Texas law is crystal clear on the issue of waiving deductibles. House Bill 2102, which took effect on September 1, 2019, specifically prohibits contractors from advertising or promising to waive an insurance deductible. This law is codified inSection 27.02 of the Texas Business and Commerce Code, which states:
"A contractor who is retained to perform roofing repair or replacement services for a property owner and who advertises or promises to rebate, credit, or otherwise offset all or part of an insurance deductible commits an offense."
The law explicitly requires property owners to pay their deductible in full. Contractors who fail to adhere to this can face serious penalties, including fines and criminal charges.
Why Waiving Deductibles is a Crime
Waiving a deductible often involves falsifying information to the insurance company, making it a form of insurance fraud. Here’s how it typically unfolds:
- Misrepresentation of Costs: To cover the cost of the deductible, contractors may inflate the invoice submitted to the insurance company. For example, if the deductible is $2,000, the contractor might increase the quoted cost of the job to recover the deductible amount from the insurer instead of the homeowner. This misrepresentation constitutes fraud.
- False Documentation: Insurance companies require proof of payment for the deductible before releasing the recoverable depreciation—the portion of the claim that the insurer holds back until the work is completed and the deductible is paid. Contractors who waive deductibles may provide false receipts or invoices indicating that the homeowner has paid the deductible when, in fact, they haven’t.
Both actions fall under the umbrella of insurance fraud, a serious crime that can lead to civil and criminal penalties.
The Felony Implications
In Texas, insurance fraud is addressed under Chapter 35 of the Texas Penal Code. If the value of the fraud exceeds $2,500, the offense is classified as a felony. For roofing contractors, inflating invoices or submitting false documentation to waive a deductible easily meets this threshold. The penalties for felony insurance fraud include:
- Significant fines.
- Prison sentences ranging from 180 days to 99 years, depending on the amount involved.
- A permanent criminal record that can result in the loss of professional licenses and business closures.
Consequences for Homeowners
Homeowners who participate in deductible waivers are not immune to legal consequences. By allowing a contractor to falsify documents or misrepresent costs to the insurer, homeowners may also be complicit in committing insurance fraud. Ignorance of the law is not a defense, and the financial and legal repercussions can be devastating.
Protecting Yourself as a Homeowner
To avoid becoming entangled in illegal practices, homeowners should:
- Choose Reputable Contractors: Work with contractors who follow the law and clearly explain their pricing and your obligations as a policyholder.
- Understand Your Policy: Familiarize yourself with your insurance policy’s terms, including the requirement to pay your deductible.
- Insist on Transparency: Request detailed, itemized invoices and proof of payment to ensure everything aligns with your claim.
Why Honest Business Practices Matter
For roofing contractors, maintaining integrity and adhering to the law is essential to building trust with clients and sustaining a long-term business. Offering to waive deductibles may seem like a competitive advantage, but the risks far outweigh the rewards. Violating HB 2102 not only jeopardizes a contractor’s livelihood but also damages the industry’s reputation as a whole.
At AXL Roofing, we prioritize compliance and transparency. We educate our clients about their responsibilities, including the legal requirement to pay their deductible, and we provide high-quality roofing services that meet both their needs and legal standards.
Conclusion
Waiving deductibles may seem like a shortcut to securing business, but it’s a dangerous and illegal practice that can have far-reaching consequences. Roofing contractors in Texas must operate within the bounds of the law, and homeowners must remain vigilant to avoid inadvertently participating in fraudulent activities. By adhering to legal and ethical standards, contractors and homeowners alike can ensure a smoother, safer insurance claims process.
