What Does This Mean For You The Homeowner
How does this new law affect the roofing contractors you will be working with? Under the recently approved Texas House Bill 2102, any roofing contractor that offers to waive your deductible on your property insurance could be facing criminal charges. So, roofers are now required to state in their contract in boldface language that you must pay the deductible under your property insurance policy. Since this House Bill is in effect, its now a criminal offense for a roofing contractor to do the following for you:
Pay your insurance deductible Rebate your insurance deductible or Offset your insurance deductible.
If you knowingly submit or allow a claim to be submitted with a waived or reduced deductible, YOU, as an insured policyholder are also in violation of the law. This new law helps protect you as the consumer from the onslaught of roofers that go door-to-door after Texas storms that are not accredited and may leave you with sub-par work, or even a partially completed roof.
The New Deductible Law:
SB38 states the following when it comes to the deductible:
PROHIBITING ROOFING CONTRACTORS FROM PAYING, WAIVING, REBATING, OR PROMISING TO PAY, WAIVE, OR REBATE ALL OR PART OF ANY INSURANCE DEDUCTIBLE APPLICABLE TO AN INSURANCE CLAIM MADE TO THE PROPERTY OWNERS PROPERTY AND CASUALTY INSURER FOR PAYMENT FOR ROOFING WORK ON THE RESIDENTIAL PROPERTY COVERED BY A PROPERTY AND CASUALTY INSURANCE POLICY.
Lets Talk About Your Insurance Deductible Roof Bids And How They Relate To The Insurance Claims Process After A Disaster
Were going to break this into a few parts because this can get a little complicated, so bear with us. However, there is a lot of misinformation about the process. We felt it was important to clear the air about everything for the benefit and safety of homeowners, as well as, roofers. Hopefully we can clear up the confusion and help set better expectations for both parties before business starts.
Okay, so you had an incident and youre looking to get back to enjoying normal life ASAP.
The most common concern most homeowners have is, how to get the best bang for their buck during a claim. Were here to tell you that the best thing you can do is find a contractor you trust, and dont go for the cheapest one. In an insurance claim, there is no best price. This is because home restoration claims differ greatly to auto claims.
Xactimate is a 3rd party estimation software. Most insurance companies use it to calculate material and labor costs for repairs. In fact, its the same software the majority of roofing companies use! The software contains pricing standards for the industry, specific to your zip code.
The standards in Xactimate are there for a reason. Material and labor cost money. If they are performing services for less, you are getting one of two disadvantages.
1.) You are not restoring your home to the industry standard.
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How Do Roofers Waive Deductibles
It sounds like a good deal, right? Your insurance company pays for a new roof after hail damages your current one. AND your roofing contractor is going to absorb the cost of your deductible? Winning!! Not really.
Roofing companies often bill you for the full cost your insurance has agreed to pay even if the project requires less money than that. The roofer will then adjust the price of the job by precisely the cost of your deductible. This leaves the insurer overbilled and can result in you being accused of insurance fraud.
Can Roofers Cover A Roofing Deductible
For example, your deductible is $1,500, and the damage is estimated at $10,000. That means $8,500 should come from insurance and you would pay $1,500. Now let’s say a roofing contractor knowingly inflates the damage to $11,500. The insurance payout increases to $10,000, and the contractor does the repair without the deductible. Again, deliberately falsifying an estimate to allow for an increase in insurance payouts is insurance fraud. There are significant criminal penalties for this type of fraud and hurts all parties involved. Any contractor who offers to waive your deductible is likely making up the difference by cutting corners or using lower quality products that can lead to more claims and repairs later on.
The Illinois law prohibits home repair and remodeling contractors from advertising or promising to pay or rebate “all or any portion of any insurance deductible as an inducement to the sale of goods or services.” This includes “granting any allowance or offering any discount against the fees to be charged or paying the insured or any person directly or indirectly associated with the property any form of compensation.”
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Yes You Have To Pay Your Deductible For Roofing Claims
Do you have to pay your insurance deductible? It is a question that confuses many homeowners, and Stonewater Roofing hears it often. In nearly every situation, the answer is yes.
Most people have not needed to make a roofing or home repair claim with their insurance company, but may have done so with their car insurance. Its a very similar process. You have a set deductible for your car insurance. Then, when you get into a fender bender, you can take your car to the shop. You pay your deductible, the shop fixes your car, and you get your car back.
The same thing occurs with the roofing insurance claim process.
In most states, including Texas, homeowners are required to pay that deductible. However, many roofing companies will offer to absorb the cost. This is illegal. You should not trust a company that is breaking the law.
But also, if a company does not ask you to pay your deductible, where does that money go? It is likely coming out of the materials or the quality of the roof that they are installing on your home. You want to be careful with your contractors, stated Stonewater Roofing COO and co-owner Jacob Law. Make sure that everybody is doing things above board and the correct way, not only by you, but also the insurance company and state regulations.
Most contractors understand how a deductible payment can impact a family after a storm. They will likely offer financing options to cover the deductible and minimize the hardship.
Following A Storm Its Important That You Have Your Roof Checked For Damage
Uncorrected damage can leave your home vulnerable to costly, more extensive roof repairs down the road. However, the last thing that you as a homeowner want to do when it comes to signing a contract for a new roof is to walk into the contractual agreement blindly. Make sure you take the time to call a local, reputable roofing contractor who is based out of your area. Check their reputation online, and avoid out-of-town companies that wont be around a couple of months down the road should issues arise. Work with a contractor who holds themselves above the bar one who wont compromise their company, or their clients well-being by offering illegal promises such as waived deductibles. This way, from start to finish, you can be confident that your project will run smoothly, and youll be taken care of.
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Why Cant A Roofing Contractor Pay Your Deductible
Simply put, its illegal according to the Colorado State Law SB38 passed June 6th, 2012 which states that it is a crime for a roofing contractor to pay, waive, or rebate any part or all of a homeowner’s insurance deductible.
Basically, it constitutes insurance fraud on both the part of the homeowner and the roofer.
Let us take a look at a hypothetical situation should your roofing contractor agree to pay your deductible:
To start, let’s say you have a roofing claim valued at $10,000 and a deductible of $1000. Your insurance company will decide on a depreciation amount based on the age of the roof.
In our example, let’s say that’s $4000. Your insurance company withholds the depreciation amount, to send to you once the job is complete, and then subtracts your $1000 deductible. The remainder: $5000, is the amount of the first check you’ll get from the insurance company. Remember, your insurer will send you the $4000 depreciation amount, if you have replacement cost value coverage on your policy, but to receive that money, there are a couple more steps.
To receive your depreciation funds, you or your contractor needs to send the insurance company an invoice stating that the amount billed for the work is $10,000.
Once they receive that, your insurer will release the depreciation funds to you. This means that your insurance company will have paid $9000 for your $10,000 roof repair, and you will have paid $1000. Your deductible payment is paid to your contractor.
How Roofers Waive Deductibles
If your roofer is planning to send you an invoice, which you will then send to the insurance company, theyre expected to be honest about the cost of their work. If, for example, the roofer plans to complete $6,000 of repair work but bills the insurance company for an extra $1,000 to account for the deductible theyre lying to the insurance company. Thats a common practice when roofers claim to waive deductibles. Even if the homeowner is unaware of the roofers dishonesty, its still a problem. Some contractors will absorb the cost of the deductible by over-billing the insurance company, then cutting a check back to the homeowner. If youre receiving a $1,000 check from a contractor and not declaring it on your income, thats a tax issue.
Some roofing contractors may make tempting claims about reducing your insurance deductible. At Taylor-Made Roofing, we dont cut corners. We are trustworthy, law-abiding contractors, and we are here to make your experience stress-free. Weve been in business in southwest Missouri for more than 20 years, and were committed to keeping your roof solid and attractive for years to come. Call us at 417-326-8778 to set up a consultation or roofing service.
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Nebraska Insurance Deductible Laws
It is a violation of the insurance laws of Nebraska to rebate any portion of an insurance deductible as an inducement to the insured to accept a residential contractors proposal to repair damaged property. Rebate of a deductible includes granting any allowance or offering any discount against the fees to be charged for work to be performed or paying the insured policy holder the deductible amount set forth in the insurance policy
Its Simply Insurance Fraud
So, you want your roof to be replaced, and youll definitely be contacted by contractors who advertise waived insurance deductibles. These contractors claim to adjust insurance deductibles into materials or repair costs and save you some money.
Some may even offer discounted rates by absorbing the deductibles into their repair cost. It is problematic as much as tempting it might sound thats just illegal. Its a tricky one, this whole scenario of waived off deductibles if youre not aware enough about how insurance management. So, hang in there and read on to find everything you want to know before making this decision.
In the past, insurance companies used to write a lump sum payment check to homeowners, and the deductible was removed from the total payment. For example, a home needs roof damage repair suffered from a sturdy storm, then the insurance company will get an estimated amount of the total repair cost. If the amount is $7,000 and a homeowner had a $1500 deductible, insurers would simply sign a check for $5,500 subtracting the deductible. But, today thats not the case.
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How Insurance Claims Work
When an insurance claim is filed on a property, the insurance company is paying fair market value to bring that property back to pre-storm conditions. The property owner for their part, agreed to pay the pre-determined deductible. When the work is done by a contractor for less than the insurance pays, then one of two things will happen: you will either save the insurance company money, or you and your contractor will be committing insurance fraud. Lets look at some examples of how this works.
In the example below, the value of this roof replacement is $10,000. The insurance company will depreciate your roof by its age and hold back that amount in what is called recoverable depreciation, until the job is finished. Once the contractor has finished the roof, they will then invoice the insurance company, letting them know it is finished, and they can then release that last check. The insurance company uses this a safeguard to ensure you get the work done. So the math on this claim would looks something like this:
You can see that as long as all parties are being honest, getting a lower bid does not benefit anyone except the insurance company. In fact, it usually backfires against the property owner, as many roofers will cut corners and use seconds and surplus materials to still remain profitable. In some cases however, roofers will tell the property owner that they will waive their deductible.
Things You Need To Know About Roof Replacement Deductibles
September 16, 2019 by Josh Puckett
Having a roof repair or replacement project done for your home is a significant task, especially if its an emergency. After all, you will need a the funds to get the job done. This is where deductibles come in. For those who are unaware, deductibles are a set amount that homeowners themselves will have to pay toward the cost of their insurance claim, such as a roof replacement. If your new roof costs $8000 and your deductible is $1500, your insurance provider will pay the remaining $6500 for the roof.
That isnt the only thing you need to know about deductibles, however in fact, there are many other things you can learn about them. In this post, Patriot Roofing discusses the four things every homeowner needs to know about roof replacement deductibles.
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Feel Free To Contact Us
If you still have any questions, please allow us the opportunity to serve you. We will be happy to explain the effects or the new law in more detail, or answer any of your questions that you may have. We are one of the top premier roofing companies in the DFW area, with over 40 years of experience. Dont just take us at our word, see our reviews here. We would love the opportunity to serve you and your family. Contact Us.
Should Your Roofing Company Offer To Pay Your Deductible
There is often a deductible with any insurance claim. So, if you make an auto insurance claim, youll pay a deductible when you have the repairs done. That being said, some roofing companies often state that they can waive or absorb your deductible.
While many roofing companies conduct themselves professionally and reputably, some roofing contractors arent so scrupulous. Although a shady roofing contractor might offer to pay the expense of the deductible on your insurance policy, in reality, doing so often requires the company to submit false or inaccurate figures on the claim.
In case the state or local statutes render the roofing company paying for insurance deductibles illegal, like indicated in Minnesota state law, then the laws also offer protection to the insurance company.
The insurance company does not need to consider the estimate submitted by the roofing company if the insurer determines the roofing company is involved in illegal business practices.
If multiple companies are preparing estimates and a few of them are providing the homeowner with a special discount to take care of the insurance deductible, then the insurer will not consider those roofing companies when it examines estimates and determines the outcome of the claim.
Relevant State Laws
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So How Can You Save Money During A Claim
Lets say you dont have the money to go out of pocket to cover your insurance deductible. Totally understandable! In fact, a pretty substantial portion of homeowners are in this exact boat. Youre not alone!
Remember when we spoke about the itemized list covered by the insurance company? Your insurance company owes damaged, covered items to you. However, you could choose not to install some of those line items. You might decide to do some of the work yourself, or even save it for later.
This means that you could keep some of the money the insurance company gives you, and pay less out of pocket. In this case, you could apply some of those extra funds to your deductible. The caveat to this is that if an incident occurs again later, your insurance company will not pay out on those line items which you chose not to repair.
Is it worth it? That is the conversation you will want to have with your trusted roofer and why its important to select a good one to begin with. Check out portfolios or go with a referral from someone you know very well.
So now weve come full circle. Pick a contractor that is going to give you good value through the entire process. For most of us, our home is the biggest investment we will ever make. Take care of it and sleep easy knowing you had good work done, legally. We really hope this helps guys, thank you for reading!