b'STEEP SLOPEHOMEOWNERS STRUGGLE TO PAY INSURANCE DEDUCTIBLESBy: Bruce Christensen, Deductible Funding LLCContractors Are Facing Increasing Hurdles inWhy are there insurance deductibles?the Legal Environment. Have you ever wondered why insurance companies The world is changing. Waiving or rebating insurancerequire deductibles? As natural disasters increase in deductibles has always been insurance fraud, butfrequency from hail to flood to hurricane to tornado to now state legislators and regulators are taking note. Afire, etc., insurance losses are on the rise. Like any minimum of 28 states have passed and implementedbusiness, an insurance company is in business to make laws making it illegal to waive or rebate a homeownersmoney, for shareholders if public or ownership if private. deductible, in addition to insurance fraud. Most of thoseLoss increases are not acceptable without mitigation.laws require the payment of a fine and many includeThey mitigate their losses in two ways:the opportunity to go to jail. First,theyincreasepremiums.Thismeansthe So, why do contractors do it? Simple. To close the dealhomeowner in Indiana enjoys higher premiums to help with the homeowner before the next contractor does. pay for the hurricane on the East coast or fire on the Most contractors use one of many estimating productsWest coast. Or the homeowner in Ohio enjoys higher on the market, which allows them to input their individualpremiums to help pay for the hail and tornado belts. It is product and labor costs for the project. Most insurancea simple law of large numbers solution that insurance companies have their own adjusters who do the legworkcompanies have used since they came into existence.to determine the replacement value of the claim, withSecond,theyimposehigherdeductiblestothe their own models. Generally, there is a comfortablehomeowner to reduce the actual claim amount. This margin between the two that entices a contractor tohas been transforming for decades in the states that waive the homeowner deductible and accept a lowerexperience more natural disasters than those that do not. margin on the project. Profit is profit, without regard toFor example, in Texas, there is a lot of hail, and roofs the actual ROI.regularly need to be replaced. While states like Illinois still impose a flat $500 or $1,000 deductible for a roof, 32 www.mrca.orgMidwest Roofer'