8409 W I-20 #8, Midland, TX 79706
Is it legal for a roofer to waive my deductible?
Having a contractor “pay,” “cover,” “waive,” or “eat” your deductible is viewed as both poor business practice and is illegal. Per the Texas Department of Insurance, it is an illegal, but an exceedingly common trend for contractors to cover deductibles. A contractor offering to cover your deductible is cutting corners price wise either on materials or labor and will not be able to guarantee you the best workmanship or best quality roofing system.
Rather than compromising our business ethics and cutting corners by using cheaper labor and materials, we want to spend the time to educate our customers on the insurance claim process, the quality of our roof system, and the importance of using a trustworthy contractor.
What is really happening when a contractor says they will waive your deductible:
Most insurance claims are written with Replacement Cost Value (RCV) provisions in the policy, which pays homeowners with multiple checks for repairing their home. The only way to obtain all the money from an insurance claim is for the contractor to provide the invoice to the insurance company for the completed work. For example: When a hail storm hits a home, the homeowner files an insurance claim and a claims adjuster is sent to inspect the damage. The adjuster determines it will cost $10,000 to complete the repairs. There is a $1,000 deductible, which is subtracted from the payment. The roof isn’t brand new, so that depreciation (e.g. $2,000) is also subtracted from the payment. The insured is given a first check for $7,000 instead of $10,000 ($1,000 deductible and the $2,000 depreciation are withheld). The remaining $2,000 worth of depreciation is only recoverable when an invoice of $10,000 or greater is received from a contractor, and the work is completed. That check is then sent to the homeowner. If an insurance company knows the work is being completed for $9,000 they will only provide the homeowner $8,000. Insurance companies won’t send extra money for the homeowner to pocket. When a contractor says they will cover your deductible, they are billing the insurance company for the entire amount on the claim ($10,000), but only charging the homeowner $9,000. The difference between the price billed to the insurance company and the price billed to the homeowner is a breach of contract, or fraud, between the insured and the insurer. It requires both the homeowner and contractor to falsify information given to your insurance company.
Long story short – be wary of contractors who offer to do this. As the saying goes, if it is too good to be true, than it probably is.