New Proposed Law Threatens Contractors, Hurts Homeowners – What You Need to Know About LB1137

In the world of insurance restoration work across Nebraska, helping homeowners get fair claim settlements and direct payments isn’t just good business—it’s how we deliver quality repairs without endless delays or out-of-pocket hassles. But a bill now moving through the Legislature—LB1137—has many of us concerned it could turn routine scope-of-loss discussions into legal risks and eliminate the tools we’ve relied on for years. This article aims to explain what LB1137 actually says, the real threats it poses to the restoration industry, and concrete steps we can take right now to push back and protect the way we serve our clients and how claims are handled.

What LB1137 Actually Does: The Parts That Matter to Contractors and Homeowners

Introduced in January 2026 and heard February 3 in the Banking, Commerce & Insurance Committee, LB1137 amends the insurance fraud statutes, the Insured Homeowners Protection Act, and the Public Adjusters Licensing Act. Its stated goal is consumer protection, but several provisions directly target how most storm restoration contractors do business.1 The biggest red flags for contractors are:

• New language making it a fraudulent insurance act (with felony penalties) to present any estimate, invoice, bid, or proposal that “misrepresents the scope of damages or costs of repairs.”
• An outright ban on residential contractors accepting or soliciting post-loss assignments of benefits (AOBs).
• A prohibition against residential contractors “represent[ing] or negotiat[ing]… on behalf of” a homeowner on any insurance claim.

These changes would reshape the insurance restoration model most restoration contractors use every day. Not surprisingly, these provisions are being sold to senators and the public alike as a way to protect homeowners and curb rising insurance premiums. For example, who doesn’t want “misrepresentations” and other fraudulent acts to be punished and eliminated? But the few contractors who do such things (and all of us reputable contractors basically know who the handful of contractors who engage in such activities are) should not be the measure for the entire industry. Moreover, it should shock nobody that this bill, and others like it, are sponsored by large insurance lobbies. In sum, this bill and its onerous provisions are really designed to do one thing – save insurance companies money by underpaying claims and leaving insureds with little or no recourse to ensure fair and proper repairs.

The Felony Trap: Everyday Scope Negotiations Could Carry Real Risk

Under the expanded fraud section, a disputed supplement, an aggressive line-item push, or even a detailed Xactimate that the carrier later rejects could be framed as “misrepresentation.” While the statute still requires intent to defraud, we’ve all seen how aggressively carriers and investigators can interpret these statutes in other states. What used to be standard advocacy for the homeowner could suddenly expose contractors to Class III or IV felony exposure depending on the dollar amount involved.2

Goodbye to AOBs and Direct Contractor Payments

LB1137 declares post-loss assignments to residential contractors void and against public policy. No more direct pay from the carrier, no more stepping in to handle the claim on the homeowner’s behalf. Homeowners would have to fight the carrier themselves or hire a licensed public adjuster (with its own restrictions and fee caps). For many storm-damaged families, that means longer delays, more out-of-pocket costs, and more denials—exactly what Johnson Restoration helps prevent today. And, probably most importantly, most homeowners are ill-equipped to even know when their carrier is under-paying and under-scoping their claim. Unfortunately, this will inevitably lead to more and more fly-by-night contractors doing cheap work at less than quality, workmanlike standards.

Why This Matters Beyond Our Bottom Lines

When contractors can’t negotiate scopes of repair or accept assignments, carriers gain even more leverage. Homeowners get partial payments or lowball offers, leading to patchwork repairs that don’t meet code or manufacturer standards. We’ve seen it in states that passed similar laws—more litigation, higher premiums, and ultimately more frustrated customers. The bill may be sold as consumer protection, but it risks leaving homeowners with fewer options and poorer outcomes.

Practical Steps: How Contractors and Homeowners Can Push Back Right Now

The hearing on February 3 was long and heated—contractors, public adjusters, and homeowners showed up in force, and senators signaled they’re open to amendments. That means our input still matters. Here’s what you can do today:

• Contact your state senator immediately—especially members of the Banking, Commerce & Insurance Committee. Polite, factual messages from real contractors carry weight. Find yours here: Nebraska Senator Finder.
• Support targeted amendments—many of us testified that narrower fixes (clearer disclosure rules, mandatory scope meetings, stronger enforcement of existing laws) would address abuse without killing AOBs or normal negotiation.
• Join or reach out to industry groups—NRCA, local roofing/restoration associations, and the Nebraska chapter of the Property Loss Research Bureau are actively engaged.
• Document everything—keep detailed records of every claim interaction. If the bill passes with tough language, good documentation will be your best defense.
• Stay informed—watch for amendments (a pending one, FA797, is already filed) and be ready to testify if the bill moves to the floor.
• Contact Johnson Restoration—if you want to get involved, either with time or monetary resources, please let me know via email.

Standing Together for Our Industry

LB1137 isn’t law yet, and the strong turnout at the hearing shows we can still shape the outcome. By speaking up clearly, professionally, and in large numbers, we can protect the tools that let us deliver full, code-compliant restorations for Nebraska homeowners. If you haven’t already, reach out to your senator this week—every voice counts. Together we can make sure any final legislation protects consumers without putting responsible contractors out of business.