Colorado Legislation Regarding Managed Repair Networks

It appears there is a great deal of mis-information out there concerning legislation passed last year in Colorado that many believe affects companies like Alacrity. I have seen discussions on various contractor blogs claiming that insurance companies no longer will be able to utilize companies such as Alacrity, Contractor Connection, etc. as a result of the law. To set the record straight, the law prevents insurance companies from requiring that the insured use a particular contractor to make a repair. I cannot speak for other DRP programs, but that is not what Alacrity does. The insurers that work with Alacrity advise their insureds both orally and in writing that the choice of a repair contractor is entirely up to the insured. The insured is then offered the opportunity to have an Alacrity contractor come out and look at the job. If the insured wants to hire that contractor, they may do so, or they may decline to hire them.

I am posting the text of an opinion memo from a Colorado District Attorney interpreting this law. The memo itself can be found at http://www.co.pueblo.co.us/pdfs/scam_alert_10-07.pdf.

The memo states:

Informational Alert – October 2007
by Stacie Harris, Economic Crimes Unit
Choosing a Business to Repair your Hail Damaged Property
House Bill 07-1104
Since the hail storm in Pueblo County on August 23, 2007, the District Attorney's Office has
been receiving inquiries about insurance practices when it comes to selecting a business to make
your property repairs.
In a competitive market, which provides the lowest prices and highest quality of commodities
and services, an individual should be able to choose a repair business.
HB 07-1104 enacted by the Colorado Legislature this year does just that. It concerns the
"referral by an insurance company of an insured to a property repair business".
Basically, the bill "safeguards the public against monopolies, trusts and market barriers," and
"fosters and encourages competition by prohibiting unfair and discriminatory insurance practices
that impede fair and honest competition".
HB 07-1104 further states that "an insurer or its agent that issues or renews a policy that insures
real or personal property shall not directly or indirectly require that appraisals or repairs to the
property be made or not be made by a specified repair business." They are not to "represent that
the use of, or the failure to use, a particular repair business may result in the nonpayment or
delayed payment of a claim; nor are they to intimidate, coerce, threaten or induce by incentive to
use a particular repair business for repairs, except that an inducement by incentive does not
include warranty or guaranty repairs".
The insurer may provide a list of repair businesses for consideration, but must verbally or in
writing disclose to the claimant that the choice or who completes the repairs is up to the
claimant."

The full text of the Colorado law can be found at: http://www.state.co.us/gov_dir/leg_dir/olls/sl2007a/sl_249.htm