New Law Requires Homeowners to Pay Insurance Deductibles

Homeowner’s insurance will typically pay to repair or replace a roof that has been damaged by hail or wind. Most homeowner’s policies, though, include a deductible amount that the homeowner must pay. In the past, it had become a common practice in Texas for roofing companies to waive the deductible so that homeowners would get a free roof. However, that practice is about to come to an end.

Texas House Bill 2102

As of September 1, 2019, Texas House Bill 2102 makes it illegal for roofing contractors to waive the homeowner’s deductible. Any contractor that does waive it would be committing a Class B misdemeanor that carries a penalty of up to 180 days in jail and a $2,000 fine. In reality, the practice was already illegal prior to adoption of the new bill, but the 1989 law that governed such transactions was so poorly written that penalties were rarely enforced.

Contract Language

The new bill requires that contracts include boldfaced language specifying that homeowners must pay their insurance deductible. The language makes it clear that it is a crime for roofing contractors to waive the deductible amount or to offset it in any way, such as paying for it or issuing a rebate. A homeowner who knowingly allows a deductible to be waived or reduced is also in violation of the new law.

Effect of Law on Storm Chasers

Legitimate roofing contractors view the new law in a positive light because it should reduce the number of storm chasers who take advantage of homeowners. However, others are concerned that the new law will keep legitimate repairs from being made on time, which could have a snowball effect. If homeowners delay making repairs until they have the deductible amount in hand, additional damage could occur that the insurance companies will not cover.

Prior to the New Law

Under the old law, slack enforcement of paying the insurance deductible sometimes resulted in an implication of fraud, and shoddy work performed by storm chasers often led to inferior roof replacements. In some cases, contractors used cheap materials that would not withstand another weather-related event. This often led to additional roof replacements.

Footing the Bill

Homeowners should keep enough funds available to pay the insurance deductible so that roof repairs can be made in a timely manner. Where that is not possible, a homeowner might be able to finance the deductible amount by charging it to a credit card or taking out a home improvement loan. It might also be possible for a homeowner to lower the deductible on their homeowner’s insurance, which would make it easier to pay. A fixed dollar amount might also be better than a percentage.

Proof of Payment

Under the new law, insurance companies have the right to refuse payment until homeowners can show that they have satisfied their deductible. This can be done by producing credit card statements, money order receipts or canceled checks. An executed payment plan or other financial arrangement might also work.

Education

According to the new bill, the Texas Insurance Commission is responsible for developing and implementing an education program related to the new law. The purpose of the program would be to educate both consumers and roofing contractors about the details of the law.

Bottom Line

This new law requires homeowners to pay their insurance deductibles for all future home repairs and makes it a crime for contractors to wave any portion of those deductibles. Because they will be investing their own money, it is more important than ever that homeowners choose the right contractor for the job.