This is insurance fraud, and he cleverly set it up so you committed it without him being much of a party to it. He is inexperienced in his trade, or acutely aware of the procedures to defraud carriers. What's your contract look like? I would remove the portion of your post about it. It's going to be expensive if you get audited.

https://www.tdi.texas.gov/tips/can-a-contractor-waive-my-deductible.html

https://www.lanelaw.com/collaborate/roofing-contractors/blog/what-the-hb2102-law-means-for-roofers?hs_amp=true

My goodness...This is not insurance fraud. I am paying my deductible. I just sourced the materials for cheaper.

Why is it any better or more legal for a roofing company to pocket $10k versus me sourcing the materials, paying my deductible, and saving $10k. The job gets done. There isn't anything in the law about the insured being NEGATIVE the deductible amount. If I pay the deductible, for all materials and services and its less than the initial insurance check and depreciation check summed up, that money is free to be kept by the insured provided the insurance contract doesn't state any unused money has to be returned. So it would be better if I was NEGATIVE $6k and the roofer was POSITIVE $16k? Please.

Should have known a roofer would say that.

Enviroag02 said:

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I pay for everything and contractor submits any paperwork (proof of completion) to the insurance including his cancelled deductible check.

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So, let me ask you this. If your roofer didn't buy materials. He didn't pay for the labor. Then how does he legally submit an invoice stating that he did anything? He didn't do anything. You did. So he submitted an invoice for a full amount when he actually paid absolutely nothing. This is fraud. Then, he took your deductible and did not collect depreciation, this is also fraud by way of refunding your deductible.

The shingle cost 145/sq vs. 245/sq from insurance is not apples to apples. the 245/sq the insurance quoted is for materials, tear off, reinstall, and all associated labor.

It sounds like this 'contractor' figured out how to make a homeowner pay him his commission or profit directly, while making the homeowner hold the burden of financial responsibility. You could have secured your own labor and done everything you just did and cut the contractor out completely and never sent him a penny. If you wanted to use his 'expertise', then you could have simply paid him a project management fee and been done with it and totally legal.

It's a highly regulated and scrutinized industry. The process is important and not everyone understands it. Some, in our trade not only understand it, but take advantage of it and put homeowners in precarious situations.

I suspect there is more to this claim but I cannot comment on it without seeing the carrier scope of work.

Be aware that the carriers don't 'make up' numbers. Their scope and estimates are based on costs for the area and zip.

Enviroag02 said:

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You are wrong about the shingle costs. That is JUST for the shingles per my estimate paperwork. Ok so the amount I pay him which corresponds to my deductible is his project management fee. My contractor is doing something. He ordered the materials, I'm paying his roofing crew, and he's submitting the completion report.

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From the audience, it seems to me his issue is that it sounds too good to be true and he thinks you may have gotten taken advantage of by an unscrupulous third party. He's made it clear that without seeing all the paperwork he can't be sure.

From the peanut gallery I think your personal shot at the end that I italicized was a bit over the line. Jason's always struck me as a reasonable poster.

So how much did the completion report show was spent on the repairs?

I understand your frustration with roofers. There is a catch here and I am trying to understand where it is. I feel like it is in the certificate of completion.

EDIT: I am editing this so as not to incriminate anyone.

I know of no carriers that will release depreciation based on a certificate of completion unless there is an itemized or at least an invoice with a dollar figure attached to it. Therefore, this is where the fraud comes in. The contractor may have submitted an invoice with a full dollar figure on it for things he did not incur. In fact, it cost him a fraction of that because he was out no money at all. you paid for it. That is where fraud is in the eyes of the carrier/TDI.

I don't really have a dog in this fight and don't really want to get into it the specifics of the OP....

However, as someone who just proactively replaced a 25 year old roof, the industry is eye opening. I reached out to roofers to replace my roof, most of them responded by telling me that I had some kind of hailstorm I never knew about 18 months ago and they could get the roof replaced by insurance. Weird my truck wasn't damaged in this hailstorm, but anyways....

A decent amount of them then sent me a quote if I wanted to replace the roof out of pocket and a quote if insurance did. I understand it would be more with some of the red tape, etc., but most were 2.5x the price....

So yeah, seems like it's an area ripe with fraud....

Enviroag02 said:

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Work has not kicked off yet, nor have materials been ordered. I just know what everything costs at this point.

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I somewhat agree with you but

1. Seems like your basically having a bunch of gypsies replacing your roof
2. Could be no warranty after it is done if it is done right or weong
3. Roofers could actually file a lien on your house because they were not paid what they quoted your contractor
4. Who has the insurance on these guys when one of them falls off the roof
5. What happens if rain storm comes up as Inhave seen happen and half your roof is off

These are just a few questions I have and all those questions may have already been discussed and dont get me wrong I am all for saving money but just be careful

I have to agree with Jason on this. Let's put numbers to it.

Assuming it cost you $20k to replace your roof, but the total claim is for $30k. There are 2 possible scenarios:

1) invoice sent to your insurance company for the $20k. Insurance is then only going to pay for the cost you incurred, nothing more. Congratulations, you just saved you insurance company $10k.

2) invoice sent is for the $30k. You paid $20k. Congratulations, you just submitted a fraudulent document to the insurance company. Possible consequences include a fine and/or jail time.

Will you get caught? Probably not. You have to decide if it's worth the risk though. I do some roofing sales part time and I will agree that door knockers are annoying, but they wouldn't do it if it didn't work for them. And I'll agree there are some shady individuals in the industry. Your best bet is always to call the highly rated local roofer and have them do it. He didn't quote you that price because he knows what insurance pays out. He quoted you that because that's the cost. Insurance quoted that on your claim because that's the cost. It's no more complicated than that.

Every homeowner I speak with that thinks they found a new loophole is just finding a new way to possibly get in trouble. Your slab and your roof are the 2 most important components of your house, in my opinion. Why cheap out when your already getting the work done for 1/4 of the normal price?

None of this adds up and reeks of fraud/scam.

.I would not do what you are suggesting OP.

There are some roofers who will forgive what you 'owe' for your deductible, that is borderline but no where near what you are describing, you are playing with fire.

Good luck

If your roofer is willing to commit fraud and f over the insurance company, what do you think he is doing to you on your job?

Since you have not started this project, and hopefully no money has changed hands, then you are in a good spot to do a little more homework on your contractor.

For what it's worth, In the state of Texas you have a 3 day right of rescission. You can kill that contract in writing before that time period.

LINK: https://www.texasattorneygeneral.gov/consumer-protection/home-real-estate-and-travel/door-door-sales-3-day-right-rescission

As I have offered to several on this board, my phone and email is always open with no strings attached and no BS involved.

Taking pot shots at a poster who is trying to help you which you know nothing about isn't a great look for you. Flagged for being hateful to someone who is just trying to help. Jason is good people.

javajaws said:

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Jason is good people.

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This. High integrity.

The quick answer on replacing / repairing with the check from insurance vs pocketing the check and either doing the repairs cheaper or not at all is… it depends. Check your policy.

Insurance is typically setup as reimbursement of costs incurred to repair or replace. If you do not use the proceeds for this, you are possibly committing fraud depending on your policy and your state laws.

As Jason has provided solid advice on this thread and others, roofing replacement in Texas in particular has a lot of scrutiny and additional "rules" due to the prevalence of fraud.

I had mine replaced last year - $60,000 claim. Roofer tried to work with me on the deductible. Advised him TDI does not play games and to get off my lawn. In the end, our approach was to max out the claim with insurance to get every detail repaired and included in the claim - repainting trim, improved gutters, restrain garage doors and cedar beams, etc. I paid contractor about $5k additional above the repair, plus my deductible.

I also got audited due to size of claim. Not a single worry from me when the insurance rep came by to see "how everything went". Had I done what the OP suggested, it would not have ended well.

Also, not performing repairs can invalidate your policy for future claims. And not filing a claim on a damaged roof and waiting on "the next storm" can cause issues as well.

If it hail, have a door knocker run a drone over your roof and send it to your adjuster. Do NOT let guys climb over your roof. Just walking on your roof can do damage.

Also make sure your personal liability policy is in place before work is done. A roofer breaking his neck falling off your roof should be on the roofer and their insurance. If your dogged barked at him and made him fall, well an attorney may have some thoughts.

Do NOT do what the OP suggests, in my opinion (and experience).

southernskies said:

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I'm not privy to the insurance claims industry since I've never had to submit one, but how is this different from your car getting lit up by hail, insurance company cuts you a check to do some body work, and then you never get the body work done and just pocket the cash? Is that insurance fraud too or is it legal to pocket the cash and count the payout towards the eventual realized depreciation when you sell the car?

I understand with this situation the roof has to be replaced. But let's say it was a water leak inside that ruined your floors. Insurance company would pay to replace whatever flooring you had previously, but you choose to just stain the concrete instead. Can you not pocket the cash difference?

Excuse the naivete here.

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The problem here is that it sounds like he is having the roofer invoice the insurance company for $10k worth of work/materials that was never actually spent. That is fraud.

The policy covers the actual cost of replacement. The adjusters valuation is an estimated full cost. If you get it done cheaper, you don't get to just invoice for the full valuation.

southernskies said:

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I'm not privy to the insurance claims industry since I've never had to submit one, but how is this different from your car getting lit up by hail, insurance company cuts you a check to do some body work, and then you never get the body work done and just pocket the cash? Is that insurance fraud too or is it legal to pocket the cash and count the payout towards the eventual realized depreciation when you sell the car?

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Other posters already touched on the answer to these questions but here is my opinon. Caliber hit the nail on the head.

TLDR: No. But you won't get enough from the first check to do a roof, usually. They will invoice for way more than it actually cost and send a fraudulent invoice to trigger release of the money. Auto insurance for a hail claim may send you one fat check. In that case, if it covers more than the cost, so be it. It's not fraud. They paid you up front to repair the vehicle. You repaired the vehicle.

LONG VERSION:

Let's convert your example to a roofing example so I can kind of stay in my lane.

You get a giant hail storm. Roof is totaled. Insurance company sends you a check for $20,000.

You can quite literally do what you want with that. In this situation you have a couple of options:

1.) Find a roofer to do it for less than the check and keep the remainder for upgrades or use it to go out to dinner.

2.) Pocket the cash and do nothing to the roof.

In the case of option 1, is it legal? Well, as the other posted said, that depends. Most policies state that you are not to profit on a claim. Will anyone know? No. Because they sent you a check. It's yours. You didn't ask them for more. The insurance inspector (if he comes out) will see a new roof and it's good to go. It's in your pocket. It's not totally ethical, but it's going to be OK.

In the case of option 2. Is that legal? Not really. Definitely not ethical. But...here's the catch. If you don't use it to replace your roof and the insurance company wants to verify your roof is repaired for any reason at any time before closing the claim, then you will either end up with an uninsurable home, or, if you get a serious leak or future damage, they may deduct the amount they already sent you from the next claim. Or, they may take more drastic measures to recover the money.

Now, here is the deal. The example RARELY happens like that aside from the case of a new roof getting damaged shortly after install because....

Most everyone has an old roof which means your insurance company is going to send you TWO CHECKS. One is the ACV and it's sent up front. The second is the depreciation check which is the remainder between the ACV and the RCV on your estimate. That check only gets sent out once they get an invoice and validate that the roof was completed. This is where things get illegal on a hard line black and white no doubt kind of way. They may send you $5,000 up front. That's not enough to complete the roof. They keep the rest until your contractor bills for it. If you get 5,000 bucks, pocket it, and then ask them for the rest and have no intention of using it for the roof, its fraud.

See this link for an example of someone that got busted for inflating costs and billing more than required:
https://www.justice.gov/usao-co/pr/owner-and-manager-disaster-restoration-inc-sentenced-prison-conspiracy-and-mail-fraud

Quote:

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I understand with this situation the roof has to be replaced. But let's say it was a water leak inside that ruined your floors. Insurance company would pay to replace whatever flooring you had previously, but you choose to just stain the concrete instead. Can you not pocket the cash difference?

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TLDR: Same as your first example. You got enough money to repair the floor, you repaired the floor. It cost a little less, so be it, keep the remainder.

LONG VERSION

If it cost less than the money they sent you, then you do what you want. What you can't do is stain your concrete for $800 and then invoice insurance for replacing the hardwood floors you had before for an additional $2,000 and then pocket the difference. The ethics of any of it are still in a gray area but they aren't going to bother you if you have not gone back and asked for more money. In the end, you repaired the floor they asked you to repair and you did it with the money they provided of their own accord.

The opposite is also true. What if you get paid for oak hardwood floors and want to put in Jerusalem stone tile? You can do that. You just have to cover the extra cost of the tile. You can't take the hardwood floor payment and then tell them it cost 3,000 more and invoice. You can absolutely take the replacement cost money for replacing the floor and upgrade as long as you cover the extra. In that case, insurance is paying to replace like for like. If it costs more, that's on you.

We do this all the time with asphalt to metal roofing.