The Roofing Insights Team Went Down To Texas To Have Roofing Deductibles Explained By AVCO Owner Heath Hicks
This past week, Dmitry and the Roofing Insights team went down to Texas to visit AVCO owner and founder Heath Hicks.
Much of their conversation centered around the topic of deductibles, and how some owners are willing to waive them to satisfy customers.
As we have touched on numerous times here at Roofing Insights, waiving deductibles is not only illegal, it is also BAD for business.
As an experienced roofing contractor, Heath Hicks knows this, but he will be the first to admit that he didn’t always practice what he preached.
Did you ever waive deductibles?
Dmitry asks as the two of them sit in Hicks’ office.
Yes, early on I did,
Hicks then goes on to say that waiving deductibles is common in Texas because in the late ‘90s, many big companies were waiving them. Then, when people started their own companies, they took that same deductible-waiving mentality with them. It’s what has contributed to problems in the industry, but Hicks believes a change is on the horizon.
All it takes is people wanting to change,
Hicks has seen the change firsthand. For a man who once condoned waiving deductibles, he now instructs his entire sales team to never offer to waive a client’s deductible.
By his own estimate, Hicks loses 1-2 clients per 10 meetings because he won’t waive deductibles, but he also says that if he were paying customers’ deductibles, he very easily might not be in business right now.
Hicks is right. Waiving deductibles may be a decent short-term strategy, but over time a roofer who waives deductibles will lose exorbitant amounts of money.
There are other negatives to waiving deductibles. Besides legal reasons, Hicks says that bringing in new employees and then telling them to break the law is foolish.
It doesn’t make any sense. They’re not going to be great employees,
he says, going on to explain how allowing employees to break the government’s rules means those same employees will likely break other company policies further down the line.
Of course, if your own employees aren’t following company protocol, the likelihood of having a unified and profitable business is slim. The roofing industry suffers greatly from companies that are willing to waive deductibles as a way to increase their business. Based off his personal experiences, Hicks admits that not charging for deductibles is a tough habit to break.
My motivation [early on] was to make money. It wasn’t to do the right thing,
Still, Hicks felt a certain level of guilt to his actions. He slowly changed, offering clients to pay half their deductible, and soon enough he developed the courage to abide by the law, a potentially alienating decision in such a cutthroat industry. Fortunately for Hicks, good values won out.
I was shocked people were paying it,
he says of the deductibles, also mentioning that people would pay the bill for the entire job, even before the insurance checks came in.
His magic recipe?
It was simple:
Ask customers to pay the deductible
Hicks realized that customers often would trust his guidance, and instead of Hicks manipulating that reality to his advantage, he simply chose to do the right thing so that both he and the customers were left feeling satisfied.
Hicks felt he had no other choice.
We’re being hypocritical [by not charging for deductibles]. We’re saying one thing and doing another,
he says, mentioning that if he didn’t charge deductibles, he would be just as corrupt as many of the insurance companies out there who fly under the radar with questionable business ethics.
As mentioned earlier, here at Roofing Insights, we always charge for deductibles. Beyond legality and morality, there is one HUGE reason for contractors to always bill for deductibles.
It’s that in five years, 80% of contractors will be bankrupt. Not collecting on deductibles plays a major role, because if a contractor is willing to cut corners on the deductible, he is probably doing the same thing in other aspects of his business.
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