companies from contractors who might inflate repair costs in order to pay the homeowner’s deductible,” said Charlie Durenberger, Manager of the CCLD Licensing and Enforcement Services Units.

The practice of contractors artificially increasing the price charged to the insurance company - to cover homeowners’ deductibles - would ultimately lead to rising costs of homeowners insurance for all consumers. Under the 2010 law, the CCLD now has broader powers to enforce this provision. Contractors who are found to have offered to pay or rebate a homeowner’s insurance deductable can face a number of penalties, including suspension or revocation of their contractor’s license and/or a fine of up to $10,000.

“The BBB is always monitoring the marketplace for questionable business practices,” said Dana Badgerow, President and CEO of the BBB. “We feel it’s important to help educate the public on matters such as this and encourage consumers to make principled decisions based on facts.”

Homeowners need to know that they are responsible for paying the deductible on their homeowners insurance. If a company claims otherwise, consumers should report the incident to the CCLD at (651) 284-5069, as well as the Better Business Bureau (bbb.org or 800-646-6222).

The mission of the Better Business Bureau is to be the leader in building marketplace trust by promoting, through self-regulation, the highest standards of business ethics and conduct, and to instill confidence in responsible businesses through programs of education and action that inform, assist and protect the general public. Our hours of operation are 8 a.m. to 5 p.m. Monday through Friday. Contact the BBB at www.bbb.org or 651-699-1111, toll-free at 1-800-646-6222. Visit our Centennial website at bbbis100.org.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Allisdiar1 September 12, 2012 at 11:07 AM
Thanks for sharing this useful knowledge with us its really helpful. Please update like that in future also. http://www.alliedinsurance.co.uk/Contractors-tradesmen.aspx

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