Under Texas House Bill 2102, which was approved in the most recent legislative session, roofing contractors who offer to waive the homeowners’ deductibles on their property insurance policies could face jail time.
The practice of waiving deductibles by roofers became commonplace in North Texas, said Zelle attorney Steven Badger.
“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 a “poorly written” law resulted in little enforcement, Badger said.
The new law requires roofers to include boldfaced language in their contracts stating that homeowners must pay the deductible under their property insurance policies. The law makes it a criminal offense for a roofing contractor to pay for, waive, absorb, rebate or offset an insurance deductible. Insured policyholders also violate 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.
Jeff Riss, Peak Roofing and Construction president, said the law will be positive for his Frisco-based business. Riss said the “enforcement bill” could 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.”
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.
In some instances, lack of enforcement of full deductible payment resulted in homeowners being implicated in insurance fraud, Badger said.
In other instances, homeowners received inferior roof replacements, 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 contractors who were trying to comply with the law lost business to contractors promising free roofs.
Yamada said when he had his roof replaced, he and the roofer split the deductible, which later enabled Yamada to get the needed replacement.
“It was a fantastic experience,” Yamada said. “I feel I got everything done that needed to get done.”
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],” Yamada said.
Ralph Harris, president of Town and Country Roofing, suggests homeowners contact their insurance providers and bargain for lower deductibles. 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 providers about lower, fixed-dollar deductibles since “fairly expensive” Frisco homes can have deductibles of several thousand dollars.
The law states an insurer may refuse to pay out a claim until they receive “reasonable proof” of payment of the deductible by the policyholder, such as canceled checks, money order receipts or credit card statements.
For those who cannot afford their deductible, Badger said a copy of an executed installment plan contract or financing agreement will work as well.
“We were mindful of that issue in drafting the legislation,” Badger said.
Karen Vermaire Fox, executive director of the North Texas Roofing Contractors Association, said homeowners need to know what they are responsible for.
“Hopefully, the homes in Frisco are going to be more protected than they were before,” Vermaire Fox said.
Until all the disreputable roofing contractors are out of the 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.”