With Spring storm season in full effect in North Texas, it seems as if everyone who owns a truck runs a roofing company. In Texas, there is no license to operate as a roofing company. It is absolutely the Wild West when those hail pellets start falling! People who were working at the Amazon warehouse last week now suddenly are roofers. Given the amount of money at stake in the roofing business in Texas due to hail claims, it's no surprise really. Let's take a look at one of the practices that many Ft Worth homeowners think is no big deal. The practice of waiving a deductible on a roof claim against your Ft Worth Home Insurance.
When roofers are trying to woo unsuspecting homeowners of using their services to re-roof their home as a result of a claim, they often offer to eat their deductible for the homeowner. On the surface it sounds like a great deal! You get a new roof, the roofer gets work, and the insurance company is going to pay for it. Guess what! Not paying a deductible is insurance fraud. How so is always the question.
When you signed the contract with your insurance company, you agreed to pay the deductible that is stipulated in the contract. It didn't say that it was optional. You signed a written contract to pay that amount as part of the agreement to provide coverage to your Burleson home. It's a very concrete agreement. Has it ever occurred to you how a roofer can east a $2,500 (1% of a $250,000 home) piece of the cost to roof your home?
Roofers are in business to make money. They have to pay for materials, labor, and taxes just like any other business. And what is left over is profit in their pocket. Would you be willing to walk away from $2,500 in profit? They aren't either. The roofers who are rebating that cost are inflating the cost of replacing your roof in the claim so that they still make their money to feed their families. So in the end, both parties are committing fraud since they have to inflate a claim amount to still make money and the homeowner isn't following through on the payment agreed to in the contract.
Why Does It Matter?
People always say that their little claim adjustment shouldn't matter when they are talking to us about the rates that they pay for home insurance. In the end, this practice comes down to simple economics. Let's take a look at the math.
In Dallas-Ft Worth, the median home value is $244,400 on March 27, 2019.
With Wind & Hail deductibles being 1%, the amount due from the insured to the roofer would be $2,444.
The most recent estimate of the DFW Metroplex population in 2019 is approximately 7,749,639. Not everyone owns a home, but it is safe to say that at least 150,000 homeowners will be impacted by a hail claim this year. So here is where math comes in. Let's see what the economic impact is everyone was to not pay their deductible.
$2,444 (deductible) X 150,000 homes = $366,600,000
So we close this with a question. Who will ultimately bear the burden of that extra $366 Million dollars that was put in those claims? The insurance company or the homeowners paying premiums?
If you want to discuss options about your home insurance, we recommend speaking with an independent insurance agent like Insurance for Texans. We work for you the homeowner, and not a particular big company.
Ron Wadley is an owner and General Solver of Problems for Insurance For Texans. Ron is a resident of North-East Tarrant County in the Dallas-Ft Worth area. He loves riding his many bikes and watching his Baylor Bears play football and basketball. Send him your insurance questions at firstname.lastname@example.org.