Why Deductible
Fraud Hurts YOU
WHY DOES WAIVING A DEDUCTIBLE HURT PROPERTY OWNERS?
First of all, it's illegal for contractors to help you avoid paying your deductible. And when they do it, they typically have to commit insurance fraud (and involve you in it) to make it happen.
Additionally, there is no way for a roofing contractor to actually “waive” your deductible. They must make up their loss somewhere, and that usually comes at YOUR expense, with sub-standard materials and workmanship.
HOW DO CONTRACTORS "AFFORD" TO WAIVE A DEDUCTIBLE?
They cut corners. Several common methods include:
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1. SKIMPING ON PRODUCTS OR WORKMANSHIP
Manufacturers, home inspectors, roofing contractors and other professionals agree: you should never skimp on your home or building's roofing materials. But a contractor willing to commit insurance fraud may likely chose cheap materials or skimp on best practices and disregard manufacturer specs, such as using fewer nails than needed or less shingle overlap than required. Cutting corners can result in voided warranties and premature roof failures. Likewise, poor workmanship will also lead to costly repairs not too far down the road.
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2. NOT REPLACING YOUR FELT UNDERLAYMENT
When replacing a roof, Texas building code and manufacturer warranties require the removal of all existing layers of roof covering, including shingles and underlayment – taking it down to the roof deck, which must be inspected for structural integrity. Problematic issues are missed if the decking isn't visible and inspected. Having multiple layers of underlayment means the felt can bunch and absorb water, resulting in unseen damage to the structure of your roof.
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3. USING “SECONDS” OR STOLEN MATERIALS
Roofing shingle “seconds” means they have no wrappers and are exposed to the elements during storage, which could result in cosmetic and/or structural flaws. Most likely, these materials also come without a warranty. Roofing professionals recommend avoiding seconds. And, of course, you don’t want stolen materials used on your home or building.
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4. CARRYING INADEQUATE OR NO LIABILITY INSURANCE
The state of Texas does not require insurance, registration or any kind of licensing of roofing contractors. Fraudulent contractors save money by not buying insurance – at the expense of the property owner. Professional roofers will carry insurance to protect themselves and their customers and will gladly provide a copy of their certificate of insurance to a property owner.
WHAT'S SO WRONG WITH A CONTRACTOR "WAIVING" MY DEDUCTIBLE?
Despite all of the above, some property owners still ask: so, what’s wrong with a contractor waiving my deductible?
1. IT’S AGAINST THE LAW
In September 2019, Texas passed a law requiring homeowners to pay the full insurance deductible they agreed to when purchasing their policy. This law also makes it illegal for a contractor to pay, waive, absorb, rebate, credit or otherwise decline to charge or collect a deductible.
2. THEY ARE INVOLVING YOU IN INSURANCE FRAUD
Contractors who are “waiving” your deductible often try to make up for an uncollected deductible by submitting a claim for phantom damage and/or an inflated, untrue invoice to the insurance company. This is INSURANCE FRAUD. You may be charged with a misdemeanor or felony, depending on the amount of the claim, for unknowingly (or knowingly) participating in the contractor’s illegal scheme.
3. THEY HAVE TO CUT CORNERS TO AFFORD IT
There is no way for a reputable contractor to actually “waive” your deductible. They must make up their loss somewhere.
4. IF THEY’RE WILLING TO BREAK THE LAW, WHAT OTHER LAWS OR RULES WILL THEY DISREGARD?
If a contractor is willing to defraud your insurance company, they are likely willing to defraud you with the work they do (or don’t do) on your roof. And that ultimately hurts you, costs you additional money and hurts your property's value. If the contractor’s work is not up to code, for example, it could void your roof’s warranty, cause serious headaches down the line and/or hurt the value of your property when you try to sell it.
WARNING SIGNS: DON'T GET CAUGHT UP IN INSURANCE FRAUD
5. THEY CLAIM THERE'S A LOOPHOLE
They say something like: Oh, there’s a loophole around the law, and there’s nothing wrong with waiving a deductible.
6. THEY SUBMIT A FRAUDULENT INVOICE TO YOUR INSURANCE COMPANY
They submit an invoice to the insurance company that is higher than what you actually paid (this is INSURANCE FRAUD).
It’s also important to note that your insurance company can ask for proof that you paid your deductible before it pays the full amount of your claim. Be prepared to show a canceled check, money order receipt, credit card statement, or a copy of the payment plan with your contractor to your insurance company.
To ensure that a roofing company or their representative is following the law,
look for these deductible fraud warning signs:
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1. LEGALLY REQUIRED CONTRACT LANGUAGE IS MISSING
Check to see if this language is missing from their contract, in a minimum 12 pt font, as required by Texas law:
"Texas law requires a person insured under a property insurance policy to pay any deductible applicable to a claim made under the policy. It is a violation of Texas law for a seller of goods or services who reasonably expects to be paid wholly or partly from the proceeds of a property insurance claim to knowingly allow the insured person to fail to pay, or assist the insured person’s failure to pay, the applicable insurance deductible."
2. THEY SAY THEY CAN PROVIDE A "FREE ROOF"
If a roofer is offering to waive, absorb, eat, pay or otherwise not make you pay your property insurance deductible, they are breaking the Texas deductible law.
3. THEY TELL YOU DEDUCTIBLE WAIVING IS LEGAL
If they claim that waiving your deductible is legal, they are lying.
4. THEY SAY "EVERYONE DOES IT"
They tell you not to worry about breaking the law and committing insurance fraud, because “everyone does it.”
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