No changes have been made to the laws regarding insurance deductibles in nearly 30 years! There was a law designed to keep policyholders and contractors honest when dealing with insurance claims. Unfortunately for insurance companies, and the Texas Department of Insurance, the old law was poorly written. The Attorney General of Texas ruled on Texas Business and Commerce Code 27.02 on April 12, 1990. Texas Business and Commerce Code 27.02 went into effect on September 1, 1989. The old law said a vendor could not “pay” the deductible. The attorney general at the time picked that apart! The policy holder is technically supposed to pay the deductible to the roofing contractor. This is similar to a copay payment to a doctor. The attorney general came back pointing out that contractors never had to collect the deductible in the first place. As a result, contractors have had a loophole for 30 years.
The real problem with roofing companies absorbing the deductible is that they were making up for the loss elsewhere. The homeowner would probably be unaware that the roofing contractor was most likely cutting corners in order to absorb the cost of the deductible. When your home is your most valuable asset, you really don’t want your roofing company cutting corners. And the worst part is that you would not see it because you aren’t inspecting your own roof. Legitimate roofers often see these issues when the roof needs to be replaced again. Examples are leaving old felt on the house, reusing vents, and not replacing damaged flashing without informing the policyholder. These resulted in lingering rot, ongoing leaks, loss of coverage on future claims, and more.
Texas law HB 2102 goes into effect on September 1, 2019 and will make the contractors compete based on quality and competency as opposed to price. In a nutshell the law says that the homeowner MUST pay the deductible that is required by their insurance company for repairs to their home after filing a claim after a storm. The insurance company can refuse to pay a claim until they receive proof of payment of the deductible. The homeowner can provide proof of payment by a credit card statement, a canceled check, money order receipt, or proof of an installment plan. According to the bill, a roofing company commits an offense if they pay, waive, absorb, or in any way cover the cost of the deductible. The offense is classified as a Class B misdemeanor. In Texas a Class B misdemeanor is punishable by up to 180 days in jail, up to a $2000 fine, or both. This is designed to put shady contractors out of business, and therefore protect policy holders.
This law is a great step in protecting homeowners and insurance policy holders from unscrupulous roofing companies. Of course some will still try to repeat common shortcuts to increase profits. Homeowners really can’t afford to have their home, their largest asset repaired by roofing contractors that cut costs. It is still up to homeowners to make sure they are choosing a contractor that they can trust. Always choose a local roofing contractor and don’t be afraid to ask for references. This law is good for homeowners but you still need to choose the right roofer. In the Dallas area you can count on LIFT Construction to give you an honest and trustworthy experience in restoring your roof. LIFT wants to make sure that your roof is done properly.