Texas is the wild wild west of roofing. A barber needs a license to cut hair in Texas, but a roofer does not need one.
How is that possible?
The main reason is that the insurance carriers in Texas do not want it to be a licensed state because it would drive line item pricing up in Xactimate (the software insurance companies use to estimate roofs). There may be a plethora of other smaller reasons but that is the main one.
So what does it mean when a roofer waives a deductible?
A deductible in insurance restoration claims is a copay. It is the amount the homeowner has to come out of pocket in order to get the insurance company to pay its share.
Again, put simply, a deductible is a form of copay. So often, DFW Roof Claims runs into homeowners who think that the deductible should be paid directly to the insurance company. This is not how it works. The insurance company usually cuts a homeowner a first check known as ACV (Actual Cash Value). This total amount is deducted from the RCV (Replacement Cost Value). The RCV is the total amount the insurance company pays for a claim without depreciation taken out. The adjuster calculates depreciation by age of roof then that amount is subtracted from RCV to get the ACV.
The ACV amount is sent to homeowner, usually in the form of paper check or direct deposit. This is when homeowner comes to a formal construction agreement for the roof (usually for the RCV or insurance estimate total). The ACV check is then collected along with the deductible. Roof is built and then final invoice is submitted to insurance company. Then the insurance company releases the depreciation amount and that is paid to the roofer to fulfill the construction agreement.
So how does waiving a deductible play into this?
In Texas state law, HB 2102, waiving a deductible is a felony in the state of TX.
Why is it illegal?
This goes back to the concept that insurance carriers pay out what the homeowner incurs. In a nutshell, this means that the insurance company is going to pay the RCV of roof or the LOWER estimate.
In fact, Statefarm is one of the few insurance carriers that prints this right on the front of their estimates.
In order to explain this in another way, it goes back to a software the isnurance carriers use called Xactimate. When an adjuster comes out and looks at the scope of damages for a property, many times he is taking measurements of the roof, gutters, fence, etc. using satellite imagery called Eagle View. Once these measurements are obtained, it spits out numbers of the property such as linear feet of gutters, square feet of shingles, etc. Those measurements are then plugged directly into Xactimate and the software spits out ‘fair market pricing’ for the replacement benefits.
Honestly, a lot of times Xactimate pricing is out of date and way under paid in the first place (but that’s a conversation for another article).
Anyways, once these numbers are obtained, that estimate is sent to the homeowner with a respective RCV, ACV, DEPRECIATION value.
This is when homeowner recieves first check, pays deductible, roof is built, final invoice submitted, depreciation released.
When a roofer is waiving the deductible, he is inflating the RCV value on the final invoice submitted to the insurance company. It is borderline insurance fraud.
It risks the isnurance company not releasing those depreciation funds, or even worse, jail time.
Even worse than that, it is a way that contractors cut corners. Think about it in this regards, if the RCV that the insurance company paid is fair market value (many times underpaid in the first place), and a shaddy contrractor bulldozes in and promises the world—a great roof with no out of pocket. Does that sound sketchy in the first place?
Of course it does. It is sketchy because if the roofer is undercutting the job drastically:
A) What level of quality is the homeowner getting for their new roof system?
B) Will the roofer even be in business in 6 months to uphold their workmanship warranty?
A contractor offering to waive a deductible is a giant red flag for the homeowner. Simple.