Many professional carpet cleaners end up in the water restoration business kind of by accident. What usually happens is, there’s a big storm in their area, and some of their existing customers call and ask if they can help them dry out their flooded basement carpet.
Since carpet cleaners already have much of the equipment used by restorers they decide to give it a shot. And while the “drying system” they set up might be something that makes them cringe years later, the check they receive from the insurance company does not. After all, the typical water restoration job is between $2,000 and $3,500. And when you compare that to a $150 to $200 carpet-cleaning job, it’s pretty easy to fall in love.
However, all businesses have their secrets and the restoration business is no exception. I don’t mean the technical training, though that is an absolute must. There are many outstanding schools that offer not just IICRC training but many advanced drying systems and techniques that anyone really serious about building their restoration business simply has to attend.
I’m talking about the secrets that make the difference between making a really great profit and just getting by. It’s no accident that many of the restorers I talk to tell me, “I’ve built a $3 million business, but I don’t know where the money goes and I’m not making anywhere near the amount of money I should be.”
The root cause of many of the issues inhibiting restorer profits is the relationship the contractor has with the adjuster. For some strange reason, many restorers choose to fight the adjuster who is, after all, the source of their business. It’s as if they think that, after a knock-down drag out over keeping equipment on a job for six days instead of five, the adjuster will ever refer them on another job again. I just don’t get it.
The smart restorer has the maturity to understand that a key part of an adjuster’s job is to prevent the company from getting ripped off. After all, that’s a huge part of their job description. But the deeper truth is that adjusters are some of the most overworked and overwhelmed people around. In the past 20 years the number of adjusters has fallen like a rock while the number of claims has risen dramatically. This means that adjusters have more claims than ever, less time to handle each one, and more and more stress and pressure every day.
If you understand this, you’ll understand why some adjusters refer the same few contractors over and over again. Once they know you’ll treat them fairly and that they don’t have to go over your estimate with a fine-tooth comb, they won’t want to use anyone else. You will allow them to close claims faster with less stress – and that is what they really want.
Now, you might be thinking that I’m telling you to simply allow the adjuster to cut your invoice; I am not saying anything of the kind. That would obviously be unfair to you, and an unbalanced relationship like that will never bring the kind of long-term results you’re looking for. As with almost everything in life, communication is the key. And when it comes to the insurance industry, that communication must come with documentation.
The first step is to understand what adjusters need in order to close a claim file – and that paying you is part of the process. There are about 25 different items they need. If you are able to provide them for the adjuster, you suddenly have become a very important person, helping them accomplish their goals.
Here’s one of the elements of the claim file that can cause some of the biggest problems for restorers: the estimate. A shocking number of restorers provide no estimate until the work is well under way or even completed. In other cases the final invoice is much larger than the estimate, with no explanation along the way. At this point, the restorer is vulnerable to having the invoice cut to pieces by an aggressive adjuster.
Once an adjuster challenges your final invoice, you are in a very difficult position. The time to explain why you charged what you did was weeks ago, and your attempt to do so after the fact makes you look shady. This is such a huge negative for adjusters that they may never work with you again.
Many restorers choose to fight with the adjuster. This is a no-win situation. You might win the battle and get paid, but you will have lost the war and will never, ever get another job from that adjuster.
I’ve even seen restorers tell the property owner that they are going to foreclose on their house if they don’t get paid. How on earth can you build a business like that?
But imagine you provide the adjuster – in addition to all kinds of documentation about the loss – a detailed estimate of the mitigation work. Six weeks later you get a phone call and the adjuster tells you that the charges are too high and they’re not going to pay unless you cut the invoice 30 percent. Believe me, it happens all the time.
You can calmly say, “Mr. Adjuster, let’s work through this together and see what we can come up with. On such-and-such-a-date-and-time, less than 48 hours after we arrived at the Jones house, I e-mailed you the estimate. I also have in my notes that I spoke with you the following day and you confirmed that you had received it. I have provided all the other documentation that the file requires including a signed Certificate of Completion and so I’m wondering, what has changed from six weeks ago when you had the estimate and now?”
Now the adjuster must have a valid reason to challenge your invoice. And if this goes up the chain to the claims director (their boss), the adjuster is going to look pretty silly trying to cut your invoice with no basis for doing so.
Now, all this assumes that you are a legitimate contractor using industry-accepted pricing, that you are doing what is required to do a good job and are not trying to pad the estimate. If all of those things are true, you can have a calm business discussion with the adjuster and stand your ground instead of fearfully cutting your invoice.
Once the adjuster sees that you are a legitimate and professional contractor and not trying to take advantage of them, all kinds of good things start to happen.
It is also extremely important that, during the job, you stay in touch with the adjuster and notify them immediately should things change. Sometimes a plumbing repair is not done correctly and a secondary leak starts. Sometimes the plaster walls end up taking longer to dry out than you estimated. Whatever the case, be sure to document the situation with photos, journal notes, statements from other contractors and the insured and, most of all, stay in touch with the adjuster and document those conversations.
Adjusters can be your best friend or your worst enemy. It’s all about the communication…and the documentation that goes along with it.