Insurance Fraud

Insurance Fraud

Did you know "free" insurance claim work for roofing services is illegal in Texas?

As it turns out, paying for deductibles, even partially, is illegal in Texas.

A new Texas law (HB 2102) is in effect as of 9/1/19 that requires homeowners to pay the full insurance deductible they agreed to pay in their property insurance policy.

The new law also makes it a class B misdemeanor (punishable by a jail sentence of up to 180 days + $2,000 fine) if a contractor pays, waives, absorbs, rebates, credits or otherwise declines to charge or collect a deductible.

This new law helps protect consumers from practices some contractors employed, which often involved cutting corners on a customers roof (to make up the difference for the waved deductible they absorbed) and often caused homeowners to unknowingly commit insurance fraud (a misdemeanor to a felony based on amount).

Eldridge Roofing insurance fraud billboard

The new law requires homeowners to pay their insurance deductible in full

The waiving of deductibles has been improper in Texas since 1989. Unfortunately, due to a 1990 opinion by the Attorney General (when deductibles were much lower than today), many contractors ignored the prohibition and the waiving of deductibles (which often required insurance fraud) became common in Texas.

The NEW LAW, HB 2102, makes a policyholder’s payment of their insurance deductible REQUIRED and makes it a Class B misdemeanor if a contractor pays, waives, absorbs, rebates, credits or otherwise declines to charge or collect a deductible. Insurance companies will have the right to request reasonable proof that the deductible has been paid before making a payment. Many insurance companies, but not all, previously required this proof.

This new law will help protect consumers by helping to eliminate shady “free roof” practices many contractors employed, which often led to consumers unknowingly participating in insurance fraud and contractors cutting important corners to make up the difference (a practice that led many contractors to go out of business, leaving their customers in the lurch).

If a roofing company’s sales pitch offers to bypass this law (or their contract does not include the new required language), that is a RED FLAG. If they’re willing to break the law, what other rules and codes are they willing to ignore?

“This new law will help further protect consumers,” said Texas Insurance Commissioner Kent Sullivan.

“Roofers who waive deductibles are cutting corners. Take your business elsewhere.”

After a major storm, contractors – including some scam artists – are quick to arrive on the scene. This leads to shoddy repairs, fake contracts, and other problems. The Texas Department of Insurance created a special fraud unit that meets with local officials after a disaster and explains steps they can take to protect residents from contractor scams.

One selling point bad contractors often use is offering to waive or absorb the homeowner’s deductible. The contractor then cuts corners, uses lower quality products, or inflates the bill sent to the insurance company to cover the difference.

It is illegal for contractors or roofers to offer to waive a deductible or promise a rebate for all or part of a deductible. Under the new law effective September 1, violators could get up to a $2,000 fine and up to six months in jail.

If a contractor offers to waive a deductible, report it to the Texas Attorney General’s Consumer Protection Hotline at 1-800-621-0508.

Tips to avoid contractor fraud

1. Get written estimates on company letterhead with clear contact information
2. Check references and phone numbers
3. Beware of those who only have out-of-town references or solicit door to door
4. Don't pay in full up front and don’t make a final payment until the job is done
5. Never sign a contract with blanks on it

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About Eldridge Roofing & Restoration, Inc.

Since being founded in 1998, the conception of Eldridge Roofing & Restoration, Inc., has been committed to true excellence in the roofing industry. Each member of our knowledgeable team strives daily to deliver professional, knowledgeable, reliable and first-class service to our homeowners.

Eldridge Roofing & Restoration, Inc., is proud to be a family-owned & operated company serving Houston, Spring, Cypress, and all other surrounding areas, while never losing sight of professionalism and the importance of quality craftsmanship at honest pricing. We individually and as a family stand firmly behind our company motto: “People before Profit.”