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Get A Game Plan Louisiana Transparency & Accountability Report Fraud
Hazard Mitigation Program Enacts Policies to Protect Homeowners

Sept. 7, 2011

BATON ROUGE – The State’s Hazard Mitigation Grant Program, run by the Office of Community Development-Disaster Recovery Unit, has increased requirements on contractors in the program to improve protection for homeowners who are mitigating their homes through the $750 million program.

Recent programmatic changes, enacted at the direction of Governor Bobby Jindal, include strengthened insurance requirements and the addition of warranties to protect homeowners. The Hazard Mitigation program has also clarified licensure requirements for contractors and launched a mediation process for homeowners who are dealing with poor workmanship by a contractor.

Commissioner of Administration Paul Rainwater said, “We have now paid more than $321 million to homeowners through the Hazard Mitigation program, in addition to more than $1 billion in mitigation funds provided by the Road Home program. But it is not enough for us to just push out dollars – we have to do all we can to protect and empower the homeowners in our Hazard Mitigation program from getting stuck in a bad deal with their contractor. Strengthening insurance requirements and requiring warranties provide extra layers of protection for homeowners seeking to protect their homes from future damage.”

STRENGTHENED INSURANCE REQUIREMENTS
Contractors now must carry insurance that protects the homeowner from damages that occur during the elevation process in order to complete work for homeowners in the Hazard Mitigation program.

Contractors performing elevation work must maintain contractor general liability, rigger’s legal liability, and/or builder’s risk insurance, which will compensate the homeowner for any damage that might occur during the mitigation project. Previously, minimum insurance requirements did not protect homeowners in the event that the mitigation work damaged their homes.

Contractors are also required to have worker’s compensation insurance and motor vehicle liability insurance in order to participate in the Hazard Mitigation Grant Program. 

Before signing a contract, the program recommends that homeowners ensure their chosen contractor is properly insured. Homeowners with questions about contractor insurance requirements should contact their program Mitigation Analyst or the HMGP hotline 1-877-824-8312.

NEW WARRANTY REQUIREMENTS
The following information is to provide the required minimum warranty provisions which individual Homeowners shall have in the contracts with their Contractors to require the Contractor to be liable for defects in the construction following completion, and to allow a complaint and remedy process defective construction method during the construction period.

In the elevation construction contracts, contractors now must provide a warranty for work as follows:

  • One year warranty that the structure is free from any defects resulting from the services provided under its contract with the homeowner;
  • Five year warranty that the structure will be free from major structural defects due to noncompliance with the building standards or other defects in materials or workmanship not regulated by building standards resulting from the services provided under its contract with the homeowner.

In order to complete work under the OCD-DRU HMGP program, a contractor must now provide either a bond in favor of the homeowner or a renovator’s warranty insurance policy which protects the homeowner for a minimum of two years for breach of the warranties provided in its contract with the homeowner.

REPORTING CONTRACTOR PROBLEMS TO HMGP
New procedures also include a process for homeowners to report poor workmanship by their contractors, enter into mediation through the program and to change contractors without penalty if the contractor will not correct problems with the construction.

Homeowners with problems with the quality of their contractor’s work can start this process by calling their Mitigation Analyst or the HMGP hotline 1-877-824-8312 or by e-mailing hazardmitigation@mitigatela.org.

Additionally, homeowners can report potential contractor fraud to the new HMGP fraud hotline at 1-877-851-9380 or via e-mail at ethics.antifraud@mitigatela.org.

CLARIFYING LISCENSURE REQUIREMENTS
In order to raise, level or shore a house, contractors must hold a Louisiana State Commercial Contractor’s license with any one or more of the following classifications:

  • Building Construction, and/or
  • Rigging, House Moving, Wrecking and Dismantling, and /or
  • Raising and Leveling of Residences and Buildings, and/or
  • Foundations and Pile Driving, and/or
  • Sidewalks, Retaining Walls, Patios, and Foundations, and/or
  • Foundations for Buildings and Tanks, and/or
  • Foundations for Buildings, Equipment or Machinery, and/or
  • Foundations, Caissons, and Slurry Walls

Residential Contractors may bid on or sign contracts for raising, leveling and shoring houses for homeowners in the Hazard Mitigation Program, but these contractors must use subcontractors holding a commercial license with one or more classifications as listed above to raise, level, and shore a house if they themselves do not have one of these classifications. 

The contractor must also provide license numbers for its subcontractors so the Hazard Mitigation Program can ensure that those performing the work are properly licensed.

INCREASED TRANSPARENCY
The Hazard Mitigation program has posted a list of contractors that have been placed on probation or suspension from the program for failing to complete work in a timely manner on the program’s Website, mitigatela.org.

The Disaster Recovery Unit within the Office of Community Development is dedicated to helping Louisiana's citizens recover from hurricanes Katrina, Rita, Gustav and Ike. As the state's central point for hurricane recovery, the OCD-DRU manages the most extensive rebuilding effort in American history, working closely with local, state and federal partners to ensure that Louisiana recovers safer and stronger than before.

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