New Guy With Questions

I am a marketing guy that just partnered with a friend that does great work and has an amazing reputation in the business.

I am trying to do some research and need your help.

We pride ourselves on doing things the right way and want to make sure there is no gray area.

We are in GA.

  1. Can you waive a deductible if you put a sign in the yard and claim it as advertising cost?

  2. Can you waive the deductible if you add a rebate or a coupon to the paper work?

  3. If no to the above questions is there any reason why you can waive the deductible?

  4. It seems as though, if you don’t waive the deductible you won’t get the job because everyone else is doing it. Your thoughts?

Why do you want to waive the deductible. Theres not enough money in insurance work to begin with. Some deductibles are $1000, some are 2% the value of the home. Crazy man, crazy.

Realistically, there is no such thing as “waiving the deductible”.

You can “pay the deductible” for your customer, which is what your competition is doing. Then, the difference is worked back into the price of the project. To your customer, it appears that you are doing him a great favor, when in essence you are simply charging the insurance company for the deductible.

The practice is borderline fraud, in my humble opinion.

We get a lot of hail storms and the amount of roofing companies double over night when a hail storm arrives. They do a better job of marketing and being more aggressive. They don’t do a better job at roofing. However if we want to compete with these guys we are required to match or come close to what they are offering. Many times they have illegal help. I don’t mind cutting $1,000 if I can get enough work. i just dont want to do the wrong thing by law.

I don’t believe the problem here is covering the deductible. The problem is submitting an invoice to the insurance company, when the job is complete, for the full amount of the claim in order to have the recoverable depreciation paid. Technically speaking, if you offered to cover the deductible, you really aren’t charging the full claim amount but in fact, charging the claim amount minus the deductible.

The flip side is, I am unaware of any situations where the insurance company pushed back on this practice. I can only speculate that the insurance companies may be happy to simply pay the claim amount. There is the potential for the Homeowner to submit a bid higher than the amount listed on the insurance statement of loss which would consume $ from the insurance company in dealing with it and ultimately paying more dollars than was initially allocated.

I’m also speculating that many of the storm chasers and companies practicing the strategy of covering the deductible are utilizing cheap, illegal latino crews and cutting corners on as many items as possible in order to keep their costs down. They are generally working on a hit and run volume basis. This seems to be the case from what I’ve observed. Therefore, they aren’t putting a ton of effort into negotiating with the insurance company, submitting supplements, etc… So the insurance company satisfies the Homeowner, the Homeowner gets a new roof without paying their deductible, the insurance company turns a blind eye towards the practice and life goes on.

My final speculation is that if handled properly, this can probably be accomplished and even if the insurance company ever challenged the contractor for “rebating” the Homeowner, they’d have a difficult time making it stick in court.

It seems to me the real answer is to do a better job in the sales process in order that you don’t have to give $1000 away in order to get the job. I’m not sure how you pay a Salesman their commission and then take $1000 off the claim amount for a $10000 roof and still make out. Well, I guess if you’re paying an illegal crew $40 per square and using the cheapest materials possible, you probably can.

Should you sell this properly, one would hope many Homeowner’s could recognize where they are getting shorted and would also be concerned about paying US dollars into the pockets of illegal aliens, assume the risk of an injury to a worker without workman’s comp and even consider the ethics of what they are doing. However, with the economy being what it is and people hurting for money, that is often easier said than done.

Wow, I continue to be surprised at how using particular roofers is being equated with unscrupulous work. How sad…

As to handling the deductible, this is an age old question. Here is my take on it.

If you create business from referrals and not advertising, you might decide to pay an advertising charge to the homeowner. If that is your marketing plan, and it works, then referrals is the mark of an excellent company. In many industries, not just ours, customers are paid for referrals.

I am not aware of anyone who will ask for payment from the homeowner, just to turn around and pay the homeowner back for advertising. I feel certain that the insurance companies would put a screeching stop to this practice if it was not legal (that is just my guess).

If you can document referrals from your work, then the amount you pay your homeowners for that is logical, at least.

It is widely advertised in this market to pay 100% of the deductible. I even see such ads in the Google ads on this site for my market.

I am now running into competitors who are allowing customers to keep some of the insurance money (yes, hundreds of dollars above and beyond the deductible). I keep asking everyone here if that is legal. So far, no one has said “no”, so I guess you can legally do whatever you want. I will close before I allow that in my business.