Insurance Coverage Deductibles…”covering them” is illegal!

Time and time again, Restoration Colorado Roofing is asked, “Will you work with my insurance deductible?” Roofing (or other) Service providers, in an effort to secure your business, may be tempted to tell you, “don’t fret about your deductible, we’ll take care of it”.  It may seem safe and look like just a price cut. This is INCORRECT! In an effort to help inform our prospective consumers, we are providing the following information.

Based on U.S. Senate Bill 38, it is a felony offense for a contractor to absorb deductible costs. Fraudulent practices such as these can significantly impact home or business owners.

(Here is a link from MAY, 1ST. 2012 connecting to Senate Bill 38)

http://www.leg.state.co.us/clics/clics2012a/csl.nsf/billcontainers/27662B8088A2C51F87257981007F1243/$FILE/038_rer.pdf

(Here is a revised link from June, 6th. 2012 connecting to Senate Bill 38)

http://www.leg.state.co.us/clics/clics2012a/csl.nsf/fsbillcont3/27662B8088A2C51F87257981007F1243?open&file=038_enr.pdf

Here are a few key reminders for our clients:

Insurance companies will send an adjuster out to your home or business after you submit a claim. The adjuster will inspect the damage, estimate the cost, and issue you a check. Under your insurance policy terms, your insurance provider will hold back a portion of the payout as “recoverable depreciation”. This means the homeowner only receives the remaining part of the total recoverable depreciation if the job is finished and the amount of the first check released and the deductible obligation are exceeded in total cost.

In order for roofing (or other) service providers to “soak up” your deductible cost and still make money, the contractor needs to prepare and submit a fraudulent invoice. The contractor will need to bill the insurance company the complete price of the roof/project and have it exceed the first check and deductible amount for the insurance roof claim. As soon as the insurance provider issues the depreciation check and it is obtained by the homeowner, the roofing service provider prepares a second invoice that mirrors the price of the work without adding the deductible price for the home owner. The roofing provider just committed insurance fraud. Once you, the homeowner or business owner, writes the final check to the roofing contractor, minus the deductible that you were not charged, you are as accountable as the roofing contractor of committing insurance fraud.

Aside from the legal ramifications, if your case or your contractor is ever examined by your residential or business insurance provider and fraud is found, there are moral concerns:

a. If the construction specialist (roofing contractor) is willing to lie to the insurance company to get a job, what makes you believe he/she won’t be dishonest to you?

b. If all contractors in our location comply with market prices for products and labor and your contractor is charging considerably less for the task, from where is the discount originating? Unskilled estimators could potentially make a measurement or calculation mistake. In such cases, they will return to the home/business owner and insurance adjuster for the added amount they missed. This low-ball method is typically utilized to secure a deal with the home owner or business owner. In addition, some roofing and service providers use substandard materials and charge for higher quality materials. If it sounds too good to be true, it probably is.

c. Some roofing providers use day laborers and do not provide Workers’ Compensation benefits. Many roofing professionals will inform you they have self-guaranteed insurance or that they have an active insurance policy in place. Always ask for proof of General Liability and Workers’ Compensation Insurance. Because of the high cost of these insurance plans, many contractors let this insurance go unpaid. With the high rate of accidental accident claims in the roofing industry, at upwards of 20%, this is an important safeguard for the people servicing your roof. It can be terrifying as a consumer to do business with a company that either knowingly, or unknowingly, involves a homeowner in its failure to provide this protection for its workers.

In essence, if a roofing company (or other) service provider is in the business of providing a quality product; it will do so through a legal and ethical process. Absorbing deductibles is just another way of legitimizing a scam. Do yourself a favor and protect yourself, and your family, from the practice of insurance fraud.