Homeowners Have To Pay The Home Insurance Deductible

It’s The LAW

A homeowner pays the deductible on a home insurance claim because it acts as a cost-sharing mechanism between the policyholder and the insurance company. The homeowner is responsible for a set amount of the claim cost (the deductible) before the insurance coverage kicks in, which helps keep premiums lower by discouraging small claims. Smaller roof damage issues are usually paid for out-of-pocket by the homeowner. Home insurance is designed to help cover more significant losses. In general insurance companies will offer a lower price for the home insurance policy if the homeowner selects a higher deductible.

Key points about home insurance deductibles:

Risk Sharing

The deductible is a way to share the risk of potential losses between the homeowner and the insurance company.

Lower Premiums

Choosing a higher deductible typically results in a lower insurance premium.

Discourages Small Claims

By requiring the homeowner to pay a portion of the cost, it discourages filing claims for minor damages.

Claim Threshold

If the damage cost is less than the deductible, the homeowner will usually not file a claim as it would not be financially beneficial.

Not Paying The Deductible Is Insurance Fraud

If a homeowner does not pay their deductible on a home insurance claim, it is considered insurance fraud and is illegal. Insurance policies are designed to share the cost of a roof damage claim. Any agreement between the homeowner and the contractor that results in a payment by the home insurance company for all or a portion of the deductible is not only a violation of the insurance policy terms, it is also illegal.

Key points to remember:

Definition of a Deductible

A deductible is the amount of money a policyholder must pay out-of-pocket before their insurance coverage kicks in on a claim.

Legal Implications

If the homeowner does NOT pay the home insurance deductible it is considered a form of insurance fraud, which can lead to legal consequences for the homeowner including fines, policy cancellation, and difficulty obtaining insurance in the future.

Contractor Responsibility

It is ILLEGAL for roofing contractors to waive, pay, or discount the home insurance deductible. Sometimes contractors attempt to obtain roof repair or roof replacement work from homeowners by offering a reduction or elimination of the deductible. These contractors will be breaking the law because they will be submitting a false invoice to the insurance company. This would be a case of insurance fraud with the assistance of the homeowner. These contractors should be reported to the insurance companies. Texas law is very clear on this matter.

“The Texas Insurance Code Section 707.002  prohibits contractors from waiving insurance deductibles. The TDI (Texas Department of Insurance) emphasizes that deductible amounts serve as a financial participation by the policyholder in the claims process. Section 707.002 of the Texas Insurance Code explicitly requires insureds to pay the deductible when their carrier pays a covered claim.

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.” from Insurance Claim Recovery Support

More information about home insurance deductibles is available from the Texas Department of Insurance