Contractor "paying" Roof Deductible - FRAUD or Not? Legal or Not?

Discussion in 'General Insurance Agent Discussions' started by readynwilling, Nov 19, 2009.

  1. readynwilling
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    readynwilling Member

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    Many of you read my post last night. Basically I am recently out of prison. I will cut/paste some of it below, so you realize my situation.
    I would like to get into insurance, but realize with my situation, it may be very, very difficult. I accept and understand that.

    A friend of mine today hooked me up with a roofing contractor, who is looking for salespeople. They do alot of storm damage work. Part of their gig is they agree to "pay" or waive or however you would like to phrase this, the homeowner's deductible. I am in Ohio. Many, many contractors not only do this, but advertise they do this. Same with collision repair shops for that matter.

    I have learned from real estate that just because it's "industry standard" or "everyone does it", does not mean it's a legal practice. Everyone was pushing b.s subprime loans (thankfully I didn't), and
    many of those people are in prison now.

    I am not in the position, nor will I let myself be put in the position where I do anything even slightly illegal (that is like a little bit pregnant - really no such thing) ever again. I make a lousy prisoner - I hate prison, and love my family and freedom. So....I am Mr. by the book now.

    Here is my question? This is obviously an "accepted practice", but is it legal. I am NOT asking for a legal opinion here, NOR WILL I RELY ON YOUR OPINION. I am looking for a blatant yes or no. If it seems enough people blatantly think it is illegal, well it likely is, and I will drop the idea. If enough people think it's legal, I will then ask my attorney to spend some time researching the issue for me, and give me a written legal opinion he can stand by. I just don't want to drop $2000 or so for an opinion in writing, if the answer is obviously a no. So please give me your thoughts on this. I really looked over the posts, did searches by keywords, and could come up with nothing on the subject.

    I really appreciate everyone who posts an answer. Thank you and God Bless you.

    Excerpt on my situation:
    I am in Ohio. Just finished serving a 20 month sentence in federal prison, for crimes committed in '98-2001 (it took years for them to allow me to plead guilty). I received my grand jury subpeona in '02, did not got go to prison till '08.

    My charges I pled to were:

    1) Subscribing to a Tax Return which he did not believe to be true and Correct as to Every Material Matter

    2) Making False Documents Containing Materially False Statements

    Prior to '02 I was in real estate, and a top, top, top performer ( 5 years in a row, multiple 6 figure income). In '03 took a break, and started a drain cleaning business, which won the Angie's List Super Service Award 3 years in a row. Terrific comments from clients testifying to what a great job we did (I sold the business before entering prison). Why I bring this out, is I feel I rehabilitated myself even BEFORE I went to prison. I screwed up (BAD), and paid bad.
     
  2. readynwilling
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    readynwilling Member

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    Re: Contractor "paying" Roof Deductible - FRAUD or Not? Legal or

    why is no one willing to answer this question?
     
  3. LGilmore
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    LGilmore Well-Known Member

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    Re: Contractor "paying" Roof Deductible - FRAUD or Not? Legal or

    Simple answer "depends". Save your money and call your state's office of the insurance commissioner. Tell them what you've asked here (skip the jail part, not relavent)and you will get the legal answer for your state.

    50 states, fifty sets of rules.
     
  4. djs
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    djs Super Moderator Moderator

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    Re: Contractor "paying" Roof Deductible - FRAUD or Not? Legal or

    I agree, this is a question that doesn't have any single answer. I doubt it is illegal in any form, but then, I've never asked. I don't have contractors here in California that will do the same thing.

    Carriers will have a huge problem with this, but that is more their problem. The deductible is the barrier to a claim. No deductible, then the barrier goes away and more claims get filed. Just the way it works.

    Dan
     
  5. CHUMPS FROM OXFORD
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    CHUMPS FROM OXFORD Well-Known Member

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    Re: Contractor "paying" Roof Deductible - FRAUD or Not? Legal or

    I'm not exaggerating. About 90% of the homes in my neighborhood have or are getting new roofs (within the last 6 months).
     
  6. arnguy
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    arnguy Well-Known Member

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    Re: Contractor "paying" Roof Deductible - FRAUD or Not? Legal or

    Gosh, you must have s--tty weather out there in Ohio, Ed. Or maybe it's the construction of the shantys in your neighborhood.:laugh:
     
  7. CHUMPS FROM OXFORD
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    CHUMPS FROM OXFORD Well-Known Member

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    Re: Contractor "paying" Roof Deductible - FRAUD or Not? Legal or

    High winds and hail this year did it. And yea...those little wooden shanties don't help either!
     
  8. alphawave2k
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    alphawave2k Well-Known Member

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    Re: Contractor "paying" Roof Deductible - FRAUD or Not? Legal or

    I can understand your apprehension in getting involved with anything that even has a hint of questionable practice. I am not a lawyer, nor have I been staying at Holiday Inn's recently, but for what it's worth, the contractor is basically giving a "special" discount to the homeowner. It just so happens to be identical to his deductible. What if the contractor wanted to sell it below cost? Not a smart business decision, but not illegal, unless he is so big and dominant that will drive others out of business around him.
    This was actually legal, until J Paul Getty with Standard Oil decided to take over the petro business back ???
    The contractor is not doing anything illegal from my standpoint. The insurance sales person and or carrier cannot get involved in any rebating...that would be the only big NO-NO that might come into play, but I don't see that here.
     
    Last edited: Nov 20, 2009
  9. djs
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    djs Super Moderator Moderator

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    Re: Contractor "paying" Roof Deductible - FRAUD or Not? Legal or

    Alpha -

    The issue is more who should get the discounted price. A deductible is supposed to be the first dollars paid, not the last. Technically speaking, if the price is reduced, the carrier should pay less, with the insured still paying their deductible.

    I know health insurance companies raise a stink on having some sort of coverage for deductibles. It tends to up the utilization considerably. I know body shops that work for carriers tend not to do this, since it effectively becomes a problem with the relationship they have with the carrier.

    I'm guessing, but I would assume most carriers don't mind this for short periods after a big event. You have a big rainstorm, the work needs to be done, the insured saves a bit of money, no big deal. When the roofer starts using it to generate business (not just attract existing business), it will quickly become a problem. The problem is the carrier can't really distinquish between the 2, so they probably frown on this in its entirety.

    In short, the carrier won't write a bigger check because the roofer is providing a discount, but they will be concerned about writing more checks.

    Dan
     
  10. alphawave2k
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    alphawave2k Well-Known Member

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    Re: Contractor "paying" Roof Deductible - FRAUD or Not? Legal or

    Dan, I am not trying to be argumentative, and I said I wasn't a lawyer so that already covered a lot of waterfront. And if I"m wrong I will eat my dirty shorts...if I can find any

    Dan[/quote]The issue is more who should get the discounted price. A deductible is supposed to be the first dollars paid, not the last. Technically speaking, if the price is reduced, the carrier should pay less, with the insured still paying their deductible.[/quote]

    The discount can come at the beginning or end...does is really matter? That's between the homeowner and the contractor. I know this because that's the way it worked for me personally. The insurance company came over inspected the roof , measured it, estimated the cost and said this job is worth X. I then upgraded my roof to X+Y b/c I wanted prettier shingles. Now the homeowner could look to the roofer and say, here's what I'm willing to pay you, or the roofer could say I am going to give you this discount, front or back end. Does it really matter?

    In health insurance you can carry a supplemental policy that is not coordinated with your regular health policy that could pay off the deductibles, coinsurance and possibly even higher. Not sure what the connection is here or what your point really was, but you injected this.

    The only thing the insurer might be ticked about is the fact that most homeowners don't know to pick up the phone and call them to say, my roof got damaged you need to cover it under my homeowners. Either they don't know it, or are afraid to make the call. The contractor is just nudging them to claim their legal right. No one has broken the law yet from what I can see, nor done anything unethical.
    Again, that's between the homeowner (insured) and whomever he wants to contract out. There might be a stipulation by the company that he has to be a licensed roofer, depending on the state. Until recently, builders in GA didn't have to have a license. My home built quality is proof of it.
    I know we're mixing in 3 different insurance markets, home, auto and health, and I've had to deal with them on all fronts. Many or some auto insurers tell their clients they have to go to this body shop or get at least 3 quotes or whatever. I have heard that if you insist you can tell them where you would like to get your car fixed even if it's not the lowest quote.
    While I am an insurance agent, I have been on the other end for dealing with insurance company's from an insured's point of view, and in my opinion they can be jerks.
    DJS, as mentioned, I wasn't looking for an argument, but I understood the essence of readynwilling's post to be, is this illegal? My contention is that it wasn't, remember my earlier disclaimers. If you agree with this fine, if not, no problem. It just my opinion, and he said he wouldn't rely on it anyway.
     

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