For the last 30 years, it’s become more common for homeowners to be duped into committing insurance fraud through a roofing contractor’s promise of a free roof or a waived deductible. A statute was passed in 1989 to end this practice but it was poorly worded, rarely enforced and largely ignored by contractors.
That is finally being stopped with the recent passage of House Bill 2102 take takes effect September 1, 2019. The new law states that “A person insured under a property insurance policy shall pay any deductible applicable to a first-party claim made under the policy.”
Matt Morris, Roof Adviser for Texas Traditions Roofing attended an educational workshop to understand the changes and what it means for homeowners and roofing contractors. “The new law is broader and harder to maneuver around, which is good for both parties involved,” explained Matt.
Unscrupulous contractors would cover the deductibles by either installing inferior products to cut costs or by filing a supplemental claim with the insurance company after the work was performed. Under the newly passed law, homeowners will no longer have to worry about unknowingly committing fraud.
“The way an insurance claim works in Texas is that once a claim is filed, the homeowner receives their first check for the actual cost value of the roof, or what the roof is worth today given its remaining useful life,” Matt said. “The second check arrives after the final invoice is submitted and it is for the recoverable depreciation amount, which is replacement cost, minus the deductible and the amount of the first check.”
“Under the new law, an insurance company has the right to ask the claimant to provide proof that they paid the deductible, or the insurance company can withhold the second payment for the claim, leaving the homeowner responsible,” Matt continued.
According to the Roofing Contractors Association of Texas, “This important legislation will both protect Texas consumers from illegal fraud schemes and ensure that reputable contractors who collect deductibles are on a level playing field in competing for business.”
The new law states that it is a violation of the law if a contractor pays for, waives, absorbs, rebates, credits, offsets or otherwise assists the insured in any other manner in avoiding monetary payment of the required insurance. An offense under this law is a Class B misdemeanor which could result in 180 days in county jail and fines of up to $2,000 for a violating contractor and a policyholder who knowingly participates.
If you are in need of help following storm damage, the advisers at Texas Traditions Roofing understand the laws and always follow proper procedures. Contact us today for a free inspection.