What you need to know about your insurance deductible when repairing or replacing your roof
Are you a homeowner and are thinking of either repairing or replacing your roof? Well, here are a few tips about your insurance deductible that you must know. Insurance deductibles refer to the amount of money that should be paid by the policyholder before the insurance company starts compensating them. Deductibles provide a way in which the insurer and the policyholder share the risk. Previously, roofing contractors have broken the law by waiving deductibles. The majority of homeowners continue to fall victims of signing contracts with these contractors, based on some promises, for instance, free roofing services.
However, there is a new law that passed, known as HB 2102, found in Texas Insurance Code chapter 707. It took effect from 1st September 2019. The law requires all homeowners to pay their insurance deductibles dutifully. One of the bright sides of this law is that it gives homeowners the freedom to spend their deductibles in installment terms. This freedom favors people who cannot afford the whole amount at once.
Impact of the Law
Under the new law, it will be a criminal offense for any contractor who offers to waive the deductible on the policyholder’s property insurance. It is a law requirement for the roofers to state clearly in their contract that their clients must pay their insurance deductibles. The contractor will also face charges if they;
- Pay the homeowner’s deductible
- Overcharge the deductible amount
- Keep the insurance deductible to themselves
- Refund any amount that should be part of the insurance deductible
The new Texas insurance law also has some effects on how insurance companies will handle the policyholders. The insurer must ensure that the policyholder has paid their deductibles before they get paid by the insurance company. The policyholder should provide the following as proof that they have paid the insurance deductible;
- Bank statements – they also include statements for credit cards
- Canceled checks
- Receipts for the money order
- Copy of an installment plan – this is for people who pay the insurance deductible in installments
The requirements for the new law sound strict and extreme. Nevertheless, they are all meant to protect homeowners from fraudulent contractors. Some homeowners have spent a lot of money on botched jobs and lost their insurance money to disreputable roofers who do not even complete the roofing job.
Increasing your Deductibles
Raising the deductible amount will save the homeowner some money on the cost of their insurance. However, this is mainly for those individuals who do not struggle to pay for their insurance. These are financially comfortable people who can afford to pay any amount of money in case of an emergency. There are three factors to consider before deciding to increase the deductible amount:
- How often one makes claims – the policyholder can increase their deductibles if they feel that they are likely to make an insurance claim.
Nonetheless, one should remember that the amount stated as the deductible is what they will pay from their pockets, in case there is an emergency, and they make a claim.
- The cost of the insurance – an increased deductible is a certain percentage of the insurance cost. A higher insurance cost implies that the policyholder will save more money by increasing the deductible amount.
- What the policy covers – it is wise to state a deductible amount that you can afford, in cases where you are not in a position to pay for even the small losses. It is better to spend a few more dollars in insurance for financial protection, instead of increasing the deductible amount. If the homeowner can pay for a claim of a certain amount, say $5000, then increasing their deductible amount is fine, since they will not claim the insurer.
Due to a poorly written statute passed in 1989, in Texas, roof contractors have been breaking the law by waiving the insurance deductibles. The culprits that have broken the law are commonly known as “deductible eaters.” However, a new bill was signed into law by Governor Abbott and took effect from 1st September 2019. The law requires all policyholders to pay their insurance deductibles before they make a claim. It also criminalizes any attempts by the contractors to waive, rebate, offset, or pay for the insurance deductible. Find out what your roof is worth by calling 512-441-8437 or emailing us today!