Contractors or roofers who waive deductibles actually place their customers at risk rather than offering them help under the statement of “no deductible payment required”. Paying in full not only secures the customers but is also essential for the roofer as the state governments have implemented laws prohibiting roofers from any kind of rebate or value in terms of cash.
Understanding Roofing Insurance and Deductibles:
Roofers occasionally, to obtain a project from their potential customers, will offer the customer to absorb the deductible which is due on the project because these deductibles are not covered by the insurance companies and without having the cash for deductibles payment, a homeowner may not be able to get a new roof.
Sometimes, the roofers also give numerous discounts on their services which cover the payments they had to make for deductibles. This may seem to be a win-win situation to some. But according to the many state, this is illegal and doing so could end up costing both the contractor and the homeowner more in the form of penalties.
Waiving Deductibles is Perilous:
Starting with Texas, the risk of facing fine and or jail time vividly portrays that the roofing contractors who offer rebates on the deductibles to their customers may not be doing what is best for themselves. Hence, making it a criminal offense and in any way offering value to the clients will also fall under this policy of facing penalties.
So, a contractor should find an easy way for homeowners to make payments rather than letting go of such income and incurring such deductible law risk. Though they seem unfair, it is quite the opposite. The contractor gets paid and the customers have clear credit records for the future…both are compliant.
However, this is not the case in all states, but why risk? Checking the list of states which impose such laws is safe. “Deductible Funding” mentions all such laws on their website with the states in which the laws are implemented.
The insurance companies have detailed records of a homeowner’s deductibles and they cover the rest. Though it may seem that they won’t notice if you have covered the rest by yourself, you are wrong. Concealing such credit facts from your insurance companies falls in the category of “insurance fraud”.
Such fraud, if claimed and proven that the laws for deductibles were not followed along with the mentioning of the roofing contractors can cause both of them a lot of potential trouble.
What do the new deductible laws and property laws state?
Some states in the US; Colorado, Iowa, Oklahoma, Arizona, Nebraska, Kentucky, Tennessee and others have reinstated some deductible laws and roofers now have to change the course of their operations, especially while finalizing deals with the homeowner according to these laws. To save themselves and their customers from risk, financial penalties, jail time and insurance fraud, roofers must act in accordance with these laws. Some of the common provisions which they need to understand are:
Missouri: Senate Bill 101 prohibits exterior repair contractors, such as roofing and siding companies, from offering to pay a homeowner’s insurance deductible in hopes of making a sale.
Texas: It is illegal for contractors or roofers to offer to waive a deductible or promise a rebate for all or part of a deductible. Under the new law effective September 1, violators could get up to a $2,000 fine and up to six months in jail. If a contractor offers to waive a deductible, report it to the Texas Attorney General’s Consumer Protection Hotline at 800-621-0508.
Maryland: It is a fraudulent insurance act for a contractor offering home repair or remodeling services for damages to a private residence caused by weather, to directly or indirectly pay or otherwise compensate an insured, or offer or promise to pay or compensate an insured, with the intent to defraud an insurer, for any part of the insured’s deductible under the insured’s property or casualty insurance policy, if payment for the services will be made from the proceeds of the policy.
South Carolina: (E)(1) A builder or contractor shall not advertise or promise to pay or rebate all or any portion of any insurance deductible as an inducement to the sale of goods or services.
Are these laws good news or not?
Many contractors and/or roofers believe it to be good news because what is more profitable than being paid in full and remaining within the law and without having to let go of your profits as discounts?
But as there are supporters, some roofing companies think of it as a barrier for their business. Their reasoning is that they would not be able to secure a project right away. But if they look deeply, that cost should be paid to them. However, the scenario has taken a toll on the earnings of the contractors who have fixed rates and are reliable because new or storm chasing contractors enter the market and obtain projects by offering waived deductibles and the existing roofers are deprived of their earned reputation as well as profitable earnings. Finding a solution however, is an inevitable need because you cannot violate the laws and regulations and looking for reputable companies who do that for you is beneficial in the long run.