Insurance hike looms for NJ contractors

Real Estate Weekly, April 7, 2004

If the Gov. James McGreevy signs a bill passed by the New Jersey Legislature last week home improvement contractors would be required to register with the state and maintain at least $500,000 of liability insurance.

According to the state Division of Consumer Affairs, faulty home repairs account for the second highest number of consumer complaints after auto repair.

Last year alone, approximately 2,000 complaints were filed against home improvement contractors, compared to the 20 complaints flied against plumbers and electricians already regulated by the state.

Assemblymen Neil M. Cohen said he first proposed such legislation in 1990 as a result of a constituent's complaint on behalf of her elderly mother, who paid $8,000 to have her driveway paved.

The contractor broke up the driveway and then did not return to the elderly women's home to complete the project--at an expensive cost to her. This contractor subsequently was convicted of committing these types of offenses in several other counties.

Undertaking a home improvement project can be a major headache," said Cohen. "Unscrupulous contractors should not be allowed to add to the stress of home repairs or prey upon the homeowners who sign a contract for services."

Under the measure, the Division of Consumer Affairs would require contractors to register with the state before engaging in any home-improvement practices. The Director of the Division of Consumer Affairs would have the authority to suspend or revoke the registration of contractors who violate provisions of the bill.

The measure would require the state to set up a toll-free hotline to inform and educate homeowners about the contractors they hire for repairs and renovations.

Stack said the bill also would give consumers the added protection of requiring simple, easy-to-read contracts that detail all facets of the job.

"All consumers should be provided with a clear and understandable contract," said Stack (D-Hudson). "The last thing a person needs to worry about is whether a contractor is qualified to do the work they're being paid to perform."

Other key aspects of the measure include: registering New Jersey home repair contractors for the first time in history; requiring the disclosure of any criminal convictions by home repair contractors; requiring home repair contractors to prominently display their registration numbers at their places of business, in business documents and correspondence, and on all vehicles used to conduct business.

The measure passed the Senate 24-11. It now goes to the Governor, who may sign it, veto it, or modify it in the form of a conditional veto.