NTRCA: What HB 2102 Means for Your Business
The North Texas Roofing Contractors Association (NTRCA) recently hosted a luncheon where Texas House Bill 2102 was the topic of discussion. The Springtree crew was in attendance and our own founder, AJ Huckaby, was the Q&A moderator of the session. We learned valuable information about the contents of HB 2102 and what it means for roofers going forward. Here is everything you need to know about the new law and how to make sure your company is compliant.
HB 2102, Section 1
Section 1 of HB 2102 amends the Texas Insurance Code by adding a new chapter (707) that requires homeowners to pay applicable deductibles for first-party claims.
“Sec. 707.002. PAYMENT OF DEDUCTIBLE REQUIRED. A Person insured under a property insurance policy shall pay any deductible applicable to a first-party claim made under the policy.”
It also authorizes insurance companies to withhold payment on a claim until they receive reasonable proof that the deductible has been satisfied, and provides a list of items that can serve as reasonable proof.
“Sec. 707.004. REASONABLE PROOF OF PAYMENT. An insurer that issues a property insurance policy with replacement cost coverage may refuse to pay a claim for withheld recoverable depreciation or a replacement cost holdback under the policy until the insurer receives reasonable proof of payment by the policyholder of any deductible applicable to the claim. Reasonable proof of payment includes a canceled check, money order receipt, credit card statement, or copy of an executed installment plan contract or other financing arrangement that requires full payment of the deductible over time.”
HB 2102, Section 2
Section 2 amends the Texas Business and Commerce Code to include new contract verbiage required on all contracts valued over $1,000 and paid for fully or partially by a property insurance claim. Beginning on September 1st, all such contracts must contain the following text in 12-point bold font:
“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 insured person to fail to pay, or assist the insured person’s failure to pay, the applicable insurance deductible.”
The contract must be signed by both parties. If it does not contain the new verbiage, the contract becomes illegal and non-binding.
Section 2 goes on to clarify all the ways policyholders and contractors can violate the law. A contractor may no longer pay, waive, absorb, rebate, credit, or otherwise decline to charge or collect a deductible. Doing so counts as a Class B misdemeanor. Only insurance companies have the right to waive deductibles.
What This Means for Your Company
Texas House Bill 2102 was passed into law on June 14th and goes into effect on September 1st. That gives construction companies and roofing contractors just under 2 months to make sure their contracts are compliant with the new law.
To summarize the changes that apply to roofing companies:
- Policyholders must pay applicable deductibles.
- Contractors may not help policyholders pay the deductible.
- Doing so is punishable as a Class B misdemeanor.
- Insurance companies may request reasonable proof that a deductible has been paid.
- Contractors must include new language in their contracts in 12-point bold type.
The Bottom Line
In the past, companies had the value proposition of waiving deductibles. Now all companies are on a level playing field and must find their own value propositions to bring in clients. What will yours be? It’s time for roofing companies to buckle down and bring their A game if they want to stand out in the industry.
As Dan Pitts, Jr. said, “Now that consumers will be required to pay their deductible, they will have more skin in the game. The more skin in the game the customer has, the more discerning they will become.”
HB 2102 raises the bar for all contractors in Texas. The customers will certainly benefit from this, but they will also demand more from their contractors. Will your company rise to the challenge? Call Springtree Restoration if you have questions about the new changes.