Should roofers pay for insurance deductibles?
- You may think they are ‘robin hood’ because they offer to do this.
- Perhaps they really are just eating the loss.
- Or perhaps – it could force them to cut corners to make up for the lack of payment.
Insurance Companies Aren’t the End-All
First off, let’s clear the air: insurance companies hold significant sway but aren’t the ultimate authority. This distinction is crucial when discussing the responsibilities of roofers regarding insurance deductibles.
The Ethical Dilemma of Covering Deductibles
Profitability vs. Ethics: A roofer covering deductibles might seem noble at first glance, but this practice raises significant ethical questions. How can a business remain profitable, maintain quality, and not cut corners if it’s absorbing costs meant for the insured? The numbers don’t lie; covering deductibles could transform a viable business into an unsustainable venture.
Legal Boundaries: In states like Texas, it’s outright illegal for roofers to cover deductibles. This law isn’t just about maintaining market fairness; it’s about ensuring that businesses operate within a framework that protects consumers in the long run.
A Slippery Slope to Poor Quality
Covering deductibles might seem like a short-term gain for both the roofer and the homeowner. However, this practice can lead to compromised service quality. When profits are pinched by absorbed deductibles, the first casualty is often the quality of work. This can leave homeowners in the lurch, facing issues down the line with no recourse if the roofer has cut corners or, worse, gone out of business.
The Question of Legality and Morality
Breaking the Law: If a roofer offers to cover your deductible, it’s not just a matter of generosity. It’s essential to consider the legal implications. In regions where this practice is illegal, engaging in it means both the roofer and the homeowner are complicit in breaking the law.
Ethical Business Growth: Ethical business practices aren’t just good karma; they’re good for business. Companies that refuse to cover deductibles but focus on providing value and quality service build a solid reputation. This ethical stance can lead to sustained growth and customer loyalty, far outweighing the quick wins of deductible deals.
Value Over Discounts
Providing Real Value: Instead of luring customers with the promise to cover deductibles, roofers should focus on the value they bring to the table. This approach fosters a healthier business environment and ensures that customers appreciate the true worth of the services they’re receiving.
Reciprocity in Business Deals: When offering discounts or special deals, always look for something in return. This quid pro quo ensures that the value exchange is mutual, maintaining the perceived value of your services.
The debate over whether roofers should pay insurance deductibles is more than a financial discussion; it’s a matter of ethical business practice, legal compliance, and long-term sustainability. Roofers, homeowners, and industry watchers would do well to consider these facets before making decisions that could have far-reaching implications.
For Further Engagement
Randy Martin Herado, a voice of experience in the roofing industry, invites anyone in the field or interested parties to connect for deeper discussions on this and related topics. Whether you’re a veteran roofer or just starting, there’s immense value in exchanging ideas and practices that align with both legal and ethical standards.
Deeper Cuts / Other people’s takes:
Jacob Fuchs of Fraser Roofing says:
“If your not lying on the NOC with the totals. I will say this I’ve NEVER paid a deductible and there are companies who do yet call themselves sales people. That’s being a order taker . Anyone can give away free stuff . Imagine the profit lost yikes. Here’s a fact if a person didn’t feel like it was wrong they would go out and publicly say “yes our guys or we cover deductibles” you’re uncomfortable stating it for a reason. What makes the industry stronger collecting deductibles or paying deductibles I think we all know that answer.”
Scott Toups of Disaster Proof Roofing says:
“To address the question directly: yes, it’s incorrect. The roofer should never “cover” the deductible. As your guest mentioned, this approach involves submitting false documentation, essentially committing fraud. But that’s usually going to happen with smaller deductibles. No one is eating those 5% deductibles. Now, regarding your point at the 2:00 mark (though it sounded a bit sleezy with your awkward hanging fingers), there are instances, as illustrated in both examples, where a customer can avoid paying their deductible. However, this isn’t the roofer covering anything. That’s the carrier paying upfront acv money on items outside their deductible. Your guest example of the “shed” was off base those are separate coverages and even get separate checks on payout. And in your example, if the adjuster opens coverage on the roof and gutters. Say the gutters have minimal depreciation and the carrier pays $3k in ACV. If the customer’s deductible is only $1,000, they can opt not to replace the damaged gutters and pocket the extra $2k. It’s their property and they can repair it how they see fit. When I submit my COC and final invoice for the roof, and the bill is for the full RCV on the roof sections, carriers often cut a check for the depreciation previously allowed. Sometimes, they even release all the depreciation on the entire claim, despite my invoice only covering the roof and not exceeding the approved RCV for that section. It’s rare for a carrier not to pay depreciation on a completed item with a submitted invoice and proof of completion. Once the invoice is issued, the full RCV cost for that item or section is incurred. Exceptions are few; they usually involve large ACV payouts ($80-$110k), where the roof section’s cost is significantly less ($40-$50k). In such cases, the carrier may delay cutting depreciation until more repairs are proven to be completed. But even those are rare.”
Adam Sinkus of A Purpose Partnership says:
“The intent and purpose of the deductibles for insurance companies is to reduce insurance fraud. Imagine if you had no financial obligation for a roof replacement. You would likely get a new roof every 10 years on insurance, simply because you could find somebody that could find some damage. Then imagine what homeowner policies would cost! Deductibles are meant to keep the homeowner honest. Not defending insurance company practice simply shedding light into the insurance side of the conversation”
Dave from Proxy1 Mitigators says:
“IMO, *Disclaimer/I am not a lawyer, Licensed Public Adjuster, or Insurance Agent (ignore me:). You’re not asking the “Full Question/s” only because you are more in the media industry than the restoration industry (you just don’t know).
Nobody is asking if these “roofers” are, or are acting as, “General Contractors,” ?? and my money will sit with no. I’ll bet 90% of the roofers you’ll meet are not GC’s.. meaning…. are they willing to “Contract” for that fencing, drywall, ceiling, framing & etc. work?
The odds are no, they’re only in it for the roof, so yes, there will be other parts of a larger storm claim payout that will “indirectly cover” the homeowners deductible that has nothing to do with the roof (fencing, interior, etc.) that is completely normal, legal and expected in many cases. There is no law that says you must fix your room, your ceiling fan or fence with insurance money – None! Just like if you totaled your car and get a check from your carrier – you are not “forced” (not yet at least) to buy another car…
Now, you’ll never be able to claim the “recoverable depreciation” (money on hold till you prove the work is done), and you’ll never be able to “file a claim on that item” again if it has been paid for and not fixed/proven its been fixed), but there is no law (in FL) that says “you must spend this money to fix ABC” (even your roof)!
He did cover when you’re breaking the law – when you do lie to the carrier that you did fix this for XYZ costs and your contractor also lies trying to get/gain that recoverable depreciation – that’s illegal, and here in FL could be a felony charge for the contract and often is. So you can simply ask the homeowner for your full roof or “rack rate” or “xactimate rate” and get it or even have the homeowner finance the job upfront so you’re not stuck waiting on insurance checks in the first place.
I applaud the “we don’t cut corners” answer from all these contractors but, i don’t believe a single word of it – sorry, i don’t. The better question/s is/are: = what are your contingency agreements chasing after (roof only)? = why not simply turn in an estimate to your customers carrier and get paid only that amount = (a retail job as we call it) 100% legal. =for the more advanced (grey areas) how many are starting these jobs “insurance-based” and then ending them with a “retail rate” ?? I’m willing to be a vast majority of the “we don’t bend the rules contractors” – are doing the latter method..
It’s a deep topic for sure…. as even a deeper sub-topic would be how many are successfully chasing canceled contingency agreements….:)??? PS, i think we all “borrowed” items from big box stores while growing up..”