New Texas Law Targets Scams

Beware of deals that sound too good to be true!

Imagine this scenario. You answer the door to find a man who introduces himself as a contractor who’s been going through your neighborhood, and he noticed you have some damage to your roof. The roof might not be leaking now, he explains, but you‘re not likely to last too many more storms before you have a problem. You haven’t budgeted for a roof replacement, though, so you’re about to refuse when he adds:

“We’ll pay your deductible for you.”

That sounds great, right? After all, the deductible is the amount you have to pay before your insurance company gives you the rest. Let’s use small numbers for a moment and say your deductible was $1, and the bill was $10. This means the insurance company is going to give you $9 toward that bill, but only after you cough up the $1. But we’re normally talking about thousands of dollars, so getting someone else to pay that deductible sounds like a good idea, right?

Wrong, for one very simple reason: it’s illegal, because it’s insurance fraud. And now, thanks to a new Texas law, your insurance company can withhold payment until you provide proof that you paid the deductible.

Unscrupulous individuals have long gotten away with this scam. They sweet-talk you into a repair to your car or house by saying the insurance isn’t going to cost you anything, or they’ll give you a rebate, or provide some other method of removing your deductible. This, however, allows them to get away with providing a substandard repair; they count on you paying less attention because it’s not your money they’re spending. They cut corners, inflate estimates, and make repairs that weren’t needed, all to scam the insurance company out of money. And that really means out of your money, because when that repair fails and you need it fixed again, that bad repair is going to make you a greater risk for the insurance company. Your rates will go right through that badly-patched roof over your family’s heads.

By law, all contracts worth more than $1,000 and which will be paid by an insurance claim must include the following in clearly-legible boldface 12pt type:

"Texas law requires a person insured under a property insurance policy to pay any deductible applicable to a claim made under the policy. It is a violation of Texas law for a person or business paid wholly or partly from proceeds of a property insurance claim to knowingly allow the policyholder to fail to pay, or assist the policyholder's failure to pay, the applicable insurance deductible."

Read your contracts! If you don’t see this text in there, it’s a sure and certain sign you’re dealing with a scammer. Don’t be another victim.