Insurance fraud or a good deal?

Severe hail storms are a way of life in north Texas. When they blow through, the damage to a home’s shingle roof is often severe enough to warrant complete replacement. That work can easily run over $10,000.

Homeowner’s insurance takes most of the burden, but it’s not unusual to have a 1%, 2%, or even 3% deductible (based on the price of the home, not the cost of the repair). That can often mean that the homeowner’s out-of-pocket costs for the covered roof repair/replacement can be $2,000 or more.

Many roofing companies will offer to perform the work on your home and “structure the charges” in such a way that you don’t have to pay a deductible… the homeowner’s out-of-pocket then being $0.

Other roofers – and the insurance companies – say that such schemes constitute insurance fraud. That it’s illegal and essentially that the point of the deductible is that’s what should be paid first and then the insurance company will cover whatever the remaining charges might be.

What I don’t understand is how so many roofers can so blatantly advertise illegal and unethical business practice. “You pay no deductible” is often emblazoned on the sides of trucks and on business cards. Why doesn’t the state attorney general crack down on such schemes? I’m sure the insurance companies can easily bring lobbying pressures to bear and stamp this out.

Or is it not really fraud? and not really illegal? As a consumer, why shouldn’t I be able to negotiate the best deal on my roof repair… especially if I can capitalize by bulking up the deal with other covered items, like skylights, paint, window screens, chimney tops, fence and deck stain, etc.?