Auto Insurance Deductible Waivers In Texas: Legal Or Not?

In Texas, it is illegal for a contractor or roofer to waive an insurance deductible without the insurer's consent. This law came into effect on September 1, 2019, and is a result of roofing contractors finding creative ways to reduce the deductible cost that Texas homeowners have to pay. While it is not illegal for a mechanic to waive a car insurance deductible, it is illegal for them to overcharge the insurance company to make up for it.

Waiving an auto insurance deductible in Texas is illegal

In Texas, it is illegal for a contractor or roofer to waive an insurance deductible. This law came into effect on September 1, 2019, and was created to protect consumers from roofing contractors who were not requiring payment of property insurance deductibles on claims.

The Texas Insurance Code, statute Chapter 707.002, states that it is a violation if a contractor does not collect the contractual deductible during a repair or replacement involving an insurance claim. This includes paying, waiving, absorbing, or otherwise declining to charge or collect the amount of the insured's deductible. The law also prohibits contractors from providing a rebate or credit that offsets the amount paid by the insured as a deductible.

Violations of this law are classified as a Class B misdemeanor, punishable by up to 180 days in county jail and/or a fine of up to $2,000 for both the contractor and the insured.

To protect yourself from unethical practices, it is recommended that you contact your insurance company to verify if a contractor has been authorized to waive your deductible. It is ultimately the policyholder's responsibility to make the required payments, and failure to do so may affect policy coverage. Additionally, using a local contracting company and researching their business can help ensure you are working with a legitimate and ethical business.

It is important to note that while it is illegal for a contractor to waive your deductible, it is not illegal for a mechanic to do so. However, if you are unable to make the payments to cover the waived deductible, the mechanic has the legal right to possess your vehicle until you pay it off.

It is insurance fraud if mechanics overcharge insurance companies to waive deductibles

In Texas, it is illegal for mechanics or contractors to waive insurance deductibles. This practice is considered insurance fraud. While it is not illegal to ask a mechanic to waive your deductible, it is illegal for them to overcharge the insurance company to make up for the waived deductible. This is considered fraud, and both the mechanic and the insured could face penalties, including fines or jail time.

According to Texas law, it is a violation if a contractor does not collect the deductible during a repair or replacement involving an insurance claim. This includes any attempt to assist the insured individual in avoiding the monetary payment of the deductible. As a result, mechanics or contractors who offer to waive deductibles may be engaging in illegal and unethical practices.

To protect yourself from these practices, it is recommended to contact your insurance company and verify if the contractor has been authorized to waive the deductible. It is also advisable to use local companies and research their reputation and business practices. Getting multiple estimates can help identify realistic project costs and avoid potential fraud.

Texas law requires proof of payment of the deductible

The Texas Department of Insurance states that contractors may provide an estimate for the work that is higher than the actual cost to repair property damage. The contractor then uses the excess money paid by the insurance company to cover the policyholder's deductible. This practice is illegal and constitutes fraud.

To protect yourself from unethical practices, it is recommended to use a local contracting company and research the business to ensure they are reputable. Ask the contractor for references and check them. Look online to find out if they have had any complaints or bad reviews. Be wary of contractors who go door-to-door looking for business.

It is important to obtain multiple estimates from separate companies to determine a realistic project cost. Be cautious if one estimate is significantly lower than the others, as this may indicate that the business intends to make a profit by cutting corners or using lower-quality products.

If you encounter a business illegally claiming to waive insurance deductibles, report it to the Better Business Bureau and the Office of the Texas Attorney General.

Consequences for contractors who waive deductibles

In Texas, it is illegal for contractors to waive deductibles or help customers avoid paying them. Deductibles are part of a customer's home insurance policy. Contractors who offer to waive deductibles may be sending false information to the insurance company about the cost of repairs, which is a fraudulent act.

Contractors who illegally waive deductibles may face fines up to $2,000 and may face jail time of up to 180 days. This penalty applies to both the contractor and the insured.

To avoid falling victim to illegal and unethical practices, it is recommended to contact your insurance company and verify if the contractor is authorized to waive the deductible. Using a local company and researching the contractor's background can also help protect yourself from potential scams.

Consumers can protect themselves from contractor scams

In Texas, consumers can protect themselves from contractor scams by following these guidelines:

• Contact your insurance company: If a contractor offers to waive your deductible, get in touch with your insurance company to verify if they have authorized this claim. Ultimately, it is the policyholder's responsibility to make the required payments, and failure to do so may affect policy coverage.
• Use a local company: Opt for local contractors as they are more likely to be legitimate businesses, and you can visit their office if any issues arise during or after the repair work.
• Research the contractor: Conduct an online search by entering the contractor's name along with terms like "scam" or "fraud." Be cautious of overly positive reviews as they may be fabricated. Check their accreditation on BBB.org or similar platforms.
• Get multiple estimates: Obtain a minimum of three quotes from different companies to determine a realistic project cost. Be cautious of significantly lower estimates, as they may indicate the use of lower-quality products or shortcuts.
• Verify insurance and licensing: Ensure that contractors have disability and workers' compensation insurance. Also, check that they have the necessary licensing and are bonded.
• Get the agreement in writing: Carefully read the contract, ensuring that it includes the work to be performed, costs, projected completion date, and provisions for changes and dispute settlement. Do not sign a contract with blank spaces.
• Demand satisfaction: Do not sign completion papers or make the final payment until the work is completed to your satisfaction.
• Report concerns: If you suspect fraud, report it to local law enforcement, the Texas Office of the Attorney General, or the FEMA Disaster Fraud Hotline.
• Be cautious of common scams: Be wary of contractors who ask for large upfront payments, pressure you for immediate decisions, or suggest borrowing money from a specific lender.

Frequently asked questions