BBB Scam Alert: Unethical contractors illegally claiming to waive insurance deductibles
Homeowners and businesses across Texas continue to recover from the devastation following a series of tornadoes in March. In their recovery efforts, many people are turning to contractors to get help in repairing roofs, windows, landscapes, and other structural issues. However, reports to Better Business Bureau reveal a concerning and illegal trend from contracting companies.
In the aftermath of damaging weather patterns, one of the first reactions of people who are beginning the repair process is to reach out to their insurance company and start taking photos of the extent of the damage. Shortly after, contracting companies offer their services in affected areas. While most of these companies are legitimate and exercise ethical business practices, some may take another route to entice consumers to use their company over others. A key tactic of some of these companies is to claim they will waive the insurance deductible for services conducted.
A deductible may be a specific dollar amount or a percentage policyholders must pay before insurance companies issue full payment. Claiming to waive insurance deductibles without the insurer’s consent is illegal in Texas. According to House Bill No. 2102, which was signed into law by Gov. Abbott and began taking effect Sept. 1, 2019, a person who sells goods or services commits an offense if, without the insurer’s consent, they:
- Pay, waive, absorb or otherwise decline to charge or collect the amount of the insured’s deductible.
- Provide a rebate or credit in connection with the sale of the good or service that will offset all or part of the amount paid by the insured as a deductible.
- In any other manner, assist the insured in avoiding monetary payment of the required insurance deductible.
A deductible is part of your home insurance policy, yet many contractors may claim they can assist you in avoiding the payment through several ways. The Texas Department of Insurance states contractors may provide an estimate for the work to be performed that is higher than the actual cost to repair your home and then uses the money paid by the insurance company to cover your deductible. Insurance companies may ask for proof that the deductible has been paid before it issues the full amount of your claim, which can be proven by a canceled check, money order receipt, credit card statement or a copy of the payment plan with your contractor.
Contractors who claim they will waive your deductible may be sending false information to your insurance company about the cost of repairs, which constitutes fraud. Additionally, contractors offering waived deductibles are likely to make up the difference in cost by cutting corners or using lower-quality products. In the world of home repair, taking shortcuts and using low-quality products often results in more claims and repairs later.
To protect yourself from falling for possibly illegal and unethical practices by contracting services, Better Business Bureau recommends:
Contact your insurance company. If speaking with a contractor who offers to waive your deductible, reach out to your insurance company and check if they have been authorized to make that claim. Ultimately, it is the policyholder’s responsibility to make required payments, and failure to do so may affect policy coverage. Many insurance companies have local offices which may be able to direct you to local contracting services they trust.
Use a local company. Some unethical contractors make a habit of traveling to areas across the nation that have been affected by damaging weather patterns, whether it manifests as a tornado, hail, flooding or other natural disasters. Using a local company not only strengthens community businesses but provides a local office that homeowners can visit if they encounter any issues during or after the repair. Be sure to verify if the address and phone number provided is an actual location and is a working number.
Research the contractor. Research the business online by typing in the contractor’s name along with ‘scam’ or ‘fraud’ and checking the results. Read what past customers have said about their experience with the business, but be cautious of reviews that present the business in an overwhelmingly positive light as they may be fabricated. See how responsive the business is to negative reviews or complaints and how they resolved the issue. Check if the business is BBB Accredited by searching on BBB.org or using the function to find Accredited Businesses near you, such as roofing contractors.
Get multiple estimates. At all points when contracting services, BBB recommends obtaining a minimum of three quotes or estimates from separate companies to help homeowners determine a realistic project cost. If one estimate is significantly less than the others, be cautious as the business has to make a profit to be sustainable. That profit may come from lower-quality products or shortcuts. Ask questions and avoid businesses that require a substantial percentage of the total cost of the project upfront.
If you have encountered a business illegally claiming to waive insurance deductibles, report it to Better Business Bureau and the Office of the Texas Attorney General.