After big hail or wind events, some contractors knock on doors with a “no out-of-pocket” pitch. In Texas, that’s not just shady—it’s illegal. State law requires you to pay your property-insurance deductible, and it bars contractors from waiving, absorbing, or rebating it (including by inflating invoices or giving “gift cards”). Insurers can also require proof that you paid the deductible before releasing full replacement-cost funds.
The short version
- You must pay your deductible. Texas Insurance Code Chapter 707 says policyholders must pay any deductible on first-party property claims. Insurers may withhold recoverable depreciation until they receive reasonable proof (e.g., canceled check, money-order receipt, credit-card statement, or finance agreement).
- Contractors can’t waive it. Texas Business & Commerce Code §27.02 prohibits waiving or rebating deductibles and requires specific notice language on covered contracts ≥$1,000 tied to insurance proceeds. Violations are a Class B misdemeanor.
- TDI’s guidance is blunt: “It’s illegal for contractors to waive your deductible or help you avoid paying it.” If someone offers it, walk away and report it.
How the scam is pitched (and why it backfires)
- “We’ll cover your deductible” (rebate, coupon, upgrade, or padded invoice).
- “We can bill the insurer extra so you don’t pay.”
- “Sign now—storm pricing ends today.”
Risk to you: The contractor is asking you to participate in something Texas law forbids. Your insurer can hold back funds until you show proof of deductible payment, and contracts lacking the required notice language are a red flag.
Texas law in plain English
- Pay it: You owe the deductible on covered repairs. (Ins. Code 707.002.)
- Prove it: The insurer may withhold replacement-cost holdback until you show reasonable proof you paid (examples listed in 707.004).
- Don’t waive it: Businesses may not waive, absorb, rebate, or otherwise offset the deductible; contracts tied to insurance proceeds must include statutory notice; violations are a Class B misdemeanor. (Bus. & Com. Code 27.02.)
- TDI reminder: Post-storm, verify contractors, get written contracts, and don’t sign under pressure.
Hire right after a storm (quick checklist)
- Get 2–3 written bids on company letterhead—no door-knock pressure.
- Detailed scope: Brands/models, underlayment type, flashing (step + kick-out), permits, and schedule.
- Tie payments to paperwork: Progress checks only with matching invoices/delivery slips and statutory lien waivers (conditional with each pay; unconditional after funds clear).
- No deductible gimmicks: If anyone offers to waive or “credit” your deductible, decline and report.
- Keep proof of deductible payment ready for your insurer (check image, card statement, or finance plan).
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If you already signed something problematic
- Stop and review. Look for the required §27.02 notice and any language implying a rebate/waiver.
- Amend in writing. Replace any rebate language with a clear term that you’ll pay the deductible directly and provide proof to the insurer.
- Report the pitch to the Texas Department of Insurance and the Attorney General if appropriate.
- Don’t risk your payout. Be prepared to show reasonable proof so the insurer releases holdback funds.
Make your paperwork work for you with TradeCrews
Proof on hand, fewer headaches
- Property Journal (TradeCrews): Save your insurer’s estimate, contractor bids, signed contract, invoices, proof of deductible payment, delivery slips, and each lien waiver. If questions come up, export a clean timeline in seconds.
- Jack Report™: Jack reviews your Journal to flag missing waivers, upcoming price-hold dates, and whether your documents contain the right §27.02 contract notice, so you clear hurdles before funds are released.
Texas checklist
- Don’t sign under pressure; no blank lines.
- Demand a detailed, written scope; avoid “we’ll handle the deductible” pitches.
- Pay the deductible yourself and keep proof (check, receipt, card statement, or financing).
- Progress payments only with matching paperwork + statutory lien waivers.
- Report illegal deductible offers to TDI.
