In recent years, the roofing industry has seen a significant surge in unethical practices aimed at exploiting homeowner’s insurance for roof replacements. Some roofing contractors engage in fraudulent business practices by filing insurance claims for roof replacements that are not necessary or for damage that doesn’t exist. This trend has not only disrupted the normal operations of reputable roofing companies but also caused considerable financial strain on insurance companies and, ultimately, consumers. Let’s delve into the issue and understand why it’s happening, how it’s affecting everyone involved, and what the future might hold.
The Rise of Insurance Fraud Among Roofing Contractors
Over the past 5 to 10 years, some roofing companies have aggressively targeted homeowners, promising new roofs at the expense of their insurance policies. These companies often canvass neighborhoods, knocking on doors and convincing homeowners that they can get their insurance to pay for a new roof, regardless of whether there’s legitimate storm damage. This practice is illegal, yet it has become alarmingly common. Be cautious of contractors offering a free inspection as it can be a tactic to deceive homeowners into unnecessary repairs or insurance claims. If you suspect homeowners insurance fraud, you can report it by Filing a Complaint with the Maryland Insurance Administration.
In many cases, these unscrupulous roofing contractors fabricate damage to secure insurance claims. For instance, they might tug on a few shingles to simulate wind damage or reference outdated reports of past hail storms to justify their claims. In Maryland, several roofing companies have been caught on video intentionally damaging roofs to get insurance approval. Another tactic is to claim that the shingles are defective and/or discontinued, which is rare. While reputable companies like Fichtner Home Exteriors report storm damage on only about 5% of the roofs they inspect, some competitors claim damage on nearly every roof they assess.
Why Are They Doing This? Understanding Common Roofing Scams
The answer is simple: money. Roofing has become highly lucrative when insurance is footing the bill. Unlike other types of insurance claims—such as those for drywall, painting, or siding—roofing claims come with significantly higher payouts. For example, a direct quote for replacing a single-family house roof might be around $15,000. However, if insurance is involved, the payout can skyrocket to $25,000 or more, even for minimal damage. Fraudulent roofing companies often inflate insurance claims by misrepresenting wear-and-tear as storm damage to generate higher payouts.
In one case, a homeowner’s insurance company paid $25,000 to replace an entire roof due to five damaged shingles, which could have been repaired for $450. To justify such high costs, unethical roofing companies falsely claim that the damaged shingles cannot be replaced due to issues like discontinued colors or new sizes of shingles. The reality is that alternative shingles can almost always be found to match the existing roof.
Homeowners should be cautious of contractors who offer to pay or waive the insurance deductible, as this is illegal and a clear red flag for insurance fraud.
The Insurance Industry’s Response to Insurance Claims
Insurance companies are beginning to crack down on these fraudulent practices, but progress is slow. The financial impact has been substantial, with insurance companies losing billions of dollars on homeowner’s insurance, largely due to roofing claims exacerbated by climate-related issues. The National Insurance Crime Bureau plays a crucial role in combating insurance fraud and providing advice to consumers on how to protect themselves. To combat this, insurers are implementing several measures that are affecting consumers:
- Rising Insurance Rates: The rest of us are paying for these claims! There was roughly a 10% to 12% increase in homeowners’ insurance costs last year in the United States, said Mark Friedlander, spokesperson for the Insurance Information Institute, a nonprofit industry association (News Channel 3-12). This is a direct response to the financial losses insurers are facing. Homeowners should check the Better Business Bureau, a valuable resource for reporting unethical behavior, for any complaints against roofing contractors.
- To help combat fraud, Maryland residents can report suspected insurance fraud to the Maryland Insurance Administration’s (MIA) Insurance Fraud Division through the following methods:
- Call: 1-800-846-4069.
- Print & Submit the Insurance Fraud Form via:
- Fax: (410) 347-5350
- Email: fraud_referrals.mia@maryland.gov
- To help combat fraud, Maryland residents can report suspected insurance fraud to the Maryland Insurance Administration’s (MIA) Insurance Fraud Division through the following methods:
- Withdrawal from High-Risk States: Major insurance carriers are pulling out of states like South Carolina, Florida, California, Washington, Louisiana, Minnesota, and Colorado. The loss of these major players reduces competition, which is bad for consumers.
- Mandatory Roof Replacements: Some insurance companies are now requiring homeowners to replace their roofs as a condition for policy renewal. If the homeowner cannot afford to replace the roof, they risk losing their insurance coverage, putting them in a precarious financial position. We have seen this first hand from customers who were forced by their insurance carriers to replace their roofs before it needed to be done.
- Increased Number of People Forgoing Insurance Policies: Higher number of people foregoing insurance policies altogether. A recent study from the Insurance Information Institute found 12% of Americans no longer have home insurance, up from 5% in 2019? (USA Today)??.
The Path Forward
For homeowners, it’s crucial to be aware of these unethical practices and to choose roofing companies wisely. Look for reputable contractors with a proven track record, and be wary of those who promise new roofs at no cost through insurance. Check the legitimacy of a roofing company by reviewing their online presence and reviews. Never sign paperwork with someone claiming they can get your roof replaced by insurance. Almost all local roofing firms can handle a storm damage issue for you, whether it be with your insurance or not. For the roofing industry, maintaining ethical standards and educating consumers about the dangers of insurance fraud is vital.
The crackdown by insurance companies is a necessary step to restore balance in the market and protect consumers from inflated costs and potential loss of coverage. Ensure that your roofing contract includes all essential details to avoid misunderstandings and potential fraud. By staying informed and vigilant, homeowners can make better decisions and avoid falling prey to unethical roofing practices. It is also important to get an itemized estimate of repair costs to protect yourself from fraudulent roofing contractors.
Choose a roofing contractor with a reputable history of integrity in business
The surge in insurance-related roofing scams has created significant challenges for both homeowners and reputable roofing companies. While the insurance industry is slowly responding with stricter measures, it’s essential for consumers to be aware of these practices and to seek out trustworthy contractors. By doing so, we can help restore integrity to the roofing industry and ensure fair treatment for all parties involved.
Meet Tom Fichtner: A Legacy of Excellence in Roofing
Tom Fichtner, the owner of Fichtner Home Exteriors, has been a pillar in the roofing industry for over three decades. With a commitment to honesty and quality, Tom has built a reputation for excellence and reliability. His extensive experience and dedication to ethical practices set Fichtner Home Exteriors apart from the competition. Under Tom’s leadership, the company remains committed to honesty and integrity, ensuring that every roof is repaired or replaced with the utmost care and professionalism, always prioritizing the best interests of homeowners. When you choose Fichtner Home Exteriors, you’re not just getting a roof; you’re gaining a partner dedicated to protecting your home and your peace of mind.
