Contract
I have recently been awarded some Fire Restoration jobs and would love to receive a copy of your work authorization and contract forms to make sur that I have all of my bases covered. Just starting to get into Insurance work. Thanks Much.
talltimbers1@hughes.net
quote=Insuranceclaims;938628]This is a very long post...........too many cups of coffee this morning.
The insurance restoration field is a multi-billion dollar business and is not for all contractors. I enjoy sharing information with others, so get comfortable, or better yet, make a pot of coffee.
Work Authorizations/Contracts
I want to expand on my previous post, where I mention the methodology of securing work involving insurance restoration. First, I will briefly describe the possibilities that lead up to the work.
Most insurance losses involve some sort of water damage to the property, including water, wind, and fire losses. In this case, Emergency Services is required to either extract and dry the structure; provide a roof cover-up; or a board-up. During Emergency Services, time is of the essence. These services need to be initiated within hours of the call.
All property owners are supposed to take whatever action is required to mitigate the loss from further damage.
The contract you are looking for is
two-fold. For the Emergency Services, you need, what is called in the industry, a
Work Authorization. For those that specialize in insurance restoration, this form is generic in one form or another, depending on the vendor. This form gives you: 1) permission to take whatever action is necessary to protect the property (structure and contents) from further damage, and restore the property to its pre-loss condition, and authority to discuss this claim with whomever necessary to approve and pay for the services rendered.
In addition, the form can state that you agree to perform the work for the "insurance agreed scope of work". If you understand the industry, you should know what you can and can't do to ensure that you get paid. If not, ask first! You always want to know if the homeowner is insured; not all losses are covered. Dont' be afraid to ask for help! (Note: This post will not discuss how various states look upon this work authorization. Yet, I know for a fact that all insurance restorers use this form across the country, and it is recognized by all carriers.) 2) The Work Authorization and or your marketing of your business may state that you will the bill the carrier for all work performed. Some restorers require a deductible payment; some don't. Usually, Emergency Services are billed 100%. Then, you wait 30-90 days to get paid. The repairs are paid in draws depending on the size of the job and whether a lender is involved. The only out-of-pocket expense to the insured is their deductible. In addition, your form will have a paragraph authorizing you to received direct payment. In the last two years, a 2nd form authorizing a direct payment may be required. Some carriers can pay the vendor directly for emergency services. Some lenders require that their name be listed on all checks. (Note: Dealing with the lender is another post in itself.) 3) Another paragraph will discuss how the "insurance agreed scope of work" is reference in Attachment A (usually Xactimate....a computerized, line item scope of work based on unit pricing (ea, lf, sf, sq). 4) A fourth paragraph may have a Stop Work-Hold Harmless clause, which refers to the insured stopping your work, during Emergency Services to mitigate the loss. 5) The last paragraph may discuss legalities, as far as liens, collections and attorney fees if you are not paid. 6) The form also has lines for the insured contact information and adjuster/carrier information.
I, personally, have used a one-form Work Authorization/Contract for 10 of 16 years and have never had a problem. This form is all inclusive to secure all work if you so desire.
Now, I mentioned that a contract for emergency services is two-fold. When it comes time for the repairs, most lenders disburse funds 30-30-40%. The lender will automatically disburse 30% to start. A home inspection is required by the lender for all other funds.
As such, and, depending on the size of the job, you may want an Attachment B for a repair contract, which details what repairs will be made with a cash flow projection. This will allow you inform the insured and lender how you are requesting draws. (Note: There are multiple options available in dealing with lenders on releasing funds; not discussed here).
Homeowner Attitude
Dealing with property owners after a loss is not the same as dealing with property owners wanting new construction or remodeling.
Before you even meet with the insured, you must understand that their lives "have been turned upside down", no matter how small the loss. One of the key points to signing the insured is to have and show
empathy to your customer. Property owners can sense whether your are there to help them or just make a buck. You need to be educated during the initial meeting as to "what your going to do for emergency services and why, how you will prepare your scope of work for the adjuster/carrier to review, and how you will make repairs.
The #1 complaint that I hear from homeowners across the country is: "I didn't know what to do; No one explained anything to me!" This includes the contractor and adjuster/carrier.
During your initial meeting, you only get one chance to sell yourself.
Free Estimates or Not
I can relate to everyone's experience. During the 1994 Northridge Earthquake, I and the company that I worked with would charge a % of the gross loss for a scope of work. This would be applied to the job if we were not used. Most property owners do not realize the time involvement to prepare a proper scope of work, which involves a computerized estimate, photos and backup documentation.
While the following statement applies to any field, it really applies to insurance losses, when you are trying to secure the job, "Knowledge is power."
Knowledge, coupled with communication skills can be a winning solution to securing the job.
Empathy....you must put yourself in the customers shoes! Sometimes, you only get one shot to secure a job. If people are not comfortable with you, during the initial meeting, and you are not able to properly explain what you will do during the entire claims process, you will not get the job. Coming on 17 years in the industry, I am still going to school to keep up with the industry.
As I have grown in the insurance industry (restorer/adjuster), I inform people that I
don't give free estimates. I will meet with them and sell myself with information, confidence and empathy. When people ask for a free estimate, I inform them why I don't give free estimates;
"you either use me or you don't; my references speak for themself." I will walk the job with them, and, once, they see that
"I have the answer, before they have the question, they know that they have the right person for the job.
I close 99% of the jobs that I go after.
Insured or Family Members Want to do Part of Work
This can be a tricky matter. There are many variables involved here. Here are some bullet points to have the homeowner think twice about this:
---Rule #1: never used friends or family.
---If I can't sue you, I can't use you.
---If there is a lender involved, you must inform the insured that you may receive a 1099, and can only sub out work to licensed and insured subcontractors.
---Even if the family members are insured and licensed, they must meet your standards for work. You will ask the insured to sign a Hold Harmless Waiver for family members being used.
---If the homeowner wants to do part of the work, you must outline this as a change order and, again, have the insured sign a Hold Harmless Waiver. In addition, you also have two options if the insured, themself, wants to do part of the work: 1) you can give them all of the line item charge or allot them a percentage of because the line items has burden built into the line item and 2) you must explain, during the initial meeting, that, if any of the line items are not done or are performed by the insured, option #1 will apply, but you get to keep all material tax and profit/overhead. If they ask why, it is because of your time and experience to prepare and provide a proper scope of work. You may want them to sign a separate form that they agree to this. Don't put on any form, which would go to the carrier. This is between you and the insured.
Insurance work can be very fast paced and requires you to be able to adapt, immediately, to any situation as the job progresses.
Again, gaining the comfort zone and confidence of the insured is essential before a work authorization, estimate or contract is even discussed.
If anyone has the opportunity to secure an insurance loss, I don't mind giving advice. If my involvement requires estimates or a full claims package, that can be discussed.
I can email a copy of my current work authorization/contract on an individual basis, but, I will not post for public view. I will ask each person/vendor to sign a form that my form is only being provided as a guideline and for personal use only and will not be publicized. Each vendor should check the legality of this form for their particular location. I, again, will say that various degrees of this form are used by restoration contractors throughout the country.
I hope this post answers some of the methodology in securing insurance work and why some "regular contractors" have a problem securing work involving insurance claims.[/quote]