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Permits. Inspections And Insurance

 
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Old 08-28-2010, 07:42 PM   #1
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Permits. Inspections And Insurance


Here's a question that we have been asked and our answer. Does anyone have something to add that I could include on my website to further protect people?

What if I have a fire claim and I didn't get the renovations inspected?

My friends are journeymen and they wanted to help me renovate my basement. My electrician and a plumber gave me a "family rate" and I paid cash. Does this affect my insurance?

What happens if I don't get an inspection? My friends are good at what they do - why pay for something I don't really need? I didn't even bother to get a permit to do the work.

We all know about having friends help us out on a project. Call on your friends to help you build a deck, renovate your basement or landscape the back yard. Everyone works hard, has a barbecue at the end of the day and sometimes there is a little cash spread around.

So what happens when you do have something go wrong, like a fire in the basement? What will the insurance company do?

The first thing that happens in a claim is the the policy is examined to see if the coverage is there. This is why most people will buy a comprehensive or special form of house insurance. If it is not specifically excluded then it will have coverage.

The next issue is proof that the work was actually done. If there has been a big fire and possible explosion then your physical evidence has burnt up and there needs to be some way to show what was lost. When you and your buddies are working on a project it is not unusual for someone to be taking pictures as the work progresses. This could be valuable evidence.

The best protection you have is to advise your agent or broker before the start of the home renovations. Yes, this would increase the value of your home and you might see an increase in premium.

What about not getting an inspection done?

If your broker, agent or insurance company did not ask about getting an inspection done then there is no issue affecting your present claim. Having an inspection confirms that the work is safe and up to code for safety and day-to-day living. Since you have skipped doing something that most people would normally do, you now don't look quite as you did before in the eyes of the insurance underwriter. Your file could be noted and you could be supervised more strictly afterwards.

If you were asked and did not tell the truth then things would go south from there. This would be seen as a deliberate lie. Not telling the truth in insurance-talk is misrepresentation and can void your entire claim. It can also cause the insurance company to cancel your home insurance policy. It will not be easy or cheap to replace.

It is better to be upfront in your insurance dealings. The insurance company is in the business of paying out claims. If an insurance adjuster thinks you are not honest then you could have a lengthy claims investigation and delays build up while you wait for your basement to be fixed.

Keep in mind that our discussion has been about a partial loss. It is not the entire house. If that fire in the basement consumes the rest of the house you could find yourself without enough money to rebuild.

Insurance Answer

Your home is probably your biggest asset. Don't jeopardize it or your insurance rates. Take control of your insurance. If you are going to be cutting corners then don't cut your own throat!

Ask for proof of insurance from the contractor you are using. If that contractor accidentally causes damage to a person or property then your insurance is protected by the underlying insurance they have in place.

Call your broker or agent and let them know what you are doing. Get a permit and follow through with the inspection process.
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Old 08-28-2010, 08:29 PM   #2
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Re: Permits. Inspections And Insurance


uh, bud.

I think you typed something wrong in your browser.

This isn't exactly a consumer advocate forum... it isn't an insurance agent support group either.

By the way... who cooks up your numbers anyway? I'd have to be near starving to touch insurance work. I can't see how anyone makes a living with it. Unless they specialize in it, and know all the ins and outs on getting you guys to live up to your responsibilities.


(I haven't had a smoke in 5 days, I'm not going to make it much longer.... Insurance agents posting consumer advice on a contractors forum.... )


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Old 08-29-2010, 12:45 AM   #3
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Re: Permits. Inspections And Insurance


Good for you - stick to it because quitting smoking is really hard but it's worth it.

The reason I posted it was to get feedback from the contractors. I know insurance is not popular and a topic dry as toast but everyone is stuck buying it.

You've had some claims experience which doesn't sound like it was great. How about the poor guy who gets turned down by the insurance company because he didn't understand the rules?

You are right - if you are focused on the good of the client then you don't make a lot of money. You can make a difference by giving people control. That's what I do.

Sorry if I offended you, it was not my intention.
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Old 08-29-2010, 11:01 AM   #4
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Re: Permits. Inspections And Insurance


Nah, you didn't offend. Thanks for the well wishes.

When your in a foul mood, Insurance people talking about advocating for consumers, gets me a bit cynical.

When someone mentions an insurance job to me. I quote it like any other job. They can pitch in the difference, or get someone who wants that kind of work.

I'd hate to do an insurance job the adjusters way, only to have the consumer go after my insurance, because they thought the remedy was inadequate.

In addition, everyone knows the customers are looking for more work then the insurance is willing to pay. When it comes to insurance jobs, I think someone needs to advocate for the contractor stuck between two entities approaching the job from way different viewpoints.
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Old 08-29-2010, 11:50 AM   #5
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Re: Permits. Inspections And Insurance


I just finished a fire damage insurance job which I bid as any other job...the insurance company proceeded to ignore my way of thinking and I ended up doing it their way......but at least I'm getting paid! I made money on this job. The best I can figure is that they want you to use their format to input cost. Am I going to estimate replacing one side of a door jamb and then another...No! But we seemed to arrive at or around the same cost, so other than the additional wait for their inspector to come and verify that the work was done, it really wasn't much different than bidding a regular job. I will admit though that this is my first insurance job and that isn't much of a sample to be basing an opinion on.....but that's my two cents worth. Would I do another one....Hell ya!!! I like a little soot and mold....Bring it on.

Dan
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Old 08-29-2010, 04:16 PM   #6
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Re: Permits. Inspections And Insurance


Those are both very interesting comments. I particularly liked the one about the broker advocating for the contractor. I advocate for my client and yes, sometimes the best interest is to listen to the contractor. As I progress with claim situations I will keep that one in mind.

I often get asked about how a contractor gets on the company "preferred vendors" list. This position means the insurance company gives out your name as a source to do the work. You agree to do the job for the appraised amount. There seems to be a lot of competition to get into this spot. From whatyou are telling me it doesn't sound like it is always a smooth process.

I wonder how many times the client agrees to extras with the contractor above and beyond what the insurance allows? If it is nothing to do with the claim then that is great and an easy way to get stuff done. If it is claim related then perhaps that broker did not try to achieve the fairness the client deserves.

Again, thanks for the input. I will use your thoughts on my website but will also approach my claims situation with a wider view as to what the contractor is trying to achieve.
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Old 08-29-2010, 08:29 PM   #7
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Re: Permits. Inspections And Insurance


I might do one or two insurance jobs a year, this year... zip. Most of the jobs I've done are for repeat customers, who contact me directly.

Let me give you one scenario which cost me a customer. Customer had a leak on a roof over a bathroom. Insurance Agent was willing to pay for a couple coats of paint. Customer wanted a new bath remodel.

I get pulled into the picture. Call the adjuster and tell him I think the sheetrock should be replaced, insulation replaced, and we should check to see if water got behind the walls as well. It was like pulling teeth, trying to explain that I have no idea if the walls need repair or not, unless I open them up in a couple of test spots, after I remove the ceiling.

I'll admit after going through the tooth pulling process, the adjuster agreed to pay for the walls if I detected water damage. Fair enough... I pull teeth for free.

Now I call the customer with the good news...I thought... Couldn't understand why she wasn't going to get a new sink, new floor (upgrade from vinyl to tile) , shower, crapper, and god knows what.... oh, and she doesn't expect to pay the deductable, either.

I explain to her how insurance claims suppose to work. In which she says "everyone else gets free things on claims, why can't I?"

I believe I explained how insurance claims work again, with a bit more emotion, when we lost phone reception.

Now I gave an example where the customer was the main problem. But, I could go on to describe other instances were the insurance co. was playing foul.

From my perspective, with three parties involved the game playing gets well out of hand. Contractors should charge for insurance estimates. I bet anyone who keeps track will realize the closure ratio to headaches isn't worth it.

Oh, and... "Preferred vendor" where I'm expected to do the job at "your price" . Never...




Are you going to determine my overhead for me too?
Let me guess..... uhmmmmmmm hmmmm.... 10% .......

Try..... 50%

put that multiplier in your number cruncher...

Yes that includes my profit, but you can add an additional 8%, if you want... cause we're friends, right?
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Old 08-29-2010, 08:44 PM   #8
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Re: Permits. Inspections And Insurance


#1 I dont work for friends

#2 I dont work for family

#3 If I do work for friends or family its because I have the time and I dont charge them a penny (bbq is nice) If A permit was required , Thats the home owners responsibility ..
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Old 08-29-2010, 08:58 PM   #9
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Re: Permits. Inspections And Insurance


You are right - it is tough on contractors. I focus on commercial insurance and I have a lot of contractors who are clients.

You do the job and then often have to wait to get paid. You still have all the expenses and cash flow can be a challenge. We went through a period here in Alberta where the contractors were so busy they could call all the shots. With the economic crunch and the housing starts slowing down there is less work to go around. So a lot of my guys went back to work for a wage. When you've got a family to feed you don't have a choice.

We're slowly seeing it come back and the insurance companies actually have been good about the situation - they do not penalize for the break in coverage as long as my guy has stayed in the trades. I know, it's hard to think of insurance companies being nice but there you go.

Claims are a challenge. I try to warn my clients, in a diplomatic way, that this is not an opportunity to "make some money back". The issues of fraud are huge in the mind of the company and it doesn't take much to bring in a denial. The rules are that one item deliberately exaggerated will cancel the whole claim.

It sounds to me that you are one of the "good guys". I can tell because you get referral business. That means you do a good job. I know about overhead, my husband is self-employed. The client that pays you on time is golden. Having steady work and a long-term contract is right up there, too.

Have you worked for a lot of insurance companies? Do they all want just a 10% profit margin? That seems too low to me.

This is a very interesting discussion.
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Old 08-29-2010, 09:04 PM   #10
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Re: Permits. Inspections And Insurance


I agree Em, but with one caveat. The reason you don't work for friends and family is they don't expect to pay for your overhead.

For me it's easy, I have no friends.

Well except for my dog, and anyone who pays my markup.
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Old 08-29-2010, 09:16 PM   #11
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Re: Permits. Inspections And Insurance


Em, you are right - not many "friends" will give you money. Buy hey, when you need to move or landscape - who you gonna call? That's right.

In the olden days the community worked together. My dad was a plumber. Way back when he and all his friends went into the trades. There was about one of everything. So when they all got married about the same time they pooled their labour. Dad plumbed every house. Our house had a slate entrance that was absolutely stunning. The end wall in the living room was stone with a slate seat that ran in front the huge fireplace. Steam heat kept us toasty and the floor to ceiling glass in the living room and dining room gave us the best view ever. It wasn't until I was much older that I realized that this was a spectacular house. Each man did his very best work, knowing that everyone would do the same on his house. That was back in the early 50's...

So your helping out a friend is similar to that philosophy. We all try to treat others as we want to be treated and it tends to work out. Sort of like, "My name is Earl".
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Old 08-29-2010, 09:17 PM   #12
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Re: Permits. Inspections And Insurance


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Originally Posted by TurnersTips View Post
You are right - it is tough on contractors. I focus on commercial insurance and I have a lot of contractors who are clients.

You do the job and then often have to wait to get paid. You still have all the expenses and cash flow can be a challenge. We went through a period here in Alberta where the contractors were so busy they could call all the shots. With the economic crunch and the housing starts slowing down there is less work to go around. So a lot of my guys went back to work for a wage. When you've got a family to feed you don't have a choice.

We're slowly seeing it come back and the insurance companies actually have been good about the situation - they do not penalize for the break in coverage as long as my guy has stayed in the trades. I know, it's hard to think of insurance companies being nice but there you go.

Claims are a challenge. I try to warn my clients, in a diplomatic way, that this is not an opportunity to "make some money back". The issues of fraud are huge in the mind of the company and it doesn't take much to bring in a denial. The rules are that one item deliberately exaggerated will cancel the whole claim.

It sounds to me that you are one of the "good guys". I can tell because you get referral business. That means you do a good job. I know about overhead, my husband is self-employed. The client that pays you on time is golden. Having steady work and a long-term contract is right up there, too.

Have you worked for a lot of insurance companies? Do they all want just a 10% profit margin? That seems too low to me.

This is a very interesting discussion.
I believe it's 10% overhead and 10% profit over that. "Industry standard" which is a BS statement.

I don't do much insurance work, obviously. So, I don't know all the ins and outs. In the jobs I've taken, either the customer or agent agreed to my price. I've never done a large one, nor would I want to.

I think your trying to snow me. You an adjuster or a salesman? If your a Ms. Turner, maybe I'd take you out for a milkshake. I doubt that's the case.

Anyway, glad to see your addressing your posts to contractors and not consumers. Thanks.

No, I'm not a good guy. I'm too greedy for that.


*****************************
Edit: "your husband"!

reread your post.... ooops. Jeez, I had you as a guy...

Welcome to CT!

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Old 08-29-2010, 09:35 PM   #13
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Re: Permits. Inspections And Insurance


I'm a broker - been doing that work for about 17 years. Yes, I am a gal.

I understand your skepticism - it is unusual to find anyone in any profession that has a high standard of ethical behaviour.

I learned insurance on my own - got sort of thrown into it by chance. Then 11 years ago I met David Turner who became my mentor. David is an absolute gentleman in all sense of the term. He always told the truth. He always did his very best. He was always impeccable with his word. He guided me into becoming an excellent broker who puts the needs of the client first, always. At the same time I have the respect of the insurance companies I deal with because I always tell them the truth.

David retired and together we put together a website, turnerstips.com. It is used by insurance brokers and underwriters for the glossary. It was set up though to provide information for all those people out there who do not have a broker that has the time or inclination to explain how insurance works. I try to give people control of their insurance.

The discussion I have had with you and "Em" is part of what I do. I go looking for input from different people. If a contractor would write an article about how it really works from their side then I would post it. People need to know what is really going on.

This is part of how I contribute to my overall profession. And before I get sounding to saintly I hope one day to sell some advertising on the site. That will help to cover my costs to maintain it. Who knows, one day it may become a household name but that is not likely.

So now you know lots about me and my intentions.
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Old 08-29-2010, 10:08 PM   #14
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Re: Permits. Inspections And Insurance


Sorry for my earlier posts. Had I known, I would of taken a different path to get my point across.

I deal with customers all day, and I've gotten good at it. At the end, its nice to come here and vent a bit. Consumer advocacy, at the end of the day, is at a low ebb. In the morning, its back on top.

Are you involved in General Liabiltiy or Worker's Comp?

Do you know what the insurance industry has planned as far as offering coverage for the new RRP laws?

If not, well it would still be good to hear stories about homeowner's concerns . I haven't heard any in... oh, a couple hours or so. Well, at least yours will be from the insurers point of view.
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Old 08-30-2010, 08:09 PM   #15
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Re: Permits. Inspections And Insurance


I deal in the liability end for the contractor. Worker's Comp is separate here in Alberta.

RRP? I'm not familiar with the term. Our biggest concerns here are Occupational Health and Safety. They are on contractors like white on rice. If you do not have a safety plan you do not get on the big jobs.

I deal with commercial-type clients from a very wide spectrum. It can be the new framer to a client who does bid bonds and needs surety coverage. Lots of different aspects.

What is constant is that everyone seems to be busy and yet wants to keep the hassles to a minimum. On a rainy, bad weather day my phone will ring off the hook as the tradesmen catch up on their paperwork.

I do hear what you are saying, though. I start out the day energized and some days just suck it out of you. It is a challenge to give that client at 15 minutes before closing the same treatment you can the first client of the day. That is part of the professionalism that we have to maintain. Besides that it is only fair!
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Old 08-30-2010, 08:12 PM   #16
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Re: Permits. Inspections And Insurance


Quote:
Originally Posted by TurnersTips View Post
I deal in the liability end for the contractor. Worker's Comp is separate here in Alberta.

RRP? I'm not familiar with the term. Our biggest concerns here are Occupational Health and Safety. They are on contractors like white on rice. If you do not have a safety plan you do not get on the big jobs.

I deal with commercial-type clients from a very wide spectrum. It can be the new framer to a client who does bid bonds and needs surety coverage. Lots of different aspects.

What is constant is that everyone seems to be busy and yet wants to keep the hassles to a minimum. On a rainy, bad weather day my phone will ring off the hook as the tradesmen catch up on their paperwork.

I do hear what you are saying, though. I start out the day energized and some days just suck it out of you. It is a challenge to give that client at 15 minutes before closing the same treatment you can the first client of the day. That is part of the professionalism that we have to maintain. Besides that it is only fair!

What does the typical (appropriate) safety plan entail?
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Old 08-30-2010, 08:21 PM   #17
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Re: Permits. Inspections And Insurance


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What does the typical (appropriate) safety plan entail?
A safety plan will cover a ton of stuff. Occupational Health and Safety has guidelines. It is everything from working alone to having an emergency evacuation plan. Each province and each state will have different requirements. Meeting these requirements is what is declared in the safety plan.

Where ever you live you can check out under your Occupational Health and Safety for what they want. A roofer is going to have different requirements then a painter but there will be some similarities.

When I present a new client to my underwriters I always mention the safety record and proper procedures if this is the case. If not, I don't bring it up unless asked. It can help you get a better rating if you are recognized for good safety. Makes sense. The safer you are, less claims you will present.

Is that helpful?

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