Is It Illegal for Your Roofer to Pay Your Deductible?

Is it illegal for your roofer to pay your deductible? Your roofer paying your deductible used to be acceptable, or a legal grey area. But now, in most states it is outright illegal for your roofer to offer to pay your deductible, as they must be committing fraud when they do so. Plus, this shady practice is often a red flag that the roofer is willing to commit other fraud and bad business practices.

Why Is It Fraud When a Roofer Pays for a Deductible?

Home insurance works differently than it used to. In the past, you made a claim with your insurance company about your damaged roof. The insurance company determined how much they owed you, subtracted your deductible, and then sent you a lump sum. You could then choose to do the repairs to your roof or not. You could choose an expensive roofer, or a cheap one. You could even perform the roof work yourself, without violating your agreement with the insurance company. Or you could take that insurance money and gamble it away—it was up to you.

Now, many insurance policies cover the exact cost of replacing or repairing your roof. That means they need to know the cost to know how much to pay you. They find that out, through a roofer, subtract your deductible, and send you the money, often in installments. You can’t complete the roofing work yourself, and you certainly can’t use any of that money on anything other fixing your roof.

This means that when a roofer offers to cover your deductible, they are taking a loss. Afterall, the insurance company is only sending them the exact amount they need to do the roof repair or replacement, right?

Except, of course, it doesn’t make sense for the roofing company to take a loss. What they are doing is telling you that your roof repair will cost a certain amount and telling your insurance company it will cost much more. They pocket that difference and incentivize you to go along with the scam by offering to pay your deductible.

Who Does This Scam Hurt?

Really, this is a scam that takes advantage of vulnerable homeowners who are worried about covering their deductible, or who aren’t aware of how these new insurance policies work. The insurance company may hold both the scammer and the homeowner responsible for this scam.

Plus, a roofer who is willing to take the risk of scamming an insurance company, is typically also willing to take the risk of scamming homeowners too. They may do a poor job, and further cut corners in an attempt to pocket even more money. For example, they might tell the insurance company that all of the flashing on your roof needs to be replaced. But then they will reuse the old flashing, which may then result in a leak soon after.

Protect yourself from this scam by refusing to work with a roofing company that will pay your deductible. If you need help affording the deductible, seek a loan from your bank, or another third party.