News

The waiving deductible practices of some contractors has been a widespread issue throughout Texas and other states.  Policyholders are duped into fraudulent insurance claims with promise of “rebates, deductible waivers, and credits” for their business. Most commonly done in the roofing industry, shady “deductible eaters” (contractors who have been knowingly breaking the law) are cannibalizing reputable contractors with promises of a “free” roof. Their practices are illegal but ignored due to an improperly worded doctrine developed in 1986 in attempt to stop fraudulent practices.

The revised House Bill 2102 signed last month by Governor Abbott is designed to combat the devastating effects of roofing fraud. It clearly states that contractors are violating the law if they pay, rebate, credit, or decline to charge or collect a deductible. Insurance companies may ask for reasonable proof of payment which are: canceled check, money order receipt, credit card statement or an executed installment plan. If there is not a proof of payment for the deductible, the insurance company can then refuse to pay the replacement cost hold-back. The new law also imposes a Class B misdemeanor offense of 180 days in county jail and a fine of up to $2,000 for both the violating contractor and/or the policyholder. 

This important legislation will both protect Texas consumers from illegal fraud schemes and ensure that reputable contractors are on an even level playing field in competitive business.