Who’s decision is it when hiring a contractor on your insurance claim?
The decision of who to hire is yours when you have an Insurance claim that requires a contractor to repair damages to your property. Don’t let your insurance company dictate who you should use, here is why.
When you the policyholder sustains damage to one of your properties and your insurance adjuster confirms coverage for some or all of the loss, your adjuster may state something along the lines of “We, the insurer have a preferred list of vendors that we recommend you choose from, all of which are reliable and provide quality service. They may then continue to say something along the lines of, you can also choose a contractor of your choice to perform the repair work however, if you choose a contractor from our preferred vendors list, we can guarantee the work and arrange repairs if the work is not completed properly for any reason.
When you choose from the list of preferred vendors provided by your insurer then your insurer saves money. Contractors on an insurer’s preferred vendors list agree to complete the scope of repair that was approved by the insurer at a price determined by the insurer. This is great for the preferred vendor as the insurer regularly provides tear out, repair and replacement work to the contractor.
The insurers goal is to save money by paying less to tear out, repair or replace the property, and the contractors goal is to receive regular work and income in volumes.
Contractors, public insurance adjusters, and insureds , have mixed feelings in regards to preferred vendors. There are several pros and cons in regards to insurance companies’ that recommend preferred vendors. In some cases the insurer will bring a favourite restoration contractor to the site when the claim is first made and together they secure the job for the contractor. Below are some pros and cons in regards to insurers preferred vendors.
- Insurance companies save money on tear out, repair or replacement of the property for less, improve loss ratios, and in some cases they provide savings to their insureds by providing lower premiums.
- Insureds feel at piece, knowing the insurance company has already performed background checks on the contractors they list, and have been told that the insurer will guarantee the contractor’s work if the work is not completed adequately or in some cases not completed at all.
- Contractors on the preferred vendors list receive work on a regular basis and prompt payments from the insurance companies. These all create a Win Win scenario for all parties involved, unless…
- A qualified contractor would typically determine the scope of work in regards to tear out, replacement and or repair work, but instead the insurer determines the scope of work as opposed to a trained and qualified professional contractor. The insurer’s main goal is cost savings therefore the scope of work is likely to be inappropriately less than what is actually required. Insurers are not typically trained in the same way that a qualified contractor is.
- Contractors on preferred vendors lists are more prone to accept the insurer’s scope of work, even in the event that the contractor disagrees with the insurer and the scope goes against what the contractor has been trained and or certified to do, because of course the contractors ultimate goal is to continue to receive a great deal of work from the insurer in the future.
- Contractors may offer to reach an agreement or compromise the claim on behalf of the policyholder and engage without official permission or approval acting as a public adjuster even though they do not have the authority to do so.
- Insurance companies pay only the current competitive rate as determined by the insurance companies. This often reduces or eliminates the margins necessary for contractors to make a decent profit. When contractors don’t make enough profit, they go out of business or remove themselves as a preferred vendor. This causes a turnover of contractors on the preferred vendors list.
Insurers will ascertain the price of the work and may apply a different Xactimate, Simbility or other pricing lists to the project which is less than Xactimate or Symbility pricing lists used by contractors that are not on the preferred vendors lists. This reduces contractors’ profit margins causes the contractor to complete work that is low quality and to use lower quality materials in order to avoid taking a loss on the project.
In some cases mold, lead and or asbestos is not properly addressed as the costs for materials and labour costs are much more significant due to time consuming procedures that must be followed on mold, lead and asbestos projects. This puts you the insured at risk of health concerns and more.
Contractors that are not on the preferred vendors list are unable to submit a “competitive” estimate given insurers’ control over the scope and price of the tear out, repair or replacement work. At Got Mold? we know all too well how this works and we choose not to be on preferred vendors lists because we do every project right the first time at all costs. The above mentioned are only some of the pros and cons.
We work for you the insured, not your insurer. Remember you have the choice, do not allow your insurer to choose the contractor to perform the repairs for your loss.
If you require flood, fire, and or wind damage restoration call us now 1-888-909-6653 email me directly firstname.lastname@example.org or fill out the form below.
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