Friday, September 9, 2011

New Law Breaks Bad Roofing Habits

On June 30, 2011, Governor Jay Nixon signed a bill into law that intends to curb unscrupulous roofing sales tactics. Before working for the Better Business Bureau, I was a roofer for eight years. Roofing paid my way through my first two years of college and I remember my time in the sun fondly. With my experience as a roofer and complaint analyst for the BBB, I realized that a law was inevitable because of the behavior of a considerable number of roofing companies--some local businesses, some out-of-area stormchasers.

The new law prohibits contractors from advertising or promising to pay any amount of an insurance deductible. It extends the consumer's right of rescission (right to cancel contract) from three days to five days, when concerning insurance claims. This must be printed in the contract.  If the contract is cancelled, the contractor must return any payments to the customer within ten days. This prevents businesses from purchasing materials for the job and then demanding payment within a couple days of entering a contract.  The most important part of the law forbids contractors from representing or negotiating with an insurance carrier on behalf of the homeowner.  The Kansas City Better Business Bureau has warned roofing companies to avoid this business tactic for more than a year. It is a sad occasion where the industry could not regulate itself and the legislature was forced to act.

Roofers negotiating with homowners' insurance carriers became commonplace when an unscrupulous company called American Shingle brought their tactics to Missouri from their headquarters in Atlanta.  Even though we warned businesses not to adopt their methods, roofers felt compelled to do so to remain competitive.  We issued a warning to consumers stating, "A business with a vested interest in getting your money should not have power to make home repair decisions for you. Whether or not the company's intentions are honorable, there is no need to take such steps for a roof. It is your money and your home. If you don't feel qualified to make decisions about home repair, find a trusted individual and ask them to do it for you."

Roofers informed homeowners that they would deal directly with insurance companies, making sure that insurance adjusters did not miss any damage. This never made sense, because it is the roofer's responsibility to provide the EXACT SAME information in a formal estimate, which the homeowner could then turn over to the insurance company.  Getting an estimate gives the homeowner the chance to get other estimates and feel no obligation to file a claim with the insurance company if the damage is minor. Roofers asked homeowners to sign a contract in advance of any bid and to file an claim with their insurance companies.  This caused problems when insurance companies would deny claims, even with the "help" of the roofer present during the appraisal.  These claims counted against the homeowners' policies and they received nothing but wasted time (sometimes homeowners would have to pay their deductible to fix minor issues, and it still counted against their policy).  Roofers frequently pointed out issues that were not important or not caused by hail.  Many stormchasers breezed through town and had homeowners file claims with their insurance company for hail damage even though the area had not received hail for years. Worst of all, several roofers had in their contract, no matter how much money was approved by the insurance company, the checks would be paid directly to the roofer.  If the cost of the roofing job fell thousands of dollars below payout, the roofers kept the difference.  Some stormchasers went as far as cutting corners to make the difference larger. American Shingle was in possession of 3000 such payouts when they went out of business, leaving thousands of customers with damaged roofs, no money to fix them, and a higher insurance payment.

Innumerable roofers gave consumers the impression that insurance companies would stiff them if they didn't have a roofer present during the appraisal. Many are still making that claim (in the comments). First of all, homeowners can provide a company's written estimate  to the insurance company in advance (or three companies' written estimates, which the adjuster prefers). Therefore the insurance adjuster must address why they will not cover something that needs to be repaired. Also, even if the insurance company tries to stiff the homeowner, the insurance industry is highly regulated.  The homeowner can report their activity to the Missouri Department of Insurance. No such higher regulatory authority exists to specifically regulate roofers.

The new law may not be popular with some roofing companies, especially stormchasers, but it should also be easy to comply with it.  The roofing industry will essentially revert back to the way it was before American Shingle came in and messed it all up.

25 comments:

  1. Simply want to say your article is as surprising. The clearness in your post is simply great and i can assume you are an expert on this subject. Fine with your permission let me to grab your RSS feed to keep up to date with forthcoming post. Thanks a million and please continue the rewarding work.

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  2. Storms and mishaps bring out the opportunity for the best and sometimes the worst. Thanks for highlighting this complicated issue between insurance coverage and contractors (roofers, in this case). Kansas City can always count on the BBB for an unbiased point of view and helpful info. Will there be a followup to this?

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  3. Ex-Insurance AdjusterMarch 17, 2012 at 5:26 PM

    This article is completely biased, and I find it ironic and disturbing that the BBB chooses to bash an industry that they themselves love to solicit business from. There are more nation-wide complaints levied against the unfair and bad faith practices of Insurance companies than against roofing contractors. It is so bad that a young industry, called Public Adjusting, had to be formed and licensed by the state to help homeowners combat the lawyer heavy Insurance co.'s. This law you are praising was the result of millions of dollars in lobbying and campaign contributions paid out by major insurance co.'s. Insurance co.'s do not overpay and they have teams of lawyers to make sure of it. This law now allows the Ins. Co.'s to get away with grossly underpaying. The roofing contractors were providing a free and necessary service that will now cost homeowners money through a Public Adjuster like me. And those who can't afford a P.A. will be taken advantage of by their insurance companies in the name of shareholder profits. This article is poorly researched and displays incredible arrogance a midst pointed ignorance of these industries.

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  4. Homeowner from Grandview, MOMarch 19, 2012 at 12:50 PM

    After the 4/3/2011 Hail Storm crashed through Kansas City. My neighbor and I spent a couple of weeks researching how to file a claim for our roofs before we stepped into the world described in the above article. He ignored all contractor's that came to his door and followed the process above. On the other hand, I interviewed over 12 local and national contractors and decided on one with a solid reputation, ASPEN CONTRACTING. Per my request my contractor inspected my roof and my neighbors and presented us both with the findings. Both roofs had similar damage, and in fact my neighbors roof had more hail strikes found in the testing area than mine. We both filed claims. My neighbor got his 3 bids and his adjuster came out to inspect the damage. I took ASPEN's inspection report and told them when the adjuster was coming to my house. They arrived 30 minutes before the adjuster. Set up a ladder and talked with me. When the adjuster came he was happy to see them. They gave him the same report they gave me and followed him as he did the inspection. After the inspection was over ASPEN and the adjuster negotiated a few small items that the adjuster deemed too high on ASPEN's estimate. Then the adjuster explained the rest of the process to me. After he left my contractor and I picked out shingles, siding, doors and colors. All the work was complete within a week and a half and I ended up with new siding, gutter, doors, screens, and a new roof for only my $500 deductible. Next door, my neighbor's experience was completely the opposite. The adjuster denied any damage at all, even though I could see large dents in his roof ventilation from my the ground in my back yard. After arguing with his agent the insurance company granted him another inspection. The same adjuster came out and paid for the vents on his roof but nothing else. This didn't even add up to his deductible. By this time I had the entire exterior of my house completely redone and my neighbor only had a new leak coming into his living room and kitchen. At this point the same contractor from ASPEN helped my neighbor go through some legal process with a judge and the insurance company. When ASPEN presented the same report they showed my neighbor and me after their initial inspection he ruled in my neighbors favor. It took over 6 months for my neighbor to get his roof fixed, not the mention the rest of the exterior damage. The insurance company never paid for the interior leak damage. They claimed that he should have had an emergency repair performed the week or month after the storm, even though the initial adjuster did his inspection a couple of weeks after the storm and didn't say anything about it.

    All-in-all I would say that this article and bill is completely contrary to the reality I experienced after a hail storm struck in my neighborhood.

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    1. Thank you for posting this. I'm one of these "roofers" but we're more like job/project coordinators as most of us do none of the physical labor, instead I get the roofing crew lined up among everything else you mentioned.
      With any door-to-door job, stereotypes will naturally develop and unfortunately, there are those out there that will cut corners after getting the homeowner to fork over the insurance check.
      However, this type of behavior and work ethic seems far more abundant in the insurance industry than in ours...just like your neighbors experience tells. Not that they're ALL bad people, most are just doing their jobs. BUT, insurance companies and the adjusters/inspectors that come out to check roofs for damage are representing the insurer, not the insured.
      That's where we come in...we're able to make a living helping people get their roofs fixed because we are there as the homeowners advocate.
      The fact is that most every industry out there has crooked people under its employ. To damn the roofing industry and us "good-guy roofers" over one company is just stupid and a waste of space on the website of the very company (Better Business Bureau) that gives MY roofing company an A in Nebraska.

      Thank you again for posting your experience so others aren't quick to think we're scam artists when we're actually there to provide value, help the homeowner, and dare I say it, to make a living.

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  5. I read the article and find it to be made up solely of one person's opinion and not fact. No claims regarding a roof will count against a policy holder's insurance. Roof claims are considered and act of God and the policy holder cannot be held responsible for the damage since he is unable to pick up his house and move it out of a hail storm. I agree that there are many roofers who do practice questionable acts, but I also know that there are many who are out to help the homeowner. I find it disturbing that someone will write such a biased article and not do their due diligence before publishing. It is absolutely true that millions have been spent by insurance lobbyists to have these new "laws" placed. The only winner in any of this is the insurance industry. Do not try to sugar coat what is really happening here. The insurance companies are trying to gain total control over the claims process with no one to answer to in order to minimize their losses on natural disaster claims. Pure and simply put it comes down to the bottom line - profit. Nothing else matters.

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  6. The difference between your glory days as a roofer paying your way through school and today is that the majority of roofing work done around the country these days is due to insurance claims because the rest of the industry dried up. When that happened, the insurers faced an onslaught of intelligent contractors entering the storm restoration market. Your article is written from either a biased or completely naive perspective. Insurers NEVER pay market rate for repairs....NEVER. This law has been in effect for a year, and it's hardly enforced because the insurers know they would face class-action lawsuits if they tried to prevent homeowners from seeking the assistance of contractors with their claims.
    The whole point of the law is to promote preferred service provider programs which limit claim expenses, limit the scopes of loss and stick it to millions of insured homeowners. American Shingle is a convenient scapegoat- you would trade a handful of contractors ripping off a handful of people and substitute them for the largest property and casualty insurers ripping off MILLIONS?
    Shame on you for this article, no one buys into this stuff that has ever been stiffed on an insurance claim, and thanks to folks like you- that list will surely grow.

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  7. The article was written because the BBB has received many complaints about the practice. It is a bad idea for roofers to work directly with insurance companies.

    It is not just American Shingle. Even this year, Countrywide Shingle out of Colorado did the exact same thing, went out of business, and took everyone's insurance money with them. But that is NOT the only issue, as explained in the article.

    Less scrupulous roofers cut corners to pad the amount of money they can pocket from the insurance company. Claims are denied, the homeowner's premium goes up, and no roof work is done. If a roofer wants to make sure the insurance adjuster does not miss anything, then by all means, they should show up on the date of the inspection. However, the homeowner should not be locked into a contract at that point and there is no need to contractually obligate the insurance company to pay the roofer directly. NEVER. EVER. It HAS created problems.

    The problems created are entirely avoidable. The blog explains clearly why the practice serves no benefit to the homeowner. There were already safeguards against anything roofers are claiming to prevent with their interference. It is unnecessary. Roofers should simply put an estimate in writing, showing exactly what is wrong with the roof. The homeowner can present three estimates to the insurance adjuster. If the claim is denied, they can take their grievance to the insurance commission.

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  8. Hey there! Thank you for sharing your thoughts about roofing contractor in your area. I am glad to stop by your site and know more about roofing contractors. Keep it up! This is a good read. You have such an interesting and informative page. I will be looking forward to visit your page again and for your other posts as well.
    An all round competent roofer From the UK would be capable of carrying out most domestic roofing projects. These would include built up flat roof systems and pitched roofing works including natural slating and concrete and clay roof tiling. Also he would need a good and applicable knowledge of lead work to weather proof areas such as chimneys and abutments. There is not any UK legislation in place that requires a roofer to have a license to trade. Although it is beneficial if he belongs to a recognized trade organization. Most roofers of good repute should come with an abundance of valid references, and proof of workman's comp.
    Additional services: leak barrier, attic ventilation, ridge caps and gutters.

    Roofing Contractor Maine

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  9. Roofing Contractor is required in commercial and residential areas and should be done with great care and attention.

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  10. As we all know that roofers work involves a lot of risk as most of the time,

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  11. I had my roof done by a Kansas city roofing contractor doing business as Garcia Roofing. They did a roof 3 houses down from my house in Kansas city. I approached them and asked them to inspect my roof. After they did, they confirmed that I had hail damage as most roofs did in my street. They just told me to call my insurance agent and request an inspection from them. Garcia roofing was not present when the adjuster came and I still got my roof and gutters approved. I also got 3 different bids. I chose to go with Garcia roofing since they were the first ones that inspected my roof.

    Garcia roofing asked for no money upfront and they gave me the list of materials that I needed to buy from Home Depot. I went with timberline high definition, synthetic shark skin underlayment and radiant barrier for my sheathing. My roofing contractor, Garcia roofing installed my roof in 2 days and I was very pleased with their work. I also had them install new 6' seamless gutters. All this was done without them negotiating with my insurance company. It was a win, win situation for all of us.

    You can see my house and the work they did at:

    http://www.youtube.com/watch?v=LvQJJs7Xklg

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    1. LOL, some service you got, are you kidding me. No doubt you committed insurance fraud and profited from the claim. Hire a real contractor who uses distributors not home depot and who can have materials delivered. Not some group of illegal immigrants. This guy also cries daily about how the economy sucks, what he doesn't realize is he is the cancer.

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    2. Not all contractors use distributors. A company that specifically does roofing will, and will have a warehouse full of inventory for most jobs, but using materials from Lowe's, Home Depot, etc. does not necessarily indicate poor workmanship. The large chain DIY stores can offer decent prices/materials for smaller outfits and smaller jobs.

      The fact that this guy asked you to buy the materials yourself, from Home Depot, however, is extremely suspect. A "real contractor", like the poster above mentioned does not have to have materials delivered. That is an incredible waste of money for one roof job. They do, however, pick up the materials themselves.

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  12. Very fascinating as a newly trained roofer. I didn't realize these politics were part of the industry. I'd like to hear what the reaction to it is now that the issue has settled down. http://www.bettercontracting.ca/aboutus/

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  13. Hopefully this new law helps improve the quality of roofs. Roofs should always be very high quality. It would be terrible if a bad roof fell and hurt somebody. http://www.emeraldroofing.net/about-us

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  14. Remarkable how incorrect the OP is about how insurance claims caused by weather related events impact future premiums.

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  15. Thanks for the information. I liked the point you made about a good roofer being able to give many options when it comes to materials. Roofing Contractors Insurance

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  16. Before hiring a contractor to help with your roofing needs, learn what you need to know to ensure you get the right roofer. Be aware: this bond is often not enough to cover multiple complaints made against it or your project if it's worth more than the value of the bond. This is only a License bond.

    Roofing Contractors Insurance California

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  17. Thanks for the information. I liked the point you made about a good roofer being able to give many options when it comes to materials.

    kansas city roofing
    kansas roofing

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  18. I am glad to hear that the governor is making laws more strict on roofing. It can be really unsafe when a roof isn't built right! Hopefully we can find some good roofers that will build us a roof that is up to code.
    http://donahueroofing.com/index.php?option=com_content&view=category&layout=blog&id=25&Itemid=37

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  19. I agree with each and every conclusions made on this topic. It is really very informative. Thanks for sharing.

    kansas city roofing

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  20. I'm glad these laws have come into effect. Before this it kinda gave other companies the right to really burn their customers. Consider hiring decent Roofing Companies in the Bronx for a job well done.

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  21. I realized that a law was inevitable because of the behavior of a considerable number of roofing companies--some local businesses, some out-of-area stormchasers.
    Insurance loss

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  22. I am one of these roofers as you call them and I can say that the longer I do this the more I see the insurance companys taking advantage of the homeowners it is sick to me that you would post this... and as far as getting three bids let me point this out if you have three bids and one of them is lower then what the insurance company would pay out what are they going to go with? I can tell you they won't go with paying out the higher amount. And if you get three bids that are all higher then what the insurance company pays do you think they would pay more.... NO THEY WON'T... The insurance company has the average price of the work already figured out per square of roof and they are going to pay out as little as they possibly can. And further more I never ever ask my clients to sign over their check to my company I always tell them to deposit the check and I will contact them soon for a color and product selection meeting at which time I show them possible upgrades and talk about payment matters if someone has a problem with there deductable we can help them with that by providing financing but we would never forgo the deductible entirely because that would be a good way to go broke as a business. Because the insurance company has already paid out one the low end of the business anyway. This arrival is completely flawed and should be ignored by any homeowner ...

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