No More Waiving Deductibles for Roof Claims in Texas

By Karen L. Edwards, RCS Editor.

If you’re working storms in Texas, waiving deductibles and free roofs are against the law starting September 1.

Waiving deductibles for homeowners in Texas has been going on for many years. In fact, in 1989 a law was passed to end the practice, but it was poorly worded and largely ignored by roofing contractors. These contractors became known as “deductible eaters.”

Things are about to change. Texas House Bill 2102 was recently passed and 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 in Georgetown, Texas recently 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.

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.”

Insurance claims in Texas involve homeowners receiving two checks. The first is for the actual cost value of the roof, or what the roof is worth today taking into account its remaining service life. Once the homeowner receives the final invoice, their second check for the recoverable depreciation amount will arrive, representing the replacement cost, less the deductible and less the amount of the first check.

Under the new law, insurance companies will now have right to ask a policyholder to provide proof that their deductible was paid. If they cannot, then the insurance company can withhold the final check. Contractors are required to include the following statement on their contracts in a minimum 12-point bold font:

“Texas law requires a person insured under a property insurance policy to pay any deductible applicable to a claim made under the policy. It is a violation of Texas law for a seller of goods or services who reasonably expects to be paid wholly or partly from the proceeds of a property insurance claim to knowingly allow the insured person to fail to pay, or assist the insured person ’s failure to pay, the applicable insurance deductible.”

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.

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