Insurance Claim

Restoration Contractors are specialists in the repair of buildings damaged by perils such as fire, windstorm, flood, water damage, hurricane and tornadoes. They are also specialists in the repair and cleaning of personal property from homes and businesses.

These kinds of cleaning processes and repairs require specialized equipment and knowledge that a normal General Contractor will not have. In addition, the restoration contractor uses estimating software that is acceptable to the insurance companies in the calculation of the repair estimate.

Many times, a claims adjuster who represents the insurance company will bring his favorite contractor with him when he inspects your damages. This is not necessarily bad, but can easily become a conflict of interest for the contractor.

I recommend that you, the policyholder and owner of the property, find a restoration contractor of your own to write your damage repair estimate. Customarily, the contractor will write this estimate at no charge, hoping that he will get the repair job. But even if it cost you a couple hundred dollars for the estimate, it could mean the difference in thousands of dollars of repairs.

But, how does a policyholder with damages locate a reputable restoration contractor?

1. Using your computer search engine, look for “Restoration Contractor” or “Disaster Repair” and your zip code or state.
2. Note which contractors in your area are advertising on TV and radio in your area. A big advertiser is usually having some success. Some national companies, like Servpro, advertise heavily and will have offices nearby.
3. Ask friends and business associates for a referral.

Once you have located two or three contractors in your area, interview them with these questions:

1. How many years have you been a Restoration Contractor?
2. Do you have a specialty, like homes or commercial losses?
3. Can you provide a list of at least ten satisfied customers with phone numbers?
4. Do you have documentation of your success in insurance settlements?
5. Have you ever had a complaint filed against you with the Department of Insurance or the state Office of Consumer Affairs?
6. Please explain your fees and how you are paid.
7. Please provide a copy of your repair contract.

Based upon the information you glean from your interviews, you can make a choice of the best Personal Injury Attorney to consult.

If you are the victim of an insured loss, such as a fire, flood, tornado or hurricane, you will likely have to hire a restoration contractor to complete repairs on your home. However, here is an issue that most property owners never consider...until it’s too late.

That issue is the liability insurance of the restoration contractor. No matter if you are the owner of residential or commercial property, you could have major liability issues in the process of the restoration.

Restoration contractors are customarily general contractors. That means that they manage the work of sub-contractors. They may hire plumbers, framing crews, roofers, electricians, drywall crews, painters and other artisans to complete the work on your property. Many times, the restoration contractor has a crew of workers on his payroll. But, there are some restoration contractors that only act as construction managers.

There’s nothing wrong with that arrangement if the job gets done on time and on budget.

You’ll be entering into a contract with the contractor you choose. In addition, you will be granting authority for your contractor to work on your premises, as well as his sub-contractors. Here is where you must take care to protect yourself.

In the pre-contract process of verifying your chosen contractor’s credentials, you will have required the contractor to provide you with a current copy of his insurance certificate. Take a few minutes and phone the insurance company and confirm that the coverage is in effect, and that the policy dates are correct.

You must insist that the restoration contractor carry General Liability, Completed Operations and Workers Compensation insurance (if he has employees). In addition, you must insist that each sub-contractor furnish the same insurance certificates. The only exception would be a contractor who worked alone and had no employees. That fellow would not need Workers Compensation insurance.

Another very important strategy is to insist that ALL the contractors place you on their insurance policies as an “Additional Named Insured.” That way, if anything were to happen in the course of repairs, such as a worker injury or some other liability issue for which they are liable, THEIR insurance policy would defend and indemnify on your behalf.

This one strategy could save you hundreds of thousands of dollars in a lawsuit award, and thousands in legal fees defending the suit.

Don’t leave yourself vulnerable to liability and lawsuits. Use this strategy!

I’ve written before about how to hire restoration contractors, and things to watch for. Now, here are a few tips on how to get the best prices for the restoration work you need to have completed.

• Make sure that the scope of damages is correct. You can usually get a copy of the scope of damages from your adjuster. The scope of damages lists the necessary work to be performed, not the prices.

• Make sure you get at least three estimates from three separate contractors. Inform the contractors that they are competing against other contractors.

• If any contractor finds needed repairs that are not listed on the scope of damage, insist that these repairs be listed on a supplemental estimate separate from the main estimate.

• Make sure that the general contractor bids include Overhead and Profit.

• Negotiate your claim with the insurance adjuster using the highest contractor bid. Many times, adjusters will use estimating software that has unit pricing far below market pricing. This is especially true after a major disaster such as a widespread hailstorm, tornado or hurricane.

• Once you have successfully negotiated the claim amount, go back to the three contractors and suggest that his contractors or suppliers offer better pricing. Economic times what they are today, some companies will drastically shave profits just to have the work.

• Ask your contractors to offer their professional input on ways to get the job done at reduced prices. He might recommend different floor covering, or different cabinets, or different countertops or light fixtures.

• Make a discounted offer to a contractor. Then shut your mouth. The first one who speaks loses.

• Tell the winning contractor that you prefer paying subcontractors and suppliers directly. This can be a win-win situation, since the contractor won’t have to front the money for materials. You can pay for materials out of the insurance proceeds. You can win because you won’t have to pay his overhead or profit for just paying bills.

• Don’t forget to have all vendors sign a Lien Waiver before receiving payment. No signature, no payment.

These strategies can save you thousands of dollars if you’re careful.

This article is Chapter Nineteen of my new book, "Commercial Insurance Claim Secrets REVEALED!" The book is presently in manuscript form, and we anticipate a publishing date of June 1, 2009.

* * * *

A restoration contractor is very different than a general contractor. Most general contractors who do remodeling or new construction do not have the skills and knowledge that a restoration contractor has.

For one thing, the restoration contractor is very familiar with the insurance claims process, and how insurance companies pay for repairs. The restoration contractors use similar estimating software to that used by the adjusters and insurance companies. A general contractor who submits an estimate in an unacceptable form to the insurance company or adjuster just annoys them, and slows down your claim.

Another reason to find restoration contractor is that they are usually full service contractors. They will be able to do temporary or emergency cleanup and board up. They will own the equipment for drying and water damage remediation. They are familiar with the kinds of damage that fires, wind and water do to commercial building. Finally, they are experts at writing accurate estimates for these specific kinds of damages.

General contractors who do not make their living in insurance restoration do not have this kind of equipment and experience. Period.

Do a search online for restoration contractors in your area. You can also look in your local Yellow Pages under “Disaster Restoration,” or “Fire Restoration,” or “Water Damage Restoration.” Look for logos in the ads that say “DKI,” or “RIA” These are professional organizations for restoration contractors. You can also go to the following websites to identify restoration contractors in your area.

DKI - Disaster Kleen-up International. Headquartered in Chicago, IL, is a network of the leading independent property damage restoration contractors across North America. You can ask for a referral at 888-735-0800, and also find them at: www.disasterkleenup.com

RIA - The Restoration Industry Association is the leading trade association for cleaning and restoration professionals worldwide, and the foremost authority, trainer and educator in the industry. You can ask for a referral in your area at 800-272-7012, or the website: www.restorationindustry.org

Call at least two restoration contractors, if possible. Ask them to meet you at your business location to inspect the damage within 24 hours of the loss.

Remember this important point…there is NOTHING in your policy that requires you to get two or three estimates. Meeting two contractors is just a smart way to find one that you like best and want to work with. Interview them about their experience and expertise. Check out their references, and ask them for a list of satisfied customer that you can call by phone. Get a copy of their insurance certificate to be sure they have liability and Workers Compensation coverage. Call the insurance companies to confirm coverage. ONLY AFTER THE CONTRACTOR CHECKS OUT should you hire him.

You might see many restoration contractors drop by after a loss to see if they can help you with temporary repairs, like tarps on roofs, board-up, and contents removal. Don’t be annoyed...they are trying to get some new business. Appreciate their effort for what it is. Get written estimates from them BEFORE you sign ANYTHING. They will sometimes tell you that they were sent by the insurance company (maybe true, maybe not), and that it is your responsibility to protect your property from further damage (which is true). They may tell you that they will “direct bill” the insurance company (which they may do).

WARNING!!

Be very careful on contents removal, sometimes known as “pack out.” The more contents they clean, the more money they make. The cost to clean something is usually a fraction of the cost to replace it. However, I have seen restoration contractors charge more to clean an item than it costs to replace it. So, when the restoration contractors are involved, the claim value may be reduced, which benefits the insurance company. That is why many adjusters will bring a restoration contractor with them to the loss location. Remember that many policies pay REPLACEMENT COST, and following major fires, large windstorm and water losses, your damaged possessions could be replaced instead of being cleaned. Every penny that goes for cleaning your contents comes from the contents limit of liability shown on your policy declarations page. So, theoretically, a substantial amount of your insurance money to replace your items could go to the restoration company to only clean the items!! If the restoration contractor cleans a bunch of your property, and you reject it as unusable, there will be less money for replacement of your property.

So, if the adjuster and restoration contractor are all gung-ho to pack-out your property, that’s probably a good idea. Getting your property off the loss site will at least prevent it from further damage. But you should be the person that controls which contractor packs out your property. You should also bet the person that controls what gets cleaned and what gets thrown away. This may take you a significant amount of time to sort through, but that time investment will mean a much larger settlement amount.

Under no circumstances allow the adjuster or restoration contractor to make the determination about what business personal property is repairable or replaceable. The adjuster will typically want to clean items and give them back to you. You own the property...it’s your call. Fight hard about this issue!

ANOTHER WARNING!!

Sometimes, adjusters and insurance companies will tell you that you must use their “approved contractor.” Unless you can find that requirement written into the terms and conditions of your insurance policy, don’t believe it. It’s your property. YOU be the person that makes the decision on which contractor or other vendor to use.

The contract for cleaning and restoration of your property will be between you and the contractor...not the contractor and the insurance company. MAKE SURE YOU ARE IN CONTROL!!