Can A Roofing Contractor Pay Your Deductible?

In a word "No" . There really should be no debate over this, yet there are far too many unethical contractors in this world who take part in this practice. Never will you find someone from your insurance carrier telling you this practice is acceptable. You will never find a deductible covering contractor disclosing the details on an invoice.

Below are a few important facts to know before you do business with a company that offers to cover part or all of your deductible. We will reproduce a few important sections of the law and standard insurance contracts for you to read over and digest. Please note, we offer no legal opinion or advice.

What Does An Insurance Contract Say About Deductibles?

There is a good deal of fine print in an insurance contract, but the basics are not hard to understand. You pay a monthly premium for coverage in exchange for protection against a big loss. Your insurance is not there for every small loss, so there is a deductible amount that must be exceeded before the insurance kicks in. This deductible always comes first.

If your deductible is $1,500.00 and you have a loss that is less than $1,500.00 your insurance owes you nothing. You would cover the first $1,500.00 of any loss. The same is true even if your home is pelted by large hail and the total loss is much greater. If you have a $12,000.00 loss, your insurance company would owe you $10,500.00 as the deductible amount. $1,500.00 would be paid by you. In fact, for any loss above $1,500.00 your part would always be the same, your deductible.

Shopping For A Better Roof Price Does Not Save A Deductible

Continuing with the above example, what if a roofer can do the job for $10,500.00 that your adjuster said would be around $12,000.00? Did you just find a way to save your deductible? No. Your deductible comes first. If your job cost you $10,500.00 then your insurance company would only owe you $9,000.00 - there is no financial reward for finding a lower price. The only way a deductible is saved is by turning in a false invoice that reflects the higher dollar amount, not what you actually paid. It is this false invoice where a bad contractor can get you in big trouble. Approximately one in three claims are internally audited by insurance companies. If a roofing contractor gains a reputation for this practice, all their invoices are highly scrutinized.

Insurance Contract Language: Section I & Section II, Conditions:

Below is some of the actual language in a standard insurance contract. There are variations of this in every homeowners policy.

2. Concealment or Fraud
- This policy is void as to you and any other insured, if you or any other insured under this policy has intentionally concealed or misrepresented any material fact or circumstance, made false statements, or committed fraud related to this insurance, whether before of after a loss.
5. Cancellation
- (2) if this policy has been in effect 90 days or more, we may not cancel this policy unless:
  - (c) you submit a fraudulent claim.

The Penal Code and Insurance Fraud

TITLE 7. OFFENSES AGAINST PROPERTY

CHAPTER 35. INSURANCE FRAUD

Sec. 35.01.  DEFINITIONS.  In this chapter:
(1)  "Insurance policy" means a written instrument in which is provided the terms of any certificate of insurance, binder of coverage, contract of insurance, benefit plan, nonprofit hospital service plan, motor club service plan, surety bond, cash bond, or any other alternative to insurance authorized by Chapter 601, Transportation Code.  The term includes any instrument authorized to be regulated by the Texas Department of Insurance.
(2)   "Insurer" has the meaning assigned by Article 1.02, Insurance Code.
(3)  "Statement" means an oral or written communication or a record or documented representation of fact made to an insurer.  The term includes computer-generated information.
(4)  "Value of the claim" means the total dollar amount of a claim for payment under an insurance policy or, as applicable, the value of the claim determined under Section 35.025.

Sec. 35.015.  MATERIALITY.  A statement is material for the purposes of this chapter, regardless of the admissibility of the statement at trial, if the statement could have affected:
(1)  the eligibility for coverage or amount of the payment on a claim for payment under an insurance policy; or
(2)  the decision of an insurer whether to issue an insurance policy.

Sec. 35.02.  INSURANCE FRAUD.  (a)  A person commits an offense if, with intent to defraud or deceive an insurer, the person, in support of a claim for payment under an insurance policy:
(1)  prepares or causes to be prepared a statement that:
(A)  the person knows contains false or misleading material information; and
(B)  is presented to an insurer; or
(2)  presents or causes to be presented to an insurer a statement that the person knows contains false or misleading material information.
(a-1)  A person commits an offense if the person, with intent to defraud or deceive an insurer and in support of an application for an insurance policy:
(1)  prepares or causes to be prepared a statement that:
(A)  the person knows contains false or misleading material information; and
(B)  is presented to an insurer; or
(2)   presents or causes to be presented to an insurer a statement that the person knows contains false or misleading material information.
(b)  A person commits an offense if, with intent to defraud or deceive an insurer, the person solicits, offers, pays, or receives a benefit in connection with the furnishing of goods or services for which a claim for payment is submitted under an insurance policy.
(c)   An offense under Subsection (a) or (b) is:
(1)  a Class C misdemeanor if the value of the claim is less than $50;
(2)  a Class B misdemeanor if the value of the claim is $50 or more but less than $500;
(3)  a Class A misdemeanor if the value of the claim is $500 or more but less than $1,500;
(4)  a state jail felony if the value of the claim is $1,500 or more but less than $20,000;
(5)  a felony of the third degree if the value of the claim is $20,000 or more but less than $100,000;
(6)  a felony of the second degree if the value of the claim is $100,000 or more but less than $200,000; or
(7)  a felony of the first degree if:
(A)  the value of the claim is $200,000 or more; or
(B)  an act committed in connection with the commission of the offense places a person at risk of death or serious bodily injury.
(d)  An offense under Subsection (a-1) is a state jail felony.
(e)  The court shall order a defendant convicted of an offense under this section to pay restitution, including court costs and attorney's fees, to an affected insurer.
(f)  If conduct that constitutes an offense under this section also constitutes an offense under any other law, the actor may be prosecuted under this section, the other law, or both.
(g)  For purposes of this section, if the actor proves by a preponderance of the evidence that a portion of the claim for payment under an insurance policy resulted from a valid loss, injury, expense, or service covered by the policy, the value of the claim is equal to the difference between the total claim amount and the amount of the valid portion of the claim.
(h)  If it is shown on the trial of an offense under this section that the actor submitted a bill for goods or services in support of a claim for payment under an insurance policy to the insurer issuing the policy, a rebuttable presumption exists that the actor caused the claim for payment to be prepared or presented.

Sec. 35.025.  VALUE OF CLAIM.  (a)  Except as provided by Subsection (b) and subject to Subsection (c), for the purposes of Section 35.02(c), if the value of a claim is not readily ascertainable, the value of the claim is:
(1)  the fair market value, at the time and place of the offense, of the goods or services that are the subject of the claim; or
(2)  the cost of replacing the goods or services that are the subject of the claim within a reasonable time after the claim.
(b)  If goods or services that are the subject of a claim cannot be reasonably ascertained under Subsection (a), the goods or services are considered to have a value of $500 or more but less than $1,500.
(c)  If the actor proves by a preponderance of the evidence that a portion of the claim for payment under an insurance policy resulted from a valid loss, injury, expense, or service covered by the policy, the value of the claim is equal to the difference between the total claim amount and the amount of the valid portion of the claim.
Added by Acts 2005, 79th Leg., Ch. 1162, Sec. 4, eff. September 1, 2005.
Sec. 35.03.  AGGREGATION AND MULTIPLE OFFENSES.  (a)  When separate claims in violation of this chapter are communicated to an insurer or group of insurers pursuant to one scheme or continuing course of conduct, the conduct may be considered as one offense and the value of the claims aggregated in determining the classification of the offense. If claims are aggregated under this subsection, Subsection (b) shall not apply.
(b)  When three or more separate claims in violation of this chapter are communicated to an insurer or group of insurers pursuant to one scheme or continuing course of conduct, the conduct may be considered as one offense, and the classification of the offense shall be one category higher than the most serious single offense proven from the separate claims, except that if the most serious offense is a felony of the first degree, the offense is a felony of the first degree. This subsection shall not be applied if claims are aggregated under Subsection (a).
Added b Acts 1995, 74th Leg., ch. 621, Sec. 1, eff. Sept. 1, 1995.
Sec. 35.04.  JURISDICTION OF ATTORNEY GENERAL.  (a)  The attorney general may offer to an attorney representing the state in the prosecution of an offense under Section 35.02 the investigative, technical, and litigation assistance of the attorney general's office.
(b)  The attorney general may prosecute or assist in the prosecution of an offense under Section 35.02 on the request of the attorney representing the state described by Subsection (a).

Texas Business & Commerce Code

§ 27.02. CERTAIN INSURANCE CLAIMS FOR EXCESSIVE
CHARGES. (a) A person who sells goods or services commits an
offense if:
(1) the person advertises or promises to provide the
good or service and to pay:
(A) all or part of any applicable insurance
deductible; or
(B) a rebate in an amount equal to all or part of
any applicable insurance deductible;
(2) the good or service is paid for by the consumer
from proceeds of a property or casualty insurance policy; and
(3) the person knowingly charges an amount for the
good or service that exceeds the usual and customary charge by the
person for the good or service by an amount equal to or greater than
all or part of the applicable insurance deductible paid by the
person to an insurer on behalf of an insured or remitted to an
insured by the person as a rebate.
(b) A person who is insured under a property or casualty
insurance policy commits an offense if the person:
(1) submits a claim under the policy based on charges
that are in violation of Subsection (a) of this section; or
(2) knowingly allows a claim in violation of
Subsection (a) of this section to be submitted, unless the person
promptly notifies the insurer of the excessive charges.
(c) An offense under this section is a Class A misdemeanor.

Please Report Insurance Fraud

If a contractor is offering to commit insurance fraud please report them to the Texas Insurance Commission. You may do so anonymously by calling the toll free hotline 1-888-327-8818

The Advertising Allowance

The most common vehicle an untrustworthy contractor uses to cover or hide a deductible is by placing his sign in your yard and paying you a "sign allowance" .

In exchange for his yard sign on your property, you get a hefty discount on your job. A discount you can not tell your insurance carrier about, because well they just would not understand. And it is really not a discount after all, it is hard earned advertising dollars...right?

Certainly there is nothing wrong from receiving compensation in exchange for something. A contractor certainly may pay a fee to place his sign in your yard. What you can not do is simply pull some number out of the air.

What is the true value of a "sign allowance"? The true value of a sign allowance is what being paid without the purchase of a roof! Smaller billboards across town may rent for $1,000.00 a month with tens of thousands viewing it. So now someone is offering you $1,500.00 so a dozen or so neighbors may view a small yard sign?

If this were proper, people would never pay for most home repairs. $300.00 service call from the plumber...no, just let him put a sign in your yard. $500.00 to the electrician....no, just put another sign in the yard. Of course this is ridiculous, yet there are hundreds of low end roofers telling you their sign allowance is perfectly legit (just don't tell your insurance carrier).

If it walks like a duck and quacks like a duck....it is a yard sign allowance? Don't deceive yourself. The yard sign allowance is a scam to improperly avoid a deductible. They are always contingent on you buying a roof and must be hidden from your insurance provider.

Are Insurance Companies Dumb?

Are they bad with money? Do they commonly overpay claims? Remember when the government had to bail out all the insurance companies?

The answer to all those questions is clearly no. They are not in the business of mismanaging claims. The price the adjuster comes up with is that for a quality contractor doing a quality job with quality materials.

Good contractors have far more overhead than the vehicle they drive. There is expensive insurance for your protection, an office and warehouse. Good contractors use quality underlayment and accessories which are key to a good job.

Contractors who cover deductibles paint themselves into a corner with a cheap price. They are constantly faced with the decision of making a buck or doing a quality job. Which direction do you think they go with you?

Can You Trust Your Roofer?

A roof is a very big ticket item that last a very long time. It is very important that the instillation is done properly. It is a big mistake to think of it as a commodity. You must trust the company you choose to do a quality job.

Can you really trust the roofer who offers to cover your deductible? They will not say this directly, but their main sales pitch is "we will lie to your insurance company so you will not have to pay your deductible".

Are you ready to trust those guys? How can you be sure a contractor who knowingly will try and deceive your insurance company will treat you differently?

Being honest and doing quality work has cost Bert Roofing jobs over the years, but there is no doubt this is the right way to go. We would love to serve you. Please give us a call at 214-321-9341 or fill out the form below.