Insurance FAQ

If your roof has been damaged in any way and you have homeowner's insurance, there are a number of factors that will determine what is covered and how much the insurance company will actually pay. Homeowners are often approached by seemingly legitimate contractors and told it is "perfectly legal" to cover a deductible on insurance repairs. Some roofers make it such a common practice they openly advertise "Free Roof" on yard signs and door hangers. While the offer of an entirely "free" roof may sound appealing - is it legal? No, it's not.

Why Can't Roofers Pay Deductibles?

A homeowner's insurance policy is actually a contract between you, the homeowner, and your insurance company. This policy outlines the responsibilities of each party should an unforeseen event occur (like a hail storm) and a claim need to be filed. In that contract, there is a section that explains what the homeowner is responsible for (deductible) and what the insurance carrier is responsible for (benefits, limits, and exclusions). It's not just the insurance companies that have financial responsibility if something happens; all homeowners have responsibilities as well. Homeowners who do not pay their deductibles are technically committing a form insurance fraud.

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How Do Roofing Companies Cover Deductibles?

Roofing contractors that cover a homeowner's deductible are lying to the insurance and mortgage companies. In order to understand how and why this is illegal, you first have to understand how paying your deductible factors into any claim you file. Here is an overly simplified example to illustrate how it's supposed to work:

  • In order for an insurance claim to be paid, documentation must be provided on the cost of the repairs.
  • Let's say the cost of repairs is $10,000 and the homeowner's insurance deductible is $1,000
  • After reviewing the claim, the insurance company cuts a check for $9,000 - the cost of repairs minus the deductible
  • The homeowner is responsible for the remaining $1,000 deductible to fully repair the damages
  • Damages are then repaired - both the insurance company and homeowner fulfilled their contractual obligations per the homeowner's insurance policy
Because insurance companies will automatically subtract the deductible from the claim payment, roofing contractors that cover deductibles either have to artificially inflate their estimates to cover the deductible or find a way to complete the job for less than it actually costs - usually through shoddy workmanship, cheap labor or cheap materials.

If a contractor knowingly misleads or inflates an estimate to cover the cost of the deductible, then that is considered insurance fraud. For example, if a homeowner had a deductible worth $1,000 and the damage is estimated at $10,000, $9,000 should come from insurance and $1,000 from the homeowner. Now let's say a contractor knowingly inflates the damage to $11,000. The financial responsibility of the carrier increases to $10,000, and the contractor does the repair without the homeowner deductible. Knowingly misrepresenting an estimate to allow for an increase in carrier payouts is insurance fraud. There are significant criminal penalties for this type of fraud and hurts all parties involved.

Shopping For A Better Roof Price Does Not Save A Deductible

What if a roofer can do the job for $10,500.00 that your adjuster said would be around $12,000.00? Did you just find a way to save your deductible? No. Your deductible comes first. If your job cost you $10,500.00 then your insurance company would only owe you $9,000.00 - there is no financial reward for finding a lower price. The only way a deductible is saved is by turning in a false invoice that reflects the higher dollar amount, not what you actually paid. It is this false invoice where a bad contractor can get you in big trouble.