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Buyer Beware! 2019 Brings New Texas Laws Regarding Deductibles!

Posted by: Jared Morgan Posted on: Aug 09, 2019

There are some major changes in the law that we wanted to take a moment to help educate you on. These are important changes to insurance claims, that you as a homeowner need to be aware of to keep yourself from receiving fines, possible jail time and a criminal record. The 86th Texas State Legislature recently passed house bills 2102, which address deductibles, and 2103, which prohibits any contractor from practicing as a public adjuster.

The waiving of deductibles has actually been illegal since 1989, but due to poor wording of the bill, many contractors simply ignored the law, or tried to find ways to create loopholes around it. As a result, many roofing companies have actually advertised free roofs to the customer, promising to waive or absorb the deductible. When a roofing company absorbs a deductible, they are operating on very slim profit margins, which they will always find a way to make up for. For the homeowner, this often means that they will receive inferior products and poor installation, with a warranty that isn’t worth the paper it’s written on. The new bill, which goes into effect on September 1st 2019, closes all the loopholes, making it illegal for the contractor, as well as the homeowner, to avoid paying the deductible. Both can be punished with a $2000 fine, 180 days in jail and a class A misdemeanor. There have also been reports that the Texas Department of Insurance has brought on new agents to enforce this new bill.

It's the law

While this may seem like bad news to homeowners who are used to getting a “free roof”, it will actually improve the industry as a whole. Since all contractors will now be working for the amount on the claim adjustment, this eliminates “price” as a primary decision. This will curb the temptation of a homeowner to simply go after the cheapest option offered, by often times unscrupulous companies, that will at best deliver an inferior product or service and at worse will take the money and run. In other words, it levels the playing field for all the companies who have been operating legally, thus allowing homeowners to hire a company whom they trust will do the best job, as opposed to the cheaper “deductible eater” company.

Since the State of Texas will now be prosecuting contractors as well as homeowners, we want to inform you so that you can be compliant and legal. In fact, contractors will be required to add language in their contracts notifying the customer that it is illegal not to pay their deductible. If you do not see this language on a contract, be wary. If you are encouraged not to pay your deductible, RUN!

House Bill 2103 addressed a loophole in how the bill was phrased. It previously prohibited roofing companies from acting as a public adjuster on a claim which they are providing services, but it now includes all contractors regardless of the contracting services they provide. What this means is that a contractor cannot negotiate or argue with your insurance company. By law, there are now only three people that can negotiate or argue with your company about the scope or value of your claim, and that is (1) you the policy holder, (2) your attorney or (3) a licensed public adjuster.

At Restoration Roofing we have remained compliant and legal, operating with integrity since our inception in 2004. We strive to remain educated and up to date with the changes in our industry as it pertains to new legislation, as well manufacturing and installation innovations. Give us a call if you would like an honest assessment of your property.

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