The short answer is… YES!
Most consumers don’t like to hear this part but you absolutely without a doubt HAVE to pay your deductible. This is a legal obligation dictated in your insurance policy that you are required to pay for your portion of the repairs. If you are getting all the work completed by your contractor and you are not paying your deductible then odds are that you are being made a party to insurance fraud.
In the past many homeowners would get the cheapest contractor bids they could find and try to save the deductible and pocket the difference. This practice has always been illegal but was difficult to enforce. However, in 2019 a new law was passed in Texas in the form of HB2102. This new law clarified the intent of the previous legislation and allowed for stricter enforcement and consequences in regards to deductible fraud.
Most “RCV” insurance policies pay out claims in multiple payments. First, you receive the “ACV” (Actual Cash Value) of your repairs after your claim is approved. This is typically paid to your contractor up front with your deductible in order for them to order materials and schedule a date for the installation. After work is completed and the claim is closed out, you receive the remaining balance of the “replacement cost” of your repairs. This final payment is called “depreciation.” This new law (HB 2102) now allows for insurance carriers to require proof of deductible payment to your contractor before they have to release your depreciation payment.
In other words, if you can’t prove you paid your deductible now, then the insurance carrier isn’t required to issue you your final payment. This final payment is often even more than the deductible and you typically still owe this final payment to your contractor even when a shady roofer illegally waives your deductible. Since your insurance carrier isn’t going to pay up because you can’t prove that you paid your deductible, now you owe the contractor more money than the deductible that he already waived for you. Please avoid this sticky situation at all costs.
If you meet a contractor for the first time and one of the very first conversations you have with this individual is how he plans to waive your deductible, you need to understand that this as a massive red flag! We know that saving money sounds like a great idea on the surface, but you should think about it in much simpler terms…
How can you trust an individual who is now conspiring with you to commit insurance fraud only moments after introducing themselves?
Think about the kind of person willing to conspire to commit a crime so openly. They are indicating to you that they are highly unethical right off the bat!
- Do you think this person/company actually has general liability insurance?
- Do you think this type of person/company is likely to cut corners on your installation?
- Do you think this kind of person/company is going to spend the extra money for quality installers?
- Do you think that this person/company is going to honor their warranties?
- Do you think this individual honestly has you and your family’s best interests at heart?
There are many subtle ways that contractors use to try to justify covering deductibles. One example is to give a “marketing credit” for allowing them to place signs or leave reviews. The Texas Department of Insurance (TDI) has addressed these tactics thoroughly, and have outright stated that this is fraudulent and illegal.
And most importantly, you should remember that shopping for a cheaper contractor WILL NOT save you on your deductible! You are often still required to prove payment of your deductible in order to collect your final insurance payment. Now you’ve received a cheaper roofing system from a likely sub-par roofing contractor and are still obligated to prove deductible payment. Trust an expert and get it done right the first time.
*Please remember that we are not licensed public adjusters or attorneys and all policy specific and legal advice should be discussed with a licensed professional as not all insurance policies are even remotely the same.