Possible solution to the deductible dillemma

I roof in the Texas panhandle. 99.9% of work here is storm related.
The deductible covering is entirely homeowner driven, but the insurance companies are using it to their advantage. Most customers want no out of pocket expenses. It doesn’t matter to him if you are covering a $250 deductible or a $2500. But the insurance companies see a $2250 difference. Ins Co sell big deductibles by offering lower rates. I have had customers tell me that their agent said, " Don’t worry about that big deductible, a roofer will cover it.". The Ins Co and Homeowner both save money and the roofer gets to pay the bill.
I am tired of Ins Co forcing me to be “crooked” in order to do business. The Homeowner and Ins Co benefit from fraud, then wash their hands and condemn the “dishonest” roofer. Why worry about insurance estimates, deductibles, or doing the Ins Co’s dirty work. Let’s just bid the job according to material+labor+profit,sign a contract, then hand the customer a bill when we are done. Then, when the Homeowner has a $12,500 insurance estimate and a $10,000 bill, the Ins Co can explain why they are only paying $7,500. Meanwhile I have a signed contract and make the same profit. What can they do, prosecute you for NOT committing insurance fraud.
Before anyone replies about salesmanship, quality work, not covering deducts, etc, My first job was with a Lubbock, Tx company started in the 1940’s. I have seen the deduct covering situation evolve from not covering, to $250 , to $1000 on up. That company refused to cover, now they no longer exist. People care about local companies and warranties and craftmanship until they find out that it will cost them hundreds or thousands of dollars. Also these numbers are for example only please don’t post criticising the math, you can change the amounts to whatever suits you. Thank you for reading.

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and what do you do when the customer just says “sorry, but i dont have $250, let alone the $2,500”??

let me know how that works out for you.

The few times I ran onto this issue, I just made sure I was $3-$4K above ‘normal’ and then forgave the deductible. I didn’t have to lose anything, and actually gained a bit.

It takes 2 to tango.And 3 to line dance.

This problem did not just materialize overnight.It evolved into what has become a serious problem.Homeowners and contractors and the insurance companies point fingers at each other about who is to blame and who created this monster.BUT neither side is willing to accept any responsibility in the matter.

Will it go away,Nope and here is why,too many areas affected and entirely to many people can profit and gain.Anytime you have the ability to profit or gain then it runs rampant.

The roofing industry is full of knuckle headed contractors selling roofs so frigging low and are just eager to cut the throat of the guy trying to maintain a profitable margin for his business.This forum had a guy who bragged about a local company that did not “Change with the times” and went under because they refused to eat deductibles,not add a mark up for materials.This guy who was on this forum had a website bragging that he was one of the lowest contractors around Tulsa.
The first time he posted he was bragging about bidding a $9000 plus job for $2600 or something crazy like that.People like that I don’t even really consider a contractor they are seasonal workers in my opinion.

This bonehead even stated on his site that he recommends the customer buy materials to save them money.These hacks and cut throats are the instigators for this situation we are having such an issue with.People doing business like that are one of the reasons things are so jacked up.

The homeowners are also equally involved.They have found a way to profit from and manipulate the system while being able to stick it to someone at the same time.They want the contractor to pay them cash back and eat the deductible and whatever other bullsh** they can put you through.That is what this has come to.

The insurance companies could give a sh** less because all they do is throw a piece of meat into the ring with pit bulls (wannabe contractors,legit contractors and homeowners) and watch them devour each other laughing all the way.The insurance companies are all for these battles.

For the most part they (Insurers) throw a piece of round steak into the ring and watch the fight holding the T-Bone.

Instead of charging accordingly and going after the money that should rightfully be paid for ALL roof components and accessories the contractors are too busy being screwed by the homeowners and slaughtered by wannabe contractors they inadvertently don’t pursue the actual amount that SHOULD be paid for ALL roof materials.

So who wins at the end of the season? The insurance companies.The homeowners,NOT the roofing contractors.

Right out of the gate I tell my customers.I will NOT cover your deductible and I will NOT give you ANY cash back.But this is what I can do.If you have a problem with the deductible I WILL let you make interest FREE payments to me on the 1st of EVERY month.I have about 15 customers who do that right now.Maybe some might have a problem on this forum with me doing that but enjoy your dinner feasting on deductibles because I don’t.

The problem is here to stay unfortunately.As long as the demand for underbidding and deductible eating and cash back is in place then is here.

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“Right out of the gate I tell my customers.I will NOT cover your deductible and I will NOT give you ANY cash back.But this is what I can do.If you have a problem with the deductible I WILL let you make interest FREE payments to me on the 1st of EVERY month.I have about 15 customers who do that right now.Maybe some might have a problem on this forum with me doing that but enjoy your dinner feasting on deductibles because I don’t.”

Interesting. I thought I was the only one. I do it with some, or like I stated before, I add it in if necessary. I’m not in business to bid myself into the hole.

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I’d say 75% of the time, the problem is with the Roofers. The opening line of many of the storm chasers and even locals is “We’ll pay your deductible”. Given the economy and everything, how can you expect a Homeowner not to be interested in that? The other 25% of the problem is the Homeowners who aggressively ask for it. I’m not sure how you blame the insurance companies on this one. I guess you could argue they should proactively attempt to enforce the paying of deductibles but at the end of the day, it isn’t costing them any more money so why should they care?

We spend a fair amount of time in our Sales Rep training this issue. The first thing we cover with them is to understand this money isn’t imaginary and a portion of it comes out of their pocket. Bottom line, we simply tell them we won’t do it, don’t ask and frankly, it is rarely an issue. We train them to sell the value of the full spectrum of services we offer and the quality of the work we do.

I’m not saying this whole deductible thing isn’t a major issue in markets such as Oklahoma and Texas where there is so much insurance work. Where we’re at though, I’d say we lose less than 5 to 10 jobs per year for refusing to pay the deductible. I did work for another company for awhile in Houston following Ike and I never paid a deductible however. I cannot fathom working for the profit margins that would be left after taking $1,000 to $2,500 out of the job, there’s too many other things I could do to make a good living without doing that crap.

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Auth_Dad, I’m pretty much right there with you.

I’ve started getting the deductible conversation out of the way within the 1st 5 minutes of a conversation with a customer so that I’m not wasting my time with them a day or two later when they ask about it or I find out they aren’t interested in using me because some knucklehead came @ them with a “money saved” offer.

I also explain (& show them the letter) that I just got from BradCo & Roofing Supply Group that said “we are raising prices 10%”. I then explain that if costs are going UP, how the hell can they offer cash back & still say they are giving you a quality product???

I kind of have a contact in the Dallas area who is a producer with a television stations; I think what they do is supply news stories free lanced to Texas stations.

Anyhow, I called him & pitched a story about maybe doing a hidden camera thing. One would be as a contractor & then get a homeowner who asks about getting a “free roof” or “$$ back vs. deductible” & the other side would be posing as a homeowner & wait for the salesperson to offer up a free roof or discounted deductible.

He gave me a phone # for a local producer in the Dallas area & this guy didn’t really seem interested. The big hook for this was why the State of Texas doesn’t seem to be interested in going after this & to maybe try to get an interview with someone in the AG’s office & ask them why nothing is done… to ask why some co’s can blatantly advertise “No deductible” or “free roof” or “up to $ 500.00 off your insurance estimate” on their door hangers, flyers, on vehicle signs & even billboards.

On the other hand, I really think this shit would come to a screeching halt if the state would just ONCE a year run a similar sting on both the homeowner as well as the contractor(s) in the D / FW market as well as Houston, San Antonio & maybe El Paso.

For the contractor to be stung, they can grab the paperwork after they send it into the insurance co. & for the customer, maybe get audit the paperwork as well (there are SOME insurance co’s that require the homeowner to sign a statement of what they paid.

It’s gotten to where I’m kinda not as irritated when a mortgage co. is involved in the process & the insurance check is cut to the bank as well as homeowner because they often require a signed statement on the funds collected / paid, etc.

Maybe we can try to all collectively contact our state representatives (especially here in Texas) & ask them why nobody is looking into insurance fraud… technically, if a vast majority of the idiots aren’t collecting deductibles then that means the cost for a total re-roof has been inflated. In the end, all us “law abiding” guys are doing is falsely inflate the cost for a re-roofing, right?[/sarcasm]

What this means is insurance estimates could technically come DOWN by a $ 500.00 or more amount, & then where would these idiot salespeople be? Back @ the used car lot, that’s where.

I’ll tell you why nobody in the state employed or elected offices want to go after this - it’s because they don’t want to go on record as the person who got customers charged “extra money” for a roof replacement (when we all know that’s not the case).

The bottom line is that in our line of work, it’s a state jail felony to pay deductibles or give any compensation back to a customer (even for a “yard sign advertisement” payment). The criteria for a state jail felony in relation to insurance fraud is
A ) it’s a Class A misdemeanor (highest level) if the work is valued at $ 1,500.00 or more
B ) this is upgraded to state jail felony if the work puts someone at risk for bodily harm (pretty much any job where a ladder is involved is right there).

Ranting & raving, that’s what I am. :badgrin:

That’s funny. Around here we can’t even get them to enforce the roof licensing law. But, by gosh, just let your grass get 13" high and see how quickly you get a ticket.

[quote=“Agape”]and what do you do when the customer just says “sorry, but i dont have $250, let alone the $2,500”??

let me know how that works out for you.[/quote]

The same thing I do when any customer “can’t” pay me. Let my lawyer handle it. It is amazing how many checks I’ve received from people who couldn’t (wouldn’t) pay me. Most deductibles are 1% of the property value. If the deduct is $2500, the customer is living in a $250,000 home. He usually has the money.

[quote=“nazroofer”]

[quote=“Agape”]and what do you do when the customer just says “sorry, but i dont have $250, let alone the $2,500”??

let me know how that works out for you.[/quote]

The same thing I do when any customer “can’t” pay me. Let my lawyer handle it. It is amazing how many checks I’ve received from people who couldn’t (wouldn’t) pay me. Most deductibles are 1% of the property value. If the deduct is $2500, the customer is living in a $250,000 home. He usually has the money.[/quote]

I tell just about anyone that cares to stand still for 10 seconds that if they either voluntarily or @ the insurance co’s suggestion no longer have a $ 500.00 deductible that they should try to put a little bit of $$ away & over time, have the money. Put it in a CD or something where they can withdraw any time they’d like to but @ the same time, try to have it work for them.

Im in line with a few of you guys here but i will never pay a deductible period. As far as the law there is a thing called international building code you show the homeowner.

The system has been broken for years and will never get better but worse. Storm chasing is just another thing you have to outsell or you lose. Im big into 4 musts in a sales consult.

  1. urgency
  2. value
  3. education
  4. confidence

If you can not produce these 4 you got a problem and will most likely lose the job either way with or without the deductible. they are in no order but all must be present in the sales meeting period.

What does IBC have to do with the deductible?

& If you knowingly submit an incorrect invoice, receipt or contract to the insurance co., then you’re committing insurance fraud.

I’m not talking about there being hits to a stained fence, gutter damage or chipped window beading & you let the customer handle that on his own & the $$ goes against the roof portion.

I’m talking about a straight up roof only situation & improperly stated invoices, receipt or contracts for the sole purpose of recovering a depreciation that is not rightfully the customer’s (or yours) to retrieve.

Does it cost me jobs because I refuse to “cheat” the system? Sure. But @ least I can give the customer a better product for their dollar & not lose my ass doing it.

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[quote=“RanchHandRoofing”]& If you knowingly submit an incorrect invoice, receipt or contract to the insurance co., then you’re committing insurance fraud.
.[/quote]

Has anyone here seen or heard of an invoice being sent to an insurance company that states “the insured has paid the deductible” ?

Ive had more than one attorney laugh at the chance that someone could be prosecuted for this deductible nonsense.

The insurance companies set this up to benefit them(smaller claim payouts via high deductible). They also are able to keep premiums lower via the same mechanism, which makes policy holders happy.

And, most importantly for our purposes, the contractors profit margins are dropping by substantial amounts because most homeowners have little or no reguard for anything but money. Ethics in the USA are a rare commidity indeed.

We will make money this year and for that we are thankful. But unless someone can show me otherwise, I think the future of this particular industry(insurance restoration work) is not as bright as it once was. I always wondered how long it would take before the insurace companies figured out a way to reduce payouts, keep customers happy and reduce roofing contractors income.

The day has come and I am actively considering additional sources of income for our company.

thats my point im not doing insurance fraud. show the adjuster the ibc and see what he has to say when things are not done to spec. Remember there is always someone above him.

PeteW, nobody is saying there is a specific statement of “customer has paid their full deductible”, but if you have a total claim valued @ 12,500.00 that breaks down with a depreciation figure waiting on you (say, 5,000.00) & the ACV is 7,500.00 minus the customer's deductible of 2,5000… then submit a receipt or invoice that states you collected 7,500.00 when you in fact only charged the customer 1,500.00 (meaning you collected $ 6,500.00 total), then THAT is where the fraud is.

Hi,

If the property owner does not pay their deductible, then how do they get their full recoverable depreciation check from the insurance?

For Example:
Insurance company agrees to pay $8,200.00 for a new roof. They give the home owner a actual cash value (ACV) check for $6,400.00. from there If the contractor does not charge the owner the deductible of $500.00 and the insurance Co receives a copy of the contract or invoice from the contractor showing a discount of $500.00 then the Final check from insurance company will be for $1,300.00 not the $1,800.00. Because according to the contractors invoice they only charged $7,700.00

They turn in an a falsified invoice. I’m guessing that more often than not, the contractor sends in an invoice for just the recoverable depreciation and states the work is complete conveniently leaving out the contract amount. I’m guessing if worded right, the insurance just pays that invoice.

Thats interesting A.D,I have always had my complete and actual price on my finals.But then again for the most part I am added as a payee.

Met 2 adjusters yesterday and thankfully, both paid for our customers roofs in full.

1 of the adjusters is a senior staff adjuster from a major insurance carrier and he said the deductable amount paid is “between the homeowner and the contractor”. Adding “if you do your paperwork correctly and dont falsify the invoice to reflect work NOT done, we dont have any issue with that”

He added “if you have a totally separate contract(sign allowance, referral, etc) that is between you and the homeowner AND that amount is paid separate from the contingency agreement, it is totally ok with us”.

When asked if, to his knowledge, anyone has ever been sued/prosecuted for the deductable issue, he laughed and said “of course not, the whole point of high deductables is to reduce our exposure. And why on earth would we want to sue our customers???”

So, we can go back and forth all day but the reality is, our margins are slowly but surely being eaten away by high deductables, homeowners who only care about cost and contractors who are willing to work for nearly nothing. I am finding less and less folks who are receptive to the quality issue and care about one thing only-how much of their deductable are you going to absorb.

I sure hope I am totally wrong and am mis reading our future in insurance restoration, because it is not good.

YMMV

Pete, you’ve described what I suspect is the strategy. Why should the insurance companies care about the deductible? How many people do you really think are going to get someone cheaper when they understand only the insurance company benefits by that approach?

Unfortunately, the lowballers don’t just negatively impact the insurance restoration portion. You’re competing with the same guys or their cousins on the cash bid side. If anything, those people care more about the lower price because the entire amount is coming out of their pockets.