If your roof has been damaged and you have homeowners’ insurance, there are several factors that determine how much the insurance company will pay and what is covered.
However, homeowners are often approached by seemingly trustworthy roofing contractors who claim they can eat the deductible on insurance repairs. Some roofers may also openly advertise “Free Roofs” on door hangers and yard signs.
Although a free roof repair sounds appealing, this practice is illegal and considered fraudulent.
Can Roofing Contractors Eat My Deductible?
In the roofing industry, some roofing contractors will go to a homeowner and tell them that they’ll eat their deductible. This approach would mean that the homeowner doesn’t need to pay a cent to repair their roof.
However, there’s not a legal way to do this.
As such, when a roofing company wants to eat your deductible, they will actually reduce the price of the roofing system they build by the cost of the deductible. For this reason, they cannot build the roof for the price that they state.
The roofing company will go to a roofing manufacturer like GAF or CertainTeed and get a quote for the roofing system your home requires.
For example, let’s say your new roofing system costs $10,000, and your deductible is $1,000. The roofer will exclaim they can repair your roof for $9,000 and that they’ll eat your deductible.
Although this sounds exceedingly appealing, the roofing system they buy will be around half the cost of your roof.
So how will the roofing contractor take the $9,000 and eat your deductible?
They will replace components of your roofing system with inferior products that are much cheaper. While you think you are getting the same roof, this isn’t the case. You either get no replacement components or more inexpensive replacement components.
Think about all of the components of a roof:
- Sub-shingle layer
- Weather layer
- Ice and water shield
- Roof deck
Since there are so many layers, the roofing contractor may choose not to include a few of them. As such, your new roof will wear out much faster, and your warranty will be voided as well.
When a roofing contractor claims they can eat your deductible, it’s best to avoid them and look for an honest and trustworthy roofing company.
How Do Insurance Companies Make Payments?
There are two ways that an insurance company makes payments during the insurance claims process. Let’s discuss these:
1. Actual Cash Value Policy (ACV)
If you have an actual cash value policy or ACV, the insurance company will pay you the entire cost of the roof replacement minus the depreciation and your deductible.
Let’s walk through an example.
$10,000 quote to repair your roof
-$4,000 in depreciation
As such, you are only left with $5,000 to get your roof repaired. In this scenario, a roofing company that claims they can eat your deductible may use even more cost-cutting methods to repair your roof.
This approach occurs because they will need to pocket some of the fees themselves. Actual cash value policies typically offer lower premiums, meaning lower payouts.
2. Replacement Cost Value Policy (RCV)
If you have a replacement cost value policy or RCV, you would be paid the full price of the roof replacement quote minus the deductible.
Here’s an example of RCV:
$10,000 quote to repair your roof
In this scenario, you’ll be left with $9,000 to repair your roof. Roofing companies who claim they will eat your deductible are looking for homeowners with RCV insurance. This arrangement means they have more leeway to pocket the difference from their cost-cutting techniques.
How Would a Roofing Contractor Eat My Deductible?
One method roofing contractors can use is giving you an estimate that’s higher than the actual cost of repairing your roof. The roofing company will then use the extra funds paid by your insurance company to cover the deductible.
Some roofing contractors may also offer credits or rebates in the amount of your deductible. This approach is also illegal.
Roofing contractors who claim they can waive your deductible will send false information about the cost of repairs to your insurance company. This tactic is considered fraud and is highly illegal in most states in the United States.
When a contractor purposely inflates an estimate to cover a deductible cost, it’s considered insurance fraud. There are substantial criminal penalties that impact all parties involved if this occurs.
Consider the principle behind a homeowners’ insurance policy. In essence, an insurance policy is a contract between a homeowner and an insurer. This contract authorizes homeowners to pay an annual premium to make sure they’re financially protected from property damage, less the cost of the deductible.
In turn, the insurance company is protected from paying the homeowner if the homeowner breaches their side of the contract. When a roofing contractor commits insurance fraud, the contract is breached, and you may be susceptible to covering the cost of repairs yourself.
How Can You Protect Yourself From Fraudulent Contractors?
As you’re looking to get your roof repaired, there are a few key steps you can perform in order to avoid fraudulent contractors. These include:
Use a Long-Term Local Company
Local roofing companies that have been in business for several decades tend to be reputable and honest. Without trustworthy roofing services, the company would have gone out of business.
You can also verify the contractor’s local address and phone number. Furthermore, you can contact the contractor, inquire about their services, and see if they claim they can eat your deductible.
If the contractor claims they can waive your deductible, avoid them and look for another contractor.
Ask for References
When you contact a roofing contractor, make sure to ask for references from clients who have had the same repair work done. Then, verify the references by confirming that the contractor completed the other clients’ roofing services.
Furthermore, we recommend doing your own research and looking for online reviews of the roofing contractor. See if the roofing company has many negative reviews or complaints, and how they address them in responses. Do they make things right? Look beyond just the best and worst reviews, and see what the average ones are like.
Other references might not be online. These can include BBB accreditation, membership in the local chamber of commerce, and a proven history of giving back to community organizations and charities.
Avoid Door to Door Contractors
Be extremely cautious of roofing companies that go door to door looking for business. Reputable roofing contractors do not need to knock on doors looking for clients. Established roofing companies have built a substantial local presence through word of mouth and online transparency.
Get Multiple Bids
Another way you can protect yourself from insurance fraud is to get more than one bid on your roofing repairs. Be wary if any of the bids are much higher or lower than the others.
It’s important that you have different contractors break down their bids by roofing system and components they plan to use. In this manner, you can make sure that you’re receiving bids on the same products and services, and can better assess the actual value of each proposal.
What to Do When a Contractor Claims They Can Waive Your Deductible?
When a roofing contractor claims they can eat your deductible, they know exactly what they’re doing. Any roofing contractor that’s willing to commit insurance fraud to get your business should be completely avoided.
Furthermore, make sure also to avoid roofing contractors who are willing to adjust the numbers so you can avoid paying the deductible.
In fact, there are no homeowner benefits that come with going with a contractor that will eat your deductible.
First of all, the contractor will commit insurance fraud that puts your insurance contract at risk. Along with having to pay for the entire repairs out of your own pocket, you may also be vulnerable to legal penalties.
Furthermore, the contractor will use cheap materials and choose not to replace certain roofing components that are damaged. Roofing contractors do this in order to cut costs on their own end and pocket the difference.
Not only is this practice extremely unlawful, but your home’s roof will also be damaged quicker and require repairs in the near future. A good roofing contractor will know how to work directly with your insurance company to get the compensation you are entitled to for your new roof.
What Are My Next Steps?
After inspecting your roof, we’ll explain exactly what needs to be repaired and how much it will cost. Furthermore, we’ll provide receipts for the materials and replacement parts we use. We’re happy to provide a complete quote you can use to compare our services with those of other roofers.