- THE MAGAZINE
Talk about an insurance claim going south. I got a call the other day from an IICRC-certified firm. Seems the company had completed a Category 1 (clean source) Class 2 (saturated flooring) water restoration claim, successfully drying in-place both the carpet and pad in two thirds of this 1,700-square-foot, slab-on-grade home with a couple of vaulted ceilings. The loss involved drying base molding and a few pockets of saturation under cabinets and a built-in garden tub unit. Pretty straightforward stuff.
The technician was IICRC-certified as a water restoration technician (WRT) and had attended HydroLab’s structural drying school some two years ago, just before it was approved by the IICRC in the Applied Structural Drying (ASD) category. Bottom line, he was pretty well versed in current drying technology.
The drying took a little longer than I would have expected – seven days in fact. I think the main reason was that there weren’t as many driers deployed as I would have specified. But hey, a building is dry when it’s dry, and I wasn’t there to do the moisture readings.
The total bill was just over $7,000 and included extracting the excess water from the carpet and pad; removing furniture-stained carpet and pad from two rooms; removing some base molding from wet walls; installing and monitoring (Daily Humidity Record) drying equipment including 16 fans, three LGR dehumidifiers and a wall drying unit; biocide application to about 300 square feet; and a little labor for contents manipulation. Charges on a unit basis were not outlandish; in fact, they ran about 15 percent to 20 percent under the market for equipment rental based on Blue Book and Xactimate pricing schedules. My rough estimate for the same work probably would have been around $8,000. The insurance company got a reasonable deal.
Here’s where things get sticky.
The insurance adjuster, whose job it is to keep the contractor honest, said, “That’s too much.” Well, of course! The first words of a newly born adjuster just out of womb are, “That’s too much!” It’s part of the hiring criteria. Further, it’s up to ethical, honest contractors to justify their pricing to adjusters, who are there to protect the interests of both the inexperienced insured and the company underwriting the loss.
No problem with that, but check out the next part. The adjuster then gives the contractor’s paperwork to a competitor to “evaluate.” The competitor, never having visited the site of the loss, comes back with a price that’s 40 percent less than the processing contractor’s.
Now, see if you can detect an ethical dilemma here: The insurance adjuster talks a competitor (who depends on that adjuster for future business) into evaluating the pricing of another contractor. The competitor, at least in theory, would a) like to have gotten that job in the first place, or b) like to see his competitor out of business entirely. Unless I’m completely missing something here…
The point is, this happens all the time. Aside from the fact that an adjuster should know better, too many restoration contractors compromise (think “sell”) their ethics for the sake of maintaining a relationship with the insurance adjuster. The very least an adjuster should do in a situation like this is to send the estimate to a qualified expert (even a contractor) who doesn’t do business in that market, and who has a proper grasp of industry standards. And the latter is another subject entirely.
Don’t get me wrong. I believe that an adjuster has the right – even the obligation – to question procedures and pricing on every job. Contractors have a responsibility to be able to justify what they do and what they charge as well. But to place an insurance company’s contractor-client in a position that forces him or her to rationalize ethical standards to please that adjuster is totally unreasonable and indefensible.
Moreover, sooner or later the contractor who was screwed by his competitor will be in a position to evaluate that same competitor’s work and pricing. Then guess what happens then? Not only does the contractor get even, the insurance adjuster winds up with the impression that all restoration contractors are dummies that can be set at each other’s throats for the sake of a fast buck. Ouch.
So what’s the right thing to do? You know the answer to that as well as I do. In the words of the drug abuse prevention proponents, “Just Say No!” Point out to the insurance adjuster the ethical dilemma this evaluation process places you in and suggest that he or she contact someone outside the market area for an “objective” evaluation. A qualified master water restorer or IICRC-approved instructor (WRT or ASD) should be easy to locate at www.iicrc.org.
I do pricing analysis for insurance companies all the time. I bend over backward to assume that the contractor whose pricing I’m evaluating is honest, to see things from his or her viewpoint and to recognize the uniqueness of the loss; in short, to be as liberal as possible. I see some incredible rip-offs perpetrated by contractors against insurance companies (e.g., a $25,000 bill for about $2,000 worth of work, of which I advised the insurance company to pay $9,000 but no more). I think I know what went on, based on 32 years of field experience and instruction and standard writing experience. But I wasn’t there. I must err on the side of the contractor in pricing disputes. Above all, I must not allow even the appearance of competitive impropriety.
Sometimes I disappoint an insurance adjuster or claims manager. Sometimes the contractor gets irate and calls me lots of four-letter words, none of which sounds anything remotely like “Jeff.” But at least I won’t be competing with that contractor in his market for future claims.
Don’t get sucked into something that very likely will come back to haunt you. Never be afraid to “Just Say No” and refer the adjuster to an impartial entity. In the long run, everyone benefits. It’s your integrity that’s at stake.