Dealing with Deductibles After Insurance Payout: Understanding Your Obligations and Rights

Have you ever encountered a situation where your insurance company has paid the full amount of the bill to the roofing company but you still owe the deductible? Or, what happens if your insurance company has gone bankrupt and the roofing company is threatening to take you to court? This article aims to clarify the legal obligations and rights involved in such scenarios.

Understanding Deductibles and Insurance Payouts

When a roof repair is needed due to damage caused by natural disasters or other events, homeowners often rely on their insurance policy to cover the costs. However, it is essential to understand the

ins and outs of deductibles. An insurance deductible is the amount that you must pay out-of-pocket before your insurance company covers any additional costs. In many cases, you are responsible for the deductible, unless your policy specifically waives it or includes a coverage clause that covers the deductible.

For instance, in the case of an ice damming issue causing water damage in a sunroom, if your insurance company has paid the full amount of the bill, less your deductible, the full amount is what you owe. If the insurance company has paid less than the full amount, you are responsible for the difference between the insurance payout and your contractual obligation.

Legal Obligations and Contractor Responsibility

Once the insurance company has paid the roofing company, it is the responsibility of the contractor to collect the remaining amount, including the deductible, from you. While it may not be standard practice for all insurance companies to follow up on this, it is illegal for your contractor to pay the deductible on your behalf without your explicit agreement.

Consider these questions when evaluating your situation:

Did the insurance company pay the full amount, including the deductible? Was there any reason for the deductible not to be applied? Check your contract with the roofing company to see what is explicitly stated regarding payment terms.

If the insurance company paid the full amount of the bill, and the roofing company wants you to pay the deductible, you are legally obligated to do so. It is crucial to understand the terms of your policy and your contract with the roofing company.

Insurance Company Bankruptcy and Your Responsibilities

What happens if the insurance company that paid the roofing company has gone bankrupt? In such a scenario, the roofing company may have legal grounds to pursue action against you. This is because the insurance company is no longer financially able to meet its obligations, and the responsibility may shift to the policyholder.

The roofing company is within their rights to take legal action if you have not paid the amount you owe, including the deductible. If they proceed with court action, you should seek legal advice to understand your rights and obligations.

Collateral Damage from Disregarding Deductibles

It's important to remember the potential ramifications of disregarding the deductible. For example, if your contractor is given a discount as part of the settlement, and the insurance company discovers it, the insurance company may bill the provider, and it will be the provider’s responsibility to pay the deductible.

Furthermore, if the provider uses substandard materials or fails to complete the job fully to offset the loss of the deductible, and the insurer audits the work, they may force the provider to redo the job at their expense or have another company complete the job and then bill you. Insurance companies have their own legal departments, and they are committed to recovering their losses.

Common Practices in the Industry

As someone who used to operate a construction company and currently manages a business in a related field, it is common for contractors to expect the business or individual to pay the deductible. This practice is often seen as a form of fraudulent discounting because the insurance company pays the cost less the deductible.

While many people are frustrated with insurance companies and want to see them 'pay the deductible,' it is important to remember that insurance companies have their own legal rights and will pursue them to recover their losses.

Conclusion

When a roofing company is paid by your insurance company and you are still required to pay the deductible, it is a legal obligation that you must meet. Proving that you paid the full amount or that the deductible was waived is critical, so always keep detailed records of your transactions and check your policy and contract terms.

Even if an insurance company has gone bankrupt, the roofing company may still have legal recourse to pursue payment for the deductible. It is advisable to seek legal advice to understand your rights and obligations in such a situation.