18/01/2024
I know there are contractors such as myself who go well beyond the scope of their responsibilities to please their customers. One area of protection should be how to address insurance claims. Here are 7 Contractor tips for dealing with Insurance Adjusters & owners. If you are a contractor fresh in the business end of this industry, use these tips to help you with receiving your full payment.
1. Be clear about rights & responsibilities
In general, there are four parties involved in a restoration project:
• Property owner
• Insurance company
• Claims adjuster
• Contractor
Each party has their own rights and responsibilities. As a restoration contractor, you work for the property owner. You don’t work for the insurance company or the adjuster, and they don’t work for you. Your only obligation is to complete the contractual work for the price you agreed upon. In return, you have the right to get paid.
The property owner has a responsibility to pay the contractor for their work – that’s their main job. The owner may be counting on an insurance check to pay for the restoration work, but that’s not always a guarantee. If the insurance company doesn’t cover the construction costs in full, the owner is still on the hook for the contractual amount.
If a contractor doesn’t receive payment, they can’t go after the insurance company – but they do have the right to file a mechanics lien on the owner’s property.
An insurance claims adjuster may be responsible to either the insurance company or the property owner, depending on who hires them. While an insurance company will likely send their own adjuster to assess the claim, a property owner can hire their own public adjuster if they want a second opinion.
It is important to clearly communicate these rights and responsibilities, so the property owner knows exactly what to expect from you.
Bottom line: Set expectations about your responsibilities – and your payment rights – before the project begins.
2. Gain the owner’s trust
With new customers in difficult situations, laying the foundations for great relationships takes on great importance. Common sense dictates that the best way to develop trust involves doing the right job for a fair price.
Acknowledging their pain helps as well. “Contractors have empathy and feel terrible about the experiences homeowners are going through,” says Klark Brown, co-founder of the Alliance of Independent Restorers. Homeowners might receive less compassionate engagement from insurance adjusters.
Related: 6 questions to ask a homeowner before signing the contract
Often, insurance companies must enlist the help of an outside appraiser after a large storm. These types of adjusters have a lot of estimates to create in a short time. Let your customer know that communications with adjusters can be slow in busy times, but you can help bridge the gap and establish yourself as a voice or reason. You can’t control the narrative, but you can be a liaison of sorts.
Bottom line: Understand your customer’s perspective, offer reassurance, and provide work at a fair price.
3. Avoid insurance negotiations
It’s critical to remember that you are a contractor, not an insurance adjuster. In fact, many states have a law specifically prohibiting restoration contractors and others from acting like an adjuster. This is known as the “unauthorized practice of public adjusting,” or UPPA.
Be very careful that you never come close to crossing the line. Even if you act with good intentions, trying to help the property owner with their claim or negotiate on their behalf can be an expensive mistake. For example, Florida’s insurance laws make unlawful adjusting a third-degree felony, with a fine of up to $10,000.
“Contractors shouldn’t be claims negotiators,” Brown says. “Public adjusters or attorneys should be the ones to handle those situations.” Naturally, you will have contact with appraisers but understand your role as a contractor and stay within those boundaries.
Bottom line: You are not a public adjuster – don’t act like one.
4. Review the insurance estimate
While a contractor should never represent themselves as an insurance adjuster – or even act like one – it is a good idea to review the insurance appraiser’s estimate. You may be able to spot mistakes or omissions that you found on your own inspection. The homeowner may wish to hire their own appraiser for a second opinion that they can use to negotiate the claim.
In the wake of a catastrophic storm, you see how an insurance company’s army of adjusters can be pushed to the limit. They need to quickly prepare many estimates, and that mode of operation can lead to errors and oversights in damage inspections.
Related: What’s the difference between an estimate, proposal, and contract?
Homeowners often hesitate to let the contractor look at the insurance estimate. They may be afraid that you will increase your own estimate if you see the dollar figure. You should gently push to overcome that objection if possible.
With insurance companies focusing on the quantity of appraisals rather than quality, the probability increases that some damage may have been missed by the adjuster.
Thus, it’s important that a homeowner allows a professional contractor to not only perform its own property damage inspection but also review the adjuster’s estimate for any errors or omissions.
But at the end of the day, it’s the homeowner’s responsibility to negotiate an insurance adjustment. Contractors should aim to help customers – not get involved in their claim negotiation.
Bottom line: Insurance adjusters can and do make mistakes. Working with a homeowner to spot any missed damage is a vital service that builds trust.
5. Maintain open lines of communication
When your prospective or current customers suffer extensive damage to their homes, they’re in a bad spot. They may have considerable wait times until they receive an estimate and approval for work to begin.
Times like these mandate that you heighten your responsiveness to inquiries even though you may also have a lot on your plate. People need answers – and while you may not have them all, a shoulder to lean on goes a long way.
From a practical—and contractual—perspective, homeowners need and want to protect their property from further damage. It’s possible that insurance claims intake advisors do not convey this message.
Related: 9 tips to improve communication on any construction project
While extensive renovations shouldn’t begin before an estimate is generated, customers need to know that basic work to prevent further damage is almost always covered under a homeowner's policy.
While you don’t want to be immersed in dealings between homeowners and insurers, make yourself available to customers if they have questions. Legal advice and insurance advice are off limits, but offering reassurance to a homeowner is not.
Chances are you may deal with insurance work frequently so any tips you can offer a customer will be welcomed.
Bottom line: Customers may be waiting on their insurance company, but make sure that you’re quick to respond and answer questions—unless they veer into legal territory you should avoid commenting on.
6. Keep detailed records
If a powerful storm just blew through your community, odds have it that you will be busy providing estimates and beginning new restoration projects. You’ll have many responsibilities to balance, and your first priority becomes keeping pace with all your duties. If you need to enlist some extra help with recordkeeping, the investment will likely pay off.
Related: The importance of documenting your work with photos
For each job you’re involved with, keep meticulous documentation of damages, including photos and supporting descriptions. Without detailed records, it can be an uphill battle for the owner to compare your estimate with an adjuster’s. If further damage exists that wasn’t discovered by the adjuster, the owner will need to provide clear proof to the insurance company.
In the midst of the resolution process, your job entails making sure the customer’s home gets properly restored to its pre-claim condition. Realize that adjusters are human, and mistakes happen—so treating all parties with respect will benefit your customer’s return to normalcy.
Share your documentation with the homeowner and let them take the concerns to the insurer.
Bottom line: To make sure that your customer’s home is returned to its former glory, keep excellent documentation that the homeowner can use to provide evidence to the insurance company.
7. Be honest
After a severe, weather-related event, demand for your services will increase. Some contractors in this position may find it difficult to resist the temptation of raising prices. However, taking advantage of a bad situation for homeowners is a path that’s best avoided. Being transparent about your work and prices will ultimately yield the best results.
With that in mind, you must also stand firm and make sure you’re running your business profitably. Provide a detailed estimate that offers a customer as much insight as possible. “Outline the complete scope of work and terms of payment,” Brown suggests. “Be firm and fair in your pricing and write estimates based on rates you charge in your communities.”
Integrity helps build relationships with adjusters as well. Regardless of who is on the insurance company’s team, you will still have a reputation to uphold with them. To get consideration for more work and to make the claims process flow smoother for customers, you’ll find honesty stands out as the best policy to get you there.
Bottom line: Treat your customers fairly when they’re in crisis, and you’ll likely be rewarded with more business in the future.
Going the extra mile
Putting in the effort to help your customer understand the appraisal process can help you build a stronger relationship. But don’t forget about your own bottom line: You still need to get paid to keep your business running on all cylinders.
Your customer may be depending on the insurance money to pay you but, at the end of the day, that’s not your concern. Contractors have a variety of tools available to ensure they get paid and should make full use of them.
