An All Too Common Scenario
Imagine the clouds turning black one day and a storm rolls in. Hail the size of softballs strikes your home or business, damaging the roof. This is unfortunately an all too common occurrence in Texas. Soon enough, a cadre of roofing repair representatives storm your neighborhood offering discounts marketed as “no deductible”, “zero deductible” and even “free roof repair”. If it sounds too good to be true, it probably is!
While at first, the offer sounds tempting as many property insurance policies have deductibles of $1,000 or more, this “discount” is misleading. Many roofers even pass on additional savings if a homeowner agrees to plant a sign advertising the roofer in their yard.
Under current Texas law it is illegal for roofers to pay deductible costs and can potentially hold homeowners liable for insurance fraud. This law has been in place for 30 years, so how does the above scenario still happen?
Requiring Proof of Payment for Insurance Deductibles
Until recently, proof of payment of a deductible has never been required. This left a loophole open for roofing contractors. Now Governor Greg Abbott has signed into law a requirement that homeowners with a property insurance policy must pay the required deductible out of pocket. In fact, an insurer could refuse to pay a claim “until the insurer receives reasonable proof of payment by the policyholder of any deductible.” Proof can include a canceled check, money order receipt, a credit card statement or a copy of an installment plan contract. A roofer commits a violation if they waive, absorb, rebate, credit or otherwise decline to make a homeowner pay the necessary deductible. The amendment to the law (HB 2102) will take affect beginning in September of 2019. It will affect roofing contractors and property owners across Texas and change the process for insured roofing damage. You can learn about roofer’s insurance coverage here.
What Will Be the Impact of the Amendment?
First of all, this revised law reduces insurance fraud and takes important steps towards regulating the roofing industry. Hailstorms and hurricanes in Texas bring out the bad apples and roof scams. Law abiding roofing companies are often out priced by the less experienced roofers that chase storms and promote “free roofs”.
Second, it’s important to understand where the illegal “savings” are coming from. The salesman-with-a-smile knocking on your door offering a free roof isn’t working for free, and those costs could come from somewhere. This typically translates into poor quality roof repairs, labor and material shortcuts.
If the roofer can do high quality work for an amount reduced by your deductible, then he is over pricing the job by the amount of the deductible. Their price is higher than its required to be to pay for the repairs. Lowering the cost of repairs by the amount of the deductible will save insurance companies money on repair cost and should eventually translate into smaller increase in home insurance and auto insurance pricing. There might be decreases as well!
But most importantly to homeowners under this new law, a customer who violates the law will no longer face legal penalties. Instead, contractors will now bear the burden of responsibility and any roofer who violates the law could be charged with a Class B misdemeanor. Charges at the level of a Class B misdemeanor are punishable by up to 180 days in a county jail, and a fine of up to $2,000.
While this new law is certainly a step in the right direction, it is by no means the end of bad roofers taking advantage of homeowners and insurance companies. We have heard of fake loans being created by local roofing companies in the exact amount of deductibles in an attempt to get around the law. Another common trick is for roofers to collect a down payment for repairs upfront, and then vanish before work is set to begin. It’s important for policy holders to verify before accepting repairs and always speak directly with their insurance agent to help keep them safe and on the right side of the law.
Learn more about homeowners’ insurance and how we can help you lock down a competitively priced home policy today. Or a licensed Hettler agent if you have any questions or concerns. Our 25 years of experience gives us the unique advantage of representing multiple property insurance companies letting you compare, decide, and save!