Contingency Agreements Valid?

So I’m a homeowner from Colorado. Recently , we had a roofer come to our home and talk to us about getting a new roof, filing a claim with our insurance, etc. He broke out a contingency form (we didn’t know what it was at the time) and my wife signed it.

We filed a claim with insurance, an adjuster came out a few days later, this guy walked the house with the adjuster. The adjuster submitted the info, insurance approved the new roof, and it brings us to the present.

We’re pretty leery of storm chasers and honestly have no idea of whether this guy/his company, are good. The offer the insurance company gave us was great and we felt it was better (safer) to go that route instead. We tell this guy that, and he basically says “no dice, you signed a contract with me.” Well, we haven’t given his co. the quote from the insurance company at all, so technically, the contingency agreement has no scope attached to it, no pricing etc.

My final call with him was, “We’re really not interested in moving forward with your company at this time.” To which he replied, “ok, well, we’ll be in touch and Happy Holidays” (in which, I infer an implied threat of action)

*side note: for the life of us, we can’t find the contingency agreement around the house and he won’t send us a copy of it

We really want to be good, honest people. What are our options? Does a contingency agreement tie us in to going forward with his company, particularly when he didn’t do any adjusting and their was no money/scope/anything-more-than-possability attached to it?

We’re pretty anxious and are looking for some answers. Thanks for the help.

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First, we’re not attorneys so we can only offer our personal opinion. I’d tell them to pound sand. Having said that, you should NEVER sign an agreement without knowing the contractor, check his license, reviews of his work and a complete break down of what he proposes to do. Keep notes and dates of your conversations and the fact that he won’t provide you with a copy of the agreement. Also, make sure he isn’t already trying to get the insurance company to pay him some money with the unknown agreement. Next time, call the insurance company yourself and have contractors give you a written proposal for all of the work.

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A written proposal /estimate prior to having the insurance adjustor come will be more problems. The field adjust has to tell the contractor how much the insurance is going to pay for the work. Only then the contractor can present the options within the estimator price limit. A contingency agreement is a valid contract, stating that you are going to work with a certain contractor to do all the insurance work. Insurance claims take a lot of time, so if would be wrong to have a contractor do all the heavy lifting then you take all the money and go with a cheaper option.


It’s the law in most states. The homeowner ALWAYS should have a
written, signed quote/contract before allowing a roofer to touch the
roof. Insurance doesn’t dictate good business practice.

Don Lambrecht
Don Lambrecht & Associates, Inc
Roof Marketing Associates,LLC

Phone: (916) 417-6768

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Most contingency agreements I’ve seen won’t stand up in court. The contractor may threaten or even take you to court but they won’t likely win. If the contract didn’t include a very explicit statement about 3 day right of rescission, it is likely to not be valid. If the termination clause is for a percentage of the claim, it likely won’t hold up in court.

We created a separate one page form that has the three day right of rescission clause clearly stated and the homeowner has to sign below it showing they received and read it. Below that, we have the termination clause that lays out the fees we charge for specific tasks involved in working with the insurance (trips by sales rep, inspection, xactimate preparation, adjuster meeting, supplements, etc.). The homeowner has to sign below that accepting those fees if they choose to terminate for convenience.

We’ve had a few terminate and they paid the fees in full. We just filed a small claims suit against someone who was in breach of contract and didn’t pay the invoice for those fees. While any court case can be a flip of the coin, I’m confident we will prevail due to this approach with the contract. While it may have happened, I’ve yet to hear of a contractor taking someone to court with the old style contingency agreement and a percentage of the claim as a termination fee.

I would add that nowhere in our contract is contingency ever mentioned. It is a contract the moment it it’s signed. That’s another thing I learned from our attorney. He wasn’t comfortable going to court with any document that was a contingency or based on a termination fee. He said the courts typically frown upon both.

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I would add, the insurance is under no legal obligation to ever tell the contractor what they’re paying. The insurance contract is with the homeowner. It states nothing about any obligations they have to any contractor of any kind. Our contract with the homeowner does state they are obligated to supply us with a full copy of the insurance documentation with x days of receiving it. But that obligated the homeowner, not the insurance company or adjuster. Most adjusters will send the scope of loss to the contractor if the homeowner authorizes it.

Since we are talking about insurance, let me ask you this. Where can I get a handbook with all the insurance laws? I always like to be safe than sorry.

I think what’s more important is that you learn what works to help get your customer’s claims approved and fairly paid for. The relatively small amount of insurance regulation and laws have little to do with that.

Although the contingent contract may not be enforceable. Your wife’s word should be.
This contractor shold have been told prior to the adjustment that you were having second thoughts
And You should be keeping your promises.


Our state law requires the insurance company to list the contract on the check if there is a signed agreement in place at the time the adjuster meets with the contract to inspect the roof. This prevents this exact type of scenario from happening.

Like Authentic_Dad we too have had success collecting after the homeowner decided to back out without any justification after we have had the roof successfully paid for by insruance. Our agreements have a three day right of recision along with a clear explanation of the termination fees. Insurance claims are more involved than a free estimate that we are always happy to provide. Once we invest time and energy in meeting with the adjuster, we do expect the homeowners to allow us to complete the work. If they have any reservations about our company they should address these before signing the agreement and using our knowledgeable staff to meet with the adjuster and ensure their roof is paid for and all items accurately listed.

On the flip side, there are storm chasers and unreputable companies out there that prey on homeowners. Before signing any agreement you should always be aware of what you are signing and research the company! Anything that requires a signature should be considered legally binding and not taken lightly!

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After doing some research

After doing some research I was able to locate a ton of information about contingency agreements. The end result is that a contingency agreement can be upheld between customer and contractor. But between the law, you will need to hire a lawyer.

Check out the contingency agreement blog:

Why do you even want a contingency agreement? Our contract is just that, a contract. Our Attorney steered us in this direction saying he would be much more comfortable in court defending a contract instead of a contingency. If you think a contingency agreement will stand up in court, try it some time and see what happens. Perhaps you’ll get lucky but don’t hold your breath.

Courts don’t like termination fees when the fees aren’t defined upfront. A 10% to 20% termination fee doesn’t seem to get it in court when the total amount is TBD when that contract is signed. What we have done instead is create a separate sheet for the 3 day right of rescission at the top and a fee list for the work performed, should the Customer decide to terminate for convenience, at the bottom. The Homeowner signs the top, signifying they have received the 3 day right of rescission.

The fee list at the bottom is for trip charges, inspection with pictures, graphs, etc., preparing the Xactimate estimate, meeting with the Adjuster, Supplementing, etc… There is a signature line below that stating the Customer agrees to this fee schedule should they decide to terminate for convenience. Most jobs end up being between $900 to $2000 in work performed fees. No, not as much as 10% to 20% usually are but enough to deter the Customer from just casually cancelling the contract. More important, this has a much, much higher chance of prevailing in court. We just took 1 to court and settled for $1,100, we have another one pending. We’ve had half a dozen others that simply paid it after a stern letter with invoice attached. We’ve used this for 3 years so this is less than a 1% problem.


I have to agree with Authentic_Dad on this one.

“ExpertRoofer1hI have to agree with Authentic_Dad on this one.”

I just had a heart attack.

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Totally agree. We do the same and set out specific monetary amounts. Your time has value to it

It depends on the language of the agreement. We use contingencies on all insurance jobs. They are very convenient because they bind themselves to the claim for both scope and price of the work. Thus, when supplements are approved and scope and dollar amount changes, the agreement allows the claim to remain fluid until it is closed out. It eliminates the need for change orders/addendums. It is all about having the right language in the agreement, spelled out for both the contractor and the homeowner. We take the time to properly explain all details of the agreement with our customers. They are usually very comfortable with them once they understand the insurance process. The ones who aren’t in my experience, and want a dollar amount, are typically under the impression they can make money on their claim. These are customers we walk away from. There is no ethical way to make money on an insurance claim unless there is 0 Depreciation. When a homeowner gets an insurance claim for a roof, their only concern should be quality. Budget is irrelevant. If a homeowner wants to back out of an agreement with us, we oblige regardless of how much legwork we’ve put in. We prefer customers who want our services, the ones who don’t but reluctantly accept are typically the most difficult to please.

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Dad, is there a thread on here that outlines how to get the insurance claim paid? Can you PM me or reply with steps we need to do?

Would you be willing to share a sample of a contingency agreement?

No. I’ve spent in the range of $7,500 along with many hours of my own research to arrive at the contract we have. It is not a contingency agreement, it is a contract. Contingency is not mentioned in it anywhere.

@Authentic_Dad I just want to say thanks so much for all your great contributions on this site. I have been reading through threads for weeks and keep getting gold nuggets of information contributed by you.

I am currently looking to get into Roofing sales and doing my homework so I make sure I get started in the most optimal situation. I have lots of sales experience. I’d love to connect with you. I’m out of Colorado but willing to travel to wherever the opportunity is.

I think I have identified your company so will try to reach out that way. However, if you are so inclined to reach out through here that would be much appreciated


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