If you own a home in Texas, you may have heard about a new deductible law, HB2102, which was enacted in September 2019. This law was put in place to help homeowners avoid being scammed by shady contractors, and to clean up insurance fraud.
In this blog post, we will explore the details of this new law and how it will benefit homeowners in Texas.
Dictionary Definition of Deductible: de-duct-i-ble
Noun: North America
(in an insurance policy) a specified amount of money that the insured must pay before an insurance company will pay a claim.
Under the current Texas law, contractors are not allowed to offer to waive, or pay for the homeowner's deductible. Even under the old statute it was not allowed, however insurance companies in Texas pushed hard to fix a previously poorly worded statute, and make it extremely crystal clear what the law really means.
Under the new law (Proof of payment of the deductible is required to be sent to your insurance company)
If you had a claim previously, you may have had let's say a $3,000 Deductible. A contractor may ask you to put a sign in your yard to "Advertise" and pay you $3,000, or they would "Fail to Collect" $3,000 and say the homeowner never paid and write off the balance as bad debt. Worst of all, some contractors would complete the work for $3,000 less, and then send the final bill into insurance to collect on the depreciation, hoping never to be audited, looping the homeowner into committing insurance fraud with them.
If a contractor is caught doing this, they could face serious consequences, including fines and jail time. Homeowners who accept such offers can also face consequences, including fines, jail time, and legal action from their insurance company with the possibility of having their claim denied.
The law also requires contractors to include a written notice in their contract stating that waiving or paying the homeowner's deductible is illegal. This notice must be in bold, 14-point font, and be signed by the homeowner. (If you don't see this, then your contractor may not be up to date with the state. No matter how long they have been in business. In addition, the law requires insurance companies to provide written notice to their policyholders of the prohibition on waiving or paying deductibles. This notice must be in a prominent location and be provided at least once every two years.
But the news is not all bad. This law will actually benefit homeowners in the long run by preventing insurance fraud and protecting them from shady contractors. Without the temptation to waive or pay the deductible, contractors will be more likely to provide accurate and honest repairs. This will ensure that homeowners are not having corners cut on their repairs, and that they receive the best possible service.
Furthermore, this law will also help to clean up the home repair industry in Texas. By cracking down on illegal practices, it will help to weed out fraudulent contractors and ensure that only reputable companies are left. This will make it easier for homeowners to find trustworthy contractors for their home repair needs.
In conclusion, the deductible law, HB2102, is a positive development for homeowners in Texas. The details of the law require contractors to include a written notice in their contract, insurance companies to provide written notice to their policyholders, and provide serious consequences for those who offer to waive or pay for deductibles. This will go a long way in protecting homeowners from insurance fraud and shady contractors. By following this law, homeowners can rest assured that they are working with reputable companies and receiving the best possible service.
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