# Title 26.1 — Insurance

## Chapter 26.1-39.2 — Residential Contractor Contracts

### § 26.1-39.2-01. Definitions.

As used in this chapter:
1. "Residential contractor" means a person in the business of contracting or offering to
contract with an owner or possessor of residential real estate to:
a. Repair or replace a roof system or perform other exterior repair, replacement,
construction, or reconstruction work on residential real estate;
b. Perform interior or exterior cleanup services on residential real estate; or
c. Arrange for, manage, or process the work referred to in subdivision a or b.
2. "Residential real estate" means a new or existing building, including a detached
garage, constructed for habitation by at least one but no more than four families.
3. "Roof system" includes roof coverings, roof sheathing, roof weatherproofing, and
insulation.
### § 26.1-39.2-02. Contract to be paid from proceeds of property and casualty insurance

policy - Right to cancel - Duties.
1. A person that enters a written contract with a residential contractor to provide goods or
services to be paid from the proceeds of a property and casualty insurance policy may
cancel the contract before midnight on the later of the fifth business day after the
person has:
a. Entered the written contract; or
b. Received written notice from the person's insurer that all or part of the claim or
contract is not a covered loss under the insurance policy.
2. The written contract must include a statement that the insured homeowner has the
right to cancel the contract in accordance with subsection 1.
3. The person seeking to cancel the contract shall evidence the cancellation by giving the
residential contractor a signed and dated copy of written notice of the cancellation.
a. The notice of cancellation may be delivered or mailed to the address of the
residential contractor's place of business as stated in the contract.
b. The notice of cancellation must include a copy of the written notice from the
person's insurer, if applicable, to the effect that all or part of the claim or contract
is not a covered loss under the insurance policy.
c. Notice of cancellation given by mail is effective upon deposit in the United States
mail, postage prepaid, if properly addressed to the residential contractor.
d. Notice of cancellation is not required to be in a particular form and is sufficient if
the notice indicates the intent of the insured not to be bound by the contract.
4. Within ten days after a contract to provide goods or services to be paid from the
proceeds of a property and casualty insurance policy has been canceled by
notification pursuant to this section, the residential contractor shall tender to the
person canceling the contract any payments, partial payments, or deposits made by
the person and any note or other evidence of indebtedness, except if the residential
contractor has provided goods or services agreed to by the person in writing to be
necessary to prevent damage to the premises, the residential contractor is entitled to
be paid the reasonable value of those goods or services. A contract provision to
provide goods or services to be paid from the proceeds of a property and casualty
insurance policy requiring the payment of a fee that is not for those goods or services

is not enforceable against a person that has canceled a contract pursuant to this
section.
### § 26.1-39.2-03. Prohibited acts.

A residential contractor may not promise to rebate a portion of an insurance deductible as
an inducement to the sale of goods or services. A promise to rebate a portion of an insurance
deductible includes granting an allowance or offering a discount against the fees to be charged
or paying an insured or a person associated with the residential real estate a form of
compensation, except for an item of nominal value.
### § 26.1-39.2-04. Post-loss assignment of rights or benefits.

A post-loss assignment of rights or benefits to a residential contractor under a property and
casualty insurance policy insuring residential real estate is subject to each of the following:
1. The assignment may authorize a residential contractor to be named as a copayee for
the payment of benefits under a property and casualty insurance policy covering
residential real estate.
2. The assignment must be provided to the insurer of the residential real estate within
five business days after execution.
3. The assignment must include a statement that the residential contractor made no
assurances the claimed loss will be fully covered by an insurance contract and must
include the following notice in capitalized fourteen-point type:
4. The assignment may not impair the interest of a mortgagee listed on the declarations
page of the property and casualty insurance policy that is the subject of the
assignment.
5. The assignment may not prevent or inhibit an insurer from communicating with the
named insured or mortgagee listed on the declarations page of the property and
casualty insurance policy that is the subject of the assignment.
6. The assignment must include a statement that the insured homeowner has the right to
cancel the assignment in accordance with subsection 1 of section 26.1-39.2-02.
### § 26.1-39.2-05. Itemized description of work.

Before commencement of repair or replacement work, a residential contractor shall furnish
the insured and insurer with an itemized description of the work to be done and the materials,
labor, and fees for repair or replacement of the damaged residential real estate and the total
itemized amount agreed to be paid for the work to be performed, except the description may not
limit the insured or residential contractor from identifying other goods and services necessary to
complete repairs or replacement associated with a covered loss.

### § 26.1-39.2-06. Notice required.

A written contract, repair estimate, or work order prepared by a residential contractor to
provide goods or services to be paid from the proceeds of a property and casualty insurance
policy must include the following notice of the prohibition contained in section 26.1-39.2-03 in
capitalized fourteen-point type which must be signed by the named insured and sent to the
named insured's insurer before payment of proceeds under the applicable insurance policy:
### § 26.1-39.2-07. Violation of the chapter.

A contract entered with a residential contractor is void if the residential contractor violates
this chapter.
### § 26.1-39.2-08. Rulemaking authority.

The commissioner may adopt rules to carry out this chapter.
