Waiving Deductible For Advertising Credit On ROOFS

readynwilling

I recently sold my very successful plumbing business. I went to prison for 2 years for totally unrelated fraud I did in '98.
I want to go into sales. I am too young to retire.
Roof sales appeals to me. Despite the felony conviction, I have a couple of reputable roofing contractors willing to take me on. I think I'd be great.
These are NOT storm chasing outfits, but they do some of that.
2 of these places told me they get business by waiving deductibles up to $500, if the customer puts a sign in the yard. I asked both if insurance companies sees this agreement, they said no.
I just want to get a gut feel, before I drop a couple of grand getting a legal opinion from my atty. Is this legal? I am in Ohio.
I will NOT rely on your opinion, but if enough people tell me it's not legal, I'm not going to drop the money to see my atty.
If enough say it seems okay, I will pursue with my atty.
What's your feeling guys?
I can not rely on the....oh the roofing contractor is doing it, not you as the salesman. That, in my situation, could easily wind up sending me back to prison.
I really appreciate everyone who can give me their opinion.

BamBamm5144

[Insert Sarcasm]

Yep. Perfectly legal. Don't you think if it was legal, those companies would let the insurance companies know of what they are doing? Also, it isnt our "opinion" if it is the law.

SLSTech

Here is one of many threads covering this - http://www.contractortalk.com/f15/insurance-fraud-57253/

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Grumpy

Is this post a joke!?

"Hey I have been convicted of fraud can I now have a position in your company with major responsibility and the chance to comit fraud again?!"

BamBamm5144

Grumpy - Around my area, everyday seems to be more of a joke than the day it was before.

NormW

Well, I dont know much about Insurance business work, I generally try to avoid it.

But you seem to have the background, to be a good salesman. Good Luck, and your smart checking into whats legal and illegal....

Grumpy

We FIX alot of storm chaser work. They do eat up a large portion of work, however also leave a good deal of repair work.

Santa's Helpers

The way you have worded it seems dishonest. However, I am sure it can be done in a legal way. Don't waive the deductible. There is compensation for advertising. It should have nothing to do with a deductible. The customer is not entitled to it and the insurance company can not benefit from it in the form of a lower cost/ payout. Separate the two issues.

Roof Chris

Not to be a downer, but telling homeowners that you will waive their deductibles prior to commencing the claim is indeed a fraud here in Colorado as it indicates you are going to do it regardless of the price. If the price is too low after the claim is completed, you will be forced to ask for more money, and you can't do that as the 1st $500-$1000 is legally supposed to come out of the insured's pocket.
I don't really care because we hit quotas without using the practice- and it gives our company more credibility- and we make more money- and it allows us to negotiate the files with the insurance companies without fearing an audit so our prices are 40-50% higher than my competitors when all is said and done with no difference in out-of-pocket cost to the homeowner.
If you "waive the deductible" and then request more money from the insurer after-the-fact you are covering your inability to sell quality to the owner with insurance dollars which is fraud.
More companies should get on the "no deductible waiving bandwagon" -trust me there's more money away from the "dark side" of roofing as I call it. It's just takes a little more work- and a lot more candor.

dougger222

Last year I talked to an adjuster who's very active in local Minnesota politics regarding insurance work and protocol. He asked me if I ever cover deductibles and told him maybe. Thinking he was going to give me the typical insurance adjuster/agent lecture about not doing that he said he talked to the state legislature recently and was told it's totaly legal to cover the deductible but the home owner can't profit on an insurance claim, of course unless he or she does the work themselves.

The same state legislature who said this also was the same state legislature that in 1998 pushed to get the matching policy in force. He had 5 missing shingles and wouldn't accept close enough. Instead he pushed for a new roof and got it setting precidence for all the other MN insureds ever since. The funny thing is by law the insurance companies don't owe for a match but they do it because they know what may happen in court again. Chances are they lawyer for the home owner would hammer down on the case of Mr. ***XX versus *Not named* insurance company in 1998.

What if you consider this situation. A home is hit by a big hail storm, we're talking siding, roofing, windows, fascia, gutters, deck, fence, you name it, O/H & P big claim, $60K. He or she has been approached by just about every storm chasing outfit in the nation and everyone has offered them either to cover the deductible or to even give money back in there pocket (heard it many times). Now they do there home work and call you the reputable local roofing contractor. After checking referrances and getting down to business they ask you, "Will you cover my $250 deductible?" Knowing every other company has offered to cover it by a yard sign allowance or to allow them to put them on the referance list do you say NO or for the chance at a $60K job say sure???

Recently had a home owner with a bigger deductible and we talked about ways to help cover some of it. What we ended up doing is having him call his neighbors and get them on board. So far have done his in laws, 1 neighbor, and have 3 other neighbors to do, two with large roofs.

Talked to a few staff adjusters for the big insurance providers and they have told me covering a deductible will not land you jail.

Recently at the Certainteed PRAC meeting it was said that covering deductibles in MN was illegal. Was out of town but my father and brother attended and they talked very shortly about it. Unless it was a new law change for 2010 it's still legal.

Anybody remember a few years ago when all the window glass companies used to give away free box's of steaks or gift cards for swapping out windshields? This was later to be found illegal as technicaly the insureds were getting free glass and more... The idea was to jack up the price and give things away to lure customers in. Had one of these outfits do my glass on a work truck before the law was changed. They charged my insurance company $1,425. A couple years later had another company swap out that glass with the same glass and it was $750.

Another way to look at it. Say you do a roof on a busy intersection and you would really want a sign out front. Say you offer to give the home owner $500 in order to allow a sign out front all Summer long. Is this also illegal too? Me thinks not... I know several storm chasers who hammer down on high traffic corner lots because of all the advertising they get. Did a busy corner lot last year for a non insurance job and landed three non insurance jobs down the street, all leads came from the sign. It was up for a couple weeks before it got stolen.

MJW

Tell me this......what greedy homeowner will turn anyone in for giving them money?

As far as I know Doug, it's a law, but I have no proof besides hear-say. Either way, it's not enforced.

It really kills me when you go bid a job and the homeowner tells you right out, "I am taking the cheapest bid, so bid it to get it, if you want it". Some will tell you right out that 'so and so' will give them $2K in their pocket if they do it.

Most Contractors aren't completely legal anyhow, so why would this little law stop any of them?? I've never seen anyone questioned at all for any legal citizenship, let alone a license.

Roof Chris

Listen- you can ask 3 insurance adjusters about this and get 3 different answers- and frankly- you're probably never going to get caught giving away a sign credit for $250 on a $60k claim-who cares right?
Shoot- for my out-of-pocket customers- I give a 10% discount up to $1000 if they sign with me at the closing- (this goes away if they don't sign right then- keep in mind I price in 50% profits on all work I do- sounds like a lot but I can break down the math if anyone is interested)
so why shouldn't this apply to my insurance claim customers as well?
The answer is- for 1- if you operate a truly successful contracting business- your prices should be 30-50% higher than insurance prices anyway- Xactimate pricing is garbage and doesn't account for my employees, healthcare, work comp. trucks, tax etc... Insurance companies will pay for a higher quality contractor- so doing storm work shouldn't pigeon-hole you into competing with chuck in a truck's pricing. If you waive a deductible- your position to negotiate is immediately eliminated if you are going to legally ask for supplements because the first $ comes out of the insured's pocket. If you just try to work within the insurance numbers you're forced to cover your costs by buying cheaper materials- paying cheap (questionable) labor- under-insuring yourself and taking major risks for low margins. I used to play on that side of the field but I've gotten a lot more sleep at night since we reorganized years ago and I saw the light.
just because you are a contractor doesn't mean that you have to scrape by on every job- we take on incredible liability every day- homeowners- god love them- need to be educated on the reasons for choosing a more expensive contractor ALA 80% of contractors are out of business within 2 1/2 years of installing your roof- so wouldn't you pay that extra $1000 to know your roof warranty is going to mean something a couple years down the road?
God bless my fellow roofers in the struggle- we'll make it some day...

dougger222

Joe, I'm not talking money back in the pocket of an insured after a claim I'm talking about no money in there pocket but they have a new roof or whatever. Yes, money back in pocket would border illegal. PM me if you want to know the MN legistlator who told the adjuster last year that it was perfectly legal to cover a deductible for whatever. You should know the name, again same person who changed the match statue back in 98.

Chris, I have a hard time getting top Xactimate prices from insurance companies. I would say out of 6-7 claims is what I want penny for penny. That being said for easy one layer walkers it's about $400 a square. For steep cut up roofs it's $450-500+. What's the secret to get say 50% more or in the case of the recently mentioned steep tear off $750 per square???

Please PM me the details on how to do it because that would be nice!!!


Lately with so many claims paid out since 06 more and more insurance companies are counting pennys. It's funny though, you can have excellent luck with one claim and the next one for the same company they don't want to pay anything.

BTW, two years ago at Certainteeds PRAC meeting one contractor said he charges 5-10% over Xactimate and all the roofers were shocked Xactimate was not high enough. A couple people quickly said, "You don't know how to use it then". One trick is to factor in the base service charges. As of right now only know of one big insurance company who allows this but they also like to use "recommended contractors" who act as adjusters who will cover deductibles up to say in one case I know of $10,000. Another one just added a second layer of shingles (15 year old house 1 layer roof). Perhaps the bleeder threw him off!

MJW

Doug, I know you weren't saying that and I believe you. It's just, that's what most people seem to expect. Too much talking going on when someone gets something cheap and pockets some money. There was a company in a nearby town that advertised roofing for $170 a square tear off and replace, materials included. This was right after the storms printed on a window on the main street in town. Now how can anyone compete with that?

Xactimate prices seem right on with most adjusters, but still low, IMO.

Not saying we get prices any higher, but to actually have employees and be competitive, Xactimate is not near high enough. We have gotten some decent pricing on siding though. Remodelmax is much more accurate for an employee based business. Xactimate is closer to rates of cheaper sub labor. Exact reason we cannot afford to hire even one good employee. Insurance companies are really getting away with murder, JMO. and the Contractors are just as bad or worse in most cases.

dougger222

Joe, tell me about, $14K to comp and $8K to liability in 2009. Getting really sick of it. Don't get me started on tax's!!!

I don't know for an easy walker $400 a square is pretty darn good, imo. Steep ones at $500ish good too.

Try bidding in an open market on small residential roofs. Hearing a lot of local roofing contractors at $250-275 a square this year.

Roof Chris

Again-#'s seem low to me. If you can collect the deductible from owners- run a 100% legit operation- you can comfortably charge insurers whatever you feel is reasonable- you just have to be able to back it up when you're explaining it to an adjuster. Get xactimate- you'll see that you can key in whatever you like including notes with explanations of why some items are required by code-why you can't redo a roof without pulling step flashing etc. Who cares what the competition is doing- if you're not differentiating your business and all you sell are shingles and nails, not peace of mind, the only way your customers will make a decision is with price and good contractors can never compete in that realm.

dougger222

I run a legit operation, been doing so for 12+ years, my father for 38 years, my uncles, cousins, and brothers are all roofing contractors, third generation. I have had Xactimate since 2007 and write a lot of "notes" after line items indicating why and how. I sell on more than price, a 30 year labor warranty is more peace of mind than most in my realm. Some charge additional for a 10 or 15 year warranty and most have only been in business for a few years.

With only three posts (on this topic total) comming on here preaching can I ask were your from? Let me ask you this, what's you job title? How long in business? How many legal employees?

Not trying to knock you but newbs typicaly don't get the credit they may deserve until we know more!!! Just need to know more is all... As a matter of fact they have an intro page on this forum.

If you don't want to answer any of the questions that's fine... Of course as you know this is public information

And since I'm getting a bunch of Smilies going... For getting big bucks on insurance work you deserve a

seeyou

I've read through this with great interest because the stormer chasers that came through here a couple of years ago were "paying" the deductible. Not sure how they were doing it.

It would seem like it would be legal to strike any deal you wanted with the homeowner. Giving them an "advertising credit" equal to their deductible would not be problematic, but giving them a check for the amount of the deductible might. But the result is the same: the job got done without the HO going out of pocket.

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Grumpy

I would just like to say that after dealing with insurance work again for the last few weeks, I can not stand insurance work. There is just way way way way too much bull chit involved. I am really considering turning everyone down who says the word "storm damage"... and it's not like I am in a financial position to turn down work, but from a sanity point of view I am just ****** DONE!

dougger222

Thomas, what kind of issues are you having? Getting work denied? Not getting paid enough? Waiting too long for mortgage compaines to release funds? Deal better with home owners than insurance adjusters? A good friend of mine who's also a gc is hired by another gc to only work insurance claims. All the jobs that are not insurance the owner himself deals with but the insurance jobs my friend deals with. That being said he meets with adjusters, writes estimate, and negotiates. You may want to consider hiring a person who specializes in this? My cousin has done this for over ten years and excells at it while many others don't like it or don't want anything to do with it.

What I've learned is really good high quality high dollar contractors dealing with insurance companies don't always work the best. Say if you get more than the insurance companies pay on average you will not fare well with adjusters and insurance personal. I'd venture to say one in only fifteen to twenty jobs will the insurance company pay whatever your estimate is. In most cases these are high end homes/customers.

Know of a few contractors who want nothing to do with insurance companies. One tells them they are too high so they run away from all the other potential jobs. If you do a lot of insurance work the numbers should be good enough to make decent money.

That's funny though, I'm hoping for hail to be able to get locked in for Fall work/next year and your complaining about it!!!