Insurance Claim Deductibles
Payments Of Deductibles Is Illegal In Colorado
Colorado SB38, also known as The Residential Roofing Bill Of Rights, was signed into law on June 6, 2012 and it governs several issues related to re-roof projects that are funded by an insurance claim. One of the issues is the payment of the deductible.
SB38 specifically states that the deductible payment cannot be paid, waived, rebated, or discounted by a contractor, nor can the contractor promise to pay, waive, rebate, or discount the deductible for the homeowner. Doing so constitutes insurance fraud on the part of the homeowner.
A roofing contractor must have, in bold letters on his contract, language stating that he will not pay the deductible in whole or in part.
But What's Wrong With Hiring A Contractor Who Will Pay Your Deductible?
It probably sounds too good to be true… A roofing contractor tells you that he’ll pay your insurance deductible for you. That way you get a “free” roof. Maybe he won’t pay all of it, but he’ll pay part of it.
Some times the contractor comes right out and tells you that this “gift” or “discount” is to offset your deductible amount. Some times he’ll tell you that it’s an “advertising fee” that he’s giving you for allowing him to put a sign in your yard.
What’s wrong with hiring a contractor who says he’ll pay all or part of your deductible?
- IT’S ILLEGAL – The reason for this is because the homeowner is contractually bound by his policy to pay his own deductible. If your contractor offers to pay that for you, it’s illegal.
- IT’S INSURANCE FRAUD – The reason that it’s illegal for the contractor to pay your deductible is because it’s insurance fraud. Basically, it’s the homeowner and the roofing contractor colluding to steal money from the insurance company. Since the homeowner has agreed with his insurance company to pay his own deductible (written into the contract with his insurance company), then if the contractor is going to be able to pay the deductible, if he’s sending in an invoice to the insurance company to enable the homeowner to receive his depreciation funds at the completion of the job, the contractor has to send in a false invoice.
- POOR QUALITY AND WORKMANSHIP Insurance estimates are normally too low “out of the box.” Most insurance companies and adjusters leave out a few, or some times many necessary items out of their estimates to do roof replacements. If you hire a contractor who has agreed to do the work for the amount of the settlement your insurance company has included, he is already operating at a low profit margin. Ask yourself, “How can my contractor afford to stay in business, if he’s already taking my job at a low profit margin, AND he’s paying my deductible?” These are very real concerns that you should consider.
Get more details in this video.