BBB Warns Contractors: Promising To Pay Insurance Deductibles Is Illegal

St. Louis, Mo., July 24, 2012 – The Better Business Bureau (BBB) is urging homeowners to be cautious when approached by companies promising to save their insurance deductibles on storm damage repairs. 

Missouri and Illinois prohibit advertising any rebates, discounts or prize offers which might be considered inducements to hire contractors. 

Carole Bellman, BBB advertising review director, said that even though special offers to save deductibles can seem enticing to homeowners, they may be considered insurance fraud.

 “Residential contractors—like roofing companies and siding repair firms—should be very careful when trying to attract customers,” she said. “They need to read the law and understand what it means.” She also warned that some companies may inflate their prices to cover special offers.

Bellman said that the St. Louis BBB has challenged 21 advertisements from local contractors since the April 28 storm.

The BBB’s Code of Advertising states: “Advertisers, agencies and media should be sure that they are in compliance with local, state and federal laws and regulations governing advertising.” The primary responsibility for truthful and non-deceptive advertising rests with the advertiser. “Ads which are untrue, misleading, deceptive, fraudulent, falsely disparaging of competitors, or insincere offers to sell, shall not be used,” the code says.

One of the challenged ads came from an Overland, Mo., roofing company. It stated, “We will save your deductible.”

A St. Louis contractor’s ad said: “FREE ROOF, GUTTERS SIDING . . . We cover your deductible. . . YOU PAY NOTHING OUT OF YOUR POCKET. WHEN WE SAY FREE, WE MEAN FREE!”

Most contractors contacted by the BBB said they were not aware of the advertising restrictions and said they would change their ads.

The Missouri law, passed last year as Senate Bill 101, states, in part, that a residential contractor “shall not advertise or promise to pay or rebate all or any portion of any insurance deductible as an inducement to the sale of goods or services.” The law further says that the restrictions include “granting any allowance or offering any discount against the fees to be charged or paying the insured or any person directly or indirectly associated with the property any form of compensation, gift, prize, bonus, coupon, credit, referral fee, or other item of monetary value for any reason.”

The Illinois law bars home repair and remodeling contractors from advertising or promising to pay or rebate “all or any portion of any insurance deductible as an inducement to the sale of goods or services.”  The ban includes ”granting any allowance or offering any discount against the fees to be charged or paying the insured or any person directly or indirectly associated with the property any form of compensation.”

The BBB regularly reviews local advertising as part of its role as a self-regulatory organization. The BBB promotes ethical selling and advertising practices through standards developed and generally adhered to by industry members.

          The BBB offers the following tips to consumers hiring roofers or other contractors:

  1. Beware of possible scams. Watch out for contractors in unmarked trucks or for companies requiring advance payment.  Don’t succumb to high-pressure techniques, such as notices that the price is good for one day only.
  2. Try to verify the business’ true identity.  Get a business card and a physical location of the company.  It is always better to deal with well-established businesses in the area than those that come in from out of state and may not be around to honor warranties.
  3. Ask for references.  Make sure the company that wants your business has satisfied customers.
  4. Read contracts carefully and make sure you understand what you are signing. Watch for language that may require you to pay a fee if you decide to cancel.
  5. Understand that when an insurance company issues a settlement check for damages, that payment is going to you, not to the contractor.  Just because you have been dealing with one company doesn’t mean you can’t decide to hire a different one if you are uneasy about the first.
  6. Do not pay the full amount in advance of the work being completed.  A good rule of thumb is to pay one-third when the contract is signed, another third while the job is underway and the final third when you are satisfied with the completed job.
  7. Check a company’s BBB Business Review by going to or by calling 314-645-3300.

About the BBB

The BBB is a nonprofit, business-supported organization that sets and upholds high standards for fair and honest business behavior. The BBB provides objective advice, free BBB Business Reviews of more than 4 million companies, 11,000 Charity Reviews, dispute resolution services, alerts and educational information on topics affecting marketplace trust.  Please visit for more information.

Contact: Michelle L. Corey, President and CEO, (314) 584-6800,; Chris Thetford, Vice President-Communications, (314) 584-6743 or   (314) 681-4719 (cell), or   Carole Bellman, Advertising Review Director, (314) 584-6733,