Under Texas House Bill 2102 approved in the most recent legislative session, roofing contractors who offer to waive a homeowner’s deductible on their property insurance policy could face jail time.
The practice of waived deductibles by roofers became commonplace in North Texas, Zelle law firm attorney Steven Badger said.
“It became an expectation in North Texas that if you had hail damage, the contractor would waive your deductible and you would get a free roof,” Badger said.
Though frequent, the practice has been illegal in Texas since 1989. But “poorly written” law resulted in little enforcement, Badger said.
HB 2102 requires roofers to include boldfaced language in their contracts stating that homeowners must pay the deductible under their property insurance policy. The law makes it a criminal offense for a roofing contractor to pay for, waive, absorb, rebate or offset an insurance deductible. An insured policyholder also violates the law if they knowingly submit or allow a claim with a waived or reduced deductible.
In July, the city of Frisco issued 522 residential roofing permits, according to the city’s building inspection report.
President of Peak Roofing and Construction Jeff Riss said the law will be positive for his Frisco-based business. Riss said he hopes what he calls the “enforcement bill” will shake out storm chasers who hustle homeowners.
“There’s so much shadiness in our business,” Riss said. “We’re hoping this bill will cut some of that out.”
But Frisco resident Michael Yamada said the law could result in repairs not getting done due to lack of affordability.
“I’m scared as a homeowner,” Yamada said. “If I can’t pay to have it done, what happens when I don’t get it done and have more damage happen?”
Yamada said he fears his insurance provider would then not cover future replacements due to negligence.
Before HB 2102
In some instances, lack of enforcement of fully paying deductibles resulted in homeowners being implicated in insurance fraud, Badger said.
In other instances, homeowners received inferior roof replacements—whether it was a half-done job or completed with cheap materials—and some contractors disappeared after waiving deductibles, Badger said.
If homeowners received a botched roof replacement from a disreputable contractor, it led to more repairs over time, Riss said. He said he has replaced roofs three times in three years on several Frisco, Little Elm and McKinney homes due to hail damage on cheaply done work.
Additionally, Badger said roofing contractors who were trying to comply with the law sometimes lost business to “shady” contractors promising free roofs.
Yamada said when he had his roof replaced, he and the roofer split the deductible, which enabled Yamada to get the necessary replacement.
“It was a fantastic experience,” Yamada said. “I feel I got everything done that needed to get done.”
Adjusting to the bill
North Texas homeowners will have to adjust to the new norm, Riss said—especially if they are unable to afford their current deductibles.
If Yamada had to pay the full deductible on a roof replacement, he said he would likely have to foot the bill on a credit card or take out a loan.
“It makes it even harder, especially for those that don’t have the means to do either one of those [options],” he said.
President of Town and Country Roofing Ralph Harris suggests homeowners contact their insurance providers and bargain for a lower deductible. Going from 2% to 1% or asking for a $1,000 or $2,000 deductible can make a big difference, he said.
“When we do have storms, people will be [better] able to afford a $1,000 or $2,000 deductible,” Harris said.
Badger said Frisco homeowners should speak to their insurance provider about a lower fixed-dollar deductible since “fairly expensive” Frisco homes can have a deductible of several thousand dollars.
A provision of the law states that an insurer may refuse to pay a claim for withheld replacement cost holdback until they receive “reasonable proof” of payment of the deductible by the policyholder. This can include canceled checks, money order receipts or credit card statements.
For those who are less able to afford their deductible, Badger said a copy of an executed installment plan contract or financing agreement for payment over time will work as well.
“We were mindful of that issue in drafting the legislation,” Badger said.
Both roofing presidents said they are rolling out educational campaigns about the new law and what homeowners can do to get a fair deductible.
Karen Vermaire Fox, executive director of the North Texas Roofing Contractors Association, said homeowners need to know what they are responsible for.
“Homeowners are going to have to be a little more particular,” Vermaire Fox said. “Hopefully the homes in Frisco are going to be more protected than they were before.”
Until all the disreputable roofing contractors are out of business, Harris said homeowners need to be as educated as possible come Sept. 1.
“It’s all about educating the homeowners,” Harris said. “There’s always going to be those bad apples out there.”