Contractors and insurance deductibles

State law prohibits contractors from offering to pay homeowners’ insurance deductibles or offering anything of value as encouragement to enter into a contract to repair damage covered by an insurance claim. 

Contractors are also required to include a written notification about the law in their “initial estimate" to make homeowners aware of the requirements. The "initial estimate" also includes price agreeable contracts.

Insurance companies must also provide a similar written notification to homeowners in their initial correspondence about a claim.

What should a contractor do?

If your company does not perform insurance repair to homes, you do not need to do anything as this law does not affect your business.

If you do perform insurance repair work, you will need to update your contracts to include a written notification of the law that prohibits covering deductibles.

The notification can be included in the contract document or provided to the customer as a separate document.

What should the notification say?

The law does not provide specific language to be included, but we suggest the following:

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.

Where can I ask questions?

Contact us at 651-284-5069 or dli.contractor@state.mn.us.