Roofing contractors in Oklahoma are now prohibited from waiving insurance deductibles now that a new law has taken effect Nov. 1.
House Bill 1940, approved on March 30 by the state's senate, says that roofing contractors who are paid by property or casualty insurance proceeds cannot “advertise or promise to pay, directly or indirectly, all or part of any applicable insurance deductible” for providing any service.
If a contractor violates the law, the insurer is not required to consider that contractor’s estimate. The law also stipulates roofing contractors, adjusters and insurers giving an estimate must provide customers with written notification of the law.
Other states in the nation have passed similar laws, such as Florida’s recent insurance changes or Texas legislators who passed a law in 2019. Like those laws, Oklahoma’s legislation was in reaction to out-of-town contractors who arrive after a storm and offer to waive or pay for a homeowner’s deductible.
The law is designed to prevent roofing contractors from committing potential fraud by billing homeowners for the full cost of a project that insurance companies will pay with the exception of the deductible. The contractor then inflates the bill sent to the insurance company to cover the deductible.
“A lot of insurers don’t understand that their policy doesn’t allow for this, so sometimes they’ll get brought in thinking that a roofing company can waive their deductible,” said State Sen. James Leewright, co-author of the law, in March. “A lot of times that deductible gets moved back into the policy or into the cost.”
Jarod Lane, president of the Oklahoma Roofing Contractors Association, told CBS-affiliated KOTV-DT that in the past, it wasn’t uncommon for a roofing company to waive the deductible.
"If they waive the deductible and they let the insurance company know that, traditionally, that wasn’t fraud because the insurance company would just lower the amount of the claim to match the roofing company,” Lane told KOTV-DT.
According to McAlester News-Capital, State Rep. Mark Lepak voted against the legislation, saying there are many aspects that hide the true cost of a roof replacement. In some cases, that could be the roofer working with the insurance company adjustor.
“It looks to me like this is a question of some larger roofers not wanting to be undercut in profits by smaller roofers who might be willing to forego some the costs to get the business,” Lepak told McAlester News-Capital.