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Storm Chaser Acting As Adjuster AND Using Contingency Contract Found Illegal In Il

 
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Old 08-06-2009, 10:51 PM   #1
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Storm Chaser Acting As Adjuster AND Using Contingency Contract Found Illegal In Il


For those interested in the legalities of the Contingency Contracts and "Acting" in a manner that could be perceived as an Adjuster in the Stae Of Illinois, this recent case will prove interesting.

I wonder if the attorneys for these companies are working overtime to rewrite their contingency contract language?

Ed



July 2009 - Judges Ruling on Breach of Contract Complaint Xteriors Inc. vs. Jerry Lambert


Below is the judgement filed by The Honorable Judge Caldwell in a Breach of Contract Suit filed by Xteriors Inc. againt Jerry Lambert. The Judge in this case found the contract offered Jerry Lambert by Xteriors failed on several grounds. See below the Excerpt of the judges findings......................




STATE OF ILLINOIS IN THE COUNTY OF McHENRY

IN THE TWENTY-SECOND JUDICIAL CIRCUIT
McHENRY COUNTY, ILLINOIS

__________________________________________________ _______________________________
Xteriors Inc, Plaintiff vs. Jerry Lambert, Defendant

Case Number; 09 SC 4169
April 30, 2009

ELECTRONIC RECORDING

EXCERPT OF REPORT OF PROCEEDINGS at the hearing of the above-entitled cause, before the Honorable MICHAEL CALDWELL, Judge of said Court, on the 30th day of April, 2009. Diana Foster


---BEGINNING OF EXCERPT---

THE COURT: The Plaintiff's claim in this case has to fail on several -- several grounds.
Number one, it clearly in this Court's judgment violates the Home Repair Act, and it very clearly especially in paragraph four of Plaintiff's Exhibit Number 1 violates the Public Insurance Adjusted and Registered Firms Act. Adjusting insurance claims according to the statute means representing an insured with an insurer for compensation and while representing the insured either negotiating values, damages, or depreciation or applying the loss circumstances to the insurance policy provision.

Section 512.53 thereafter requires any person engaging in the business of adjusting insurance claims or holding himself out as a public insurance adjuster -- I stress the "or" because that clearly shows that the statute is drafted in the disjunctive – and this paragraph clearly appoints Xteriors Home Remodeling as an insurance adjuster for this purpose.

On that basis and that basis alone, there should be a judgment for the Defendant.

Going further, in the Home Repair Act because there is no dollar amount here-- This is a pig in a poke. If somebody gets an estimate, the estimate has to contain -- an offer of repair must contain an estimate of repair. Doing this without anything else is simply requiring the Defendant in this case to pay money for what is in effect the securing of estimates and negotiating with an insurance company.

The contract clearly violates the Home Repair Fraud Act. In addition, when we get to the contract provisions, Mr. Lambert has a three-day period within which under statute he's allowed to void the contract, but thereafter all of the -- all of the contract provisions with respect to cancellation or termination of the contract lie with the contractor.

We're at a period of time or a point of time in this case where there was an impasse between the interests of the owner and the insurance company. The insurance company was only going to authorize $21,000 in repair and the estimate came in at $30,000 from Xteriors. Now, Xteriors has the opportunity -- the option to cancel the contract at that point if there's no agreement. Why not Mr. Lambert? Why can't Lambert declare these negotiations between the insurance company and the contractor at an impasse and end the contract? (Indiscernible.)

In addition, its again, the option of the contractor at the point where the contract doesn't contain a ten percent -- the ten percent override for overhead and profit, again, it's the contractor and only the contractor's option to cancel the contract.

If there are provisions with respect to cancellation of the contract at some point after execution and before final performance on one side, the rule of (indiscernible) would require equal opportunity on the part of the homeowner to transfer them or cancel them on the other side.

If all he did was negotiate with the insurance company, he definitely -- Mr. -- Excuse me -- Xteriors Corporation has not performed its contract. I don't think it's capable of being performed number one; and number two, I believe it violates public policy.

For all of these reasons there will be a judgment for the Plaintiff-- excuse me – for the defendant in the plaintiff’s complaint.

I'm going to have to dismiss the counterclaim, though. I don't have equitable powers and it I still sitting in small claims courtroom. The only thing I can do is make a determination with respect to money damages. I cannot make any findings with respect to the mechanic's lien claim. I cannot order removal of the lien. I don't have injunctive powers at this particular point. That, however, is a matter for another day unless you can get a release from the Plaintiff.

Prepare an order, please.

--- End of excerpt ---

Posted by BuckStopsHere at 4:39 PM
Labels: hail damage, HailChaserChaser, illinois roofing, Precision Roofing and Restoration, Roofing, Siding, Siding Contractor, Steve Tatgenhorst, Steven H. Tatgenhorst, Xteriors Inc.Roofing contractor



1 comments:

BuckStopsHere said... The lesson here is to have any contract reviewed by a competent attorney. It is always better to spend a couple hundred dollars to an attorney to review the document, than have to pay thousands to the attorney later to defend your rights.

Second point, make sure you obtain copies of your contractors insurance and workman’s comp information before they start work.

Third, before final payment is made for work done. Obtain a waiver of lien signed by your contractor and any sub contractors he/she may have hired to do your work. Without the waiver of lien, the person doing the work on your home can than place a lien on your home for the value of the work and supplies. You will never know it has been done without checking the Clerk’s office. Or until you go to sell your home. The lien will more than likely have to be settled before you can sell your home.
For those of you living in McHenry County Illinois. Here is the link to the McHenry County check and see if you have a lien on your home. http://68.21.116.68/freewebsearch/default.aspx , Type your last name in and click on Search. The listing is for all land records recorded with the county. Double click if you see your name and the information will be shown. In the case of Xteriors Inc. This is what you will see.

McHenry, IL
Land Records Search

Search Criteria: Party Name = XTERIORS

6 Records Found
Recorded Date Document Name Last Name First Name Party Type Document Type
06/11/2009 2009R0029711 XTERIORS INC PARTY FILING REL OF LIEN
10/22/2008 2008R0054733 XTERIORS INC PARTY FILING REL OF LIEN
09/11/2008 2008R0048424 XTERIORS INC PARTY FILING MECH LIEN
09/11/2008 2008R0048423 XTERIORS INC PARTY FILING MECH LIEN
09/11/2008 2008R0048422 XTERIORS INC PARTY FILING MECH LIEN
09/11/2008 2008R0048421 XTERIORS INC PARTY FILING MECH LIEN






These are public records. Open for anyone to see.
Good luck!!
July 20, 2009 8:54 AM
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Old 08-11-2009, 07:30 PM   #2
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Re: Storm Chaser Acting As Adjuster AND Using Contingency Contract Found Illegal In Il


It's a start, Ed. I always feel a bit guilty in these discussions as I do a ton of storm related work and actually market our firm as Insurance Claim Specialists! There are, however, large differences between storm chasers and insurance restoration companies. I don't even have a problem with someone getting an authorization to proceed signed by the owner on a large hurricane, tornado, water, or fire loss. It is generally not necessary for roofing claims and is used to bait the client into thinking they are in a binding agreement, which as your article shows, is not. I have copies of several of these contracts and they are all very similar in nature. I have even used a 'work authorization' for commercial work in years past that my attorney told me up front wasn't worth the paper it was written on. I demand only one thing up front from my customers when working their claim. A handshake, a look in the eye, and their word. If I feel even the least bit skeptical that they are going to milk my time for a better result and then low bid me out, I walk away. I have lost far less business that way then when I used the 'work authorizations' years ago. If you present yourself properly up front and sell your skill set and your company, they will use you.

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Old 09-04-2009, 08:26 PM   #3
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Re: Storm Chaser Acting As Adjuster AND Using Contingency Contract Found Illegal In Il


Maybe, I haven't had enough coffee yet, and it's 9:17 PM EST.

I tend to agree with BuildPinnacle. As a restorer and adjuster, I have traveled the country and and worked 3 major CATS since 1994. For those in the restoration field, a work authorization is the key document, when called upon for emergency services. The insured only pays the deductible and all work is billed to the carrier. The rule of thumb is that we will do the work for the insurance agreed scope of work. Any work out of the insurance scope is a change order. In 16 years, I don't think I have ever prepared more than a few handful of invoices or contracts, if emergency services are involved. The estimates to the carrier are the invoices.

As for someone acting as a Public Adjuster, the definition of a PA really needs some rewording. If you are already on the job working or due to emergency services and the adjuster for the carrier arrives, you walk the job and give him your preliminary estimate. You reach a verbal agreement and keep working. Technically, you have discussed what it will take to make repairs and, thus, have negotiated the loss. This is the way it is, and has been going on for years everywhere. That person is not a PA, but doing their job as a restorer......identify the damage, prepare a estimate to repair, and reach an agreed scope. END OF CONVERSATION.

Again, maybe I missed the point of the suit. If I did, please explain.

Thanks.
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Old 09-06-2009, 07:10 PM   #4
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Re: Storm Chaser Acting As Adjuster AND Using Contingency Contract Found Illegal In Il


Quote:
Originally Posted by Insuranceclaims View Post
Maybe, I haven't had enough coffee yet, and it's 9:17 PM EST.

As for someone acting as a Public Adjuster, the definition of a PA really needs some rewording. If you are already on the job working or due to emergency services and the adjuster for the carrier arrives, you walk the job and give him your preliminary estimate. You reach a verbal agreement and keep working. Technically, you have discussed what it will take to make repairs and, thus, have negotiated the loss. This is the way it is, and has been going on for years everywhere. That person is not a PA, but doing their job as a restorer......identify the damage, prepare a estimate to repair, and reach an agreed scope. END OF CONVERSATION.

Again, maybe I missed the point of the suit. If I did, please explain.

Thanks.
The push to take the contractors or restorers out of the claims process is being made by the public adjusters. We never had a problem with it in Texas until about 4 or 5 years ago. The big PA's spent tons of money lobbying for a public adjuster law that clearly defines the negotiating, etc and prevents contractors from doing so. We can't market that we will negotiate claims, etc. It's BS. The inurance companies started out using it as a weapon after it passed. It seemed like on every claim if I didn't toe the line, the adjuster would say....'Are you a P.A., can I see your license?'. I caught on quick and used to say back, 'A public adjuster?...Isn't that what you are, an adjuster. I'm just a roofer'. They would feel obligated to explain to me what they were talking about, not feel threatened anymore and I would play my stupidity off to them all the way through the 'negotiation of the claim.' Texas law does not allow a contractor to hold negotiate a claim and perform the work even if he was to get his PA license. Conflict of interst according to them. Gives the insured to much ammunition to recieve a fair settlemnet according to me. The PA's hated seeing contractors do their jobs for free. They were loosing business to us. I just keep up with the rules they give us and keep playing the games.

Insofar as the lawsuit, the insured basically wanted out of the agreement and the roofer was pushing it. The way these agreements are drawn up leave too many intangibles and are not binding in court. That's what the lawsuit was about....the HO wanting out of their contract and the judge stating that the contingency contract was not a valid contract.
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Old 04-11-2010, 09:17 PM   #5
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Re: Storm Chaser Acting As Adjuster AND Using Contingency Contract Found Illegal In Il


Good to see give them a price and move on!!!!I hate those things
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Old 01-21-2011, 02:47 PM   #6
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Re: Storm Chaser Acting As Adjuster AND Using Contingency Contract Found Illegal In Il


I want to take this opportunity to introduce myself. My name is Steve, and I have decided, after almost a year and a half, to tell the real story about what has transpired with my company. I want to do this for various reasons, one of the most important being to offer assistance to other contractors and storm chasers, in an effort to hopefully lower their risk of something like this happening to them. Make no mistake gentlemen, what has happened to me, can happen to anyone. I made mistakes, but the biggest mistake I ever made, was trusting my customers 100%. Call it naive, stupid, whatever you want. I have come to the conclusion that the system is to blame for most of what goes on. Dont get me wrong, there are many dishonest contractors out there, but most of the issues can be improved with new or revised regulation. I wonder if contractors in Illinois even know how easy it is for a customer to defraud them. You see, its not just the dishonest contractor, its a series of events that start the minute the rain starts falling. For the record, anything that I say that pertains to my situation, I can absolutely substantiate with written documentation. I will be informing whoever want to listen, of things that are going on that will shock some of you, and at the least, get most of your attention. I look forward to helping out anyone who has a question. I have a wife, two young boys, and what has happened to me is something that you cant even think could happen. I am by no means perfect. I have made mistakes, but none of what I did was even in the realm of criminal. Through my experience, I have gained a tremendous amount of knowledge regarding the issues surrounding storm chasers and the roofing and siding business.
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Old 01-24-2011, 04:55 PM   #7
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Re: Storm Chaser Acting As Adjuster AND Using Contingency Contract Found Illegal In Il


buildpinnacle quote: "Gives the insured to much ammunition to recieve a fair settlement according to me."

And therein lies the key!

Insurance companies base their (full replacement) premiums on the cost to replace an entire property. Insured's premium is, for example, $1,200 per year on a $300,000 property. If the entire structure is destroyed, the insurance company agrees to pay for demo and rebuild.

However, if the insured suffers damage of only $30,000 (RTA - wind/hail storm, for example) that amounts, obviously, to only 10% of the dollar amount covered even though the insured paid premiums based on 100% / $300,000. Under this scenario, the other 90% of the insured's premium is pure profit to the P&C insurance company.

Multiply that out a few million times and you'll see why Warren Buffet's Bershire Hathaway fund loves the P&C insurance industry.

In order to get the highest premium from their insureds, P&C insurance bases their premiums on the highest demo/rebuild costs. When a disaster occurs however, they will attempt 99% of the time to pay what they say are current fair market rates even though they are usually substantilly lower than real, true and accurate (RTA) rates.

P&C insurance companies and many insurance friendly state insurance commissioners (MN for example) support and lobby for PA statutes that do or at least attempt to prohibit contractors from advocating on behalf of insured's with damage. They know that good contractors will always get more legitimate money per claim out of insurance companies and this hurts the P&C insurance companies bottom line.

They also know that in a disaster situation where several thousand/many thousand properties have been damaged, there will never be enough PA's available to handle all of the claims in a timely manner. When contractors are prohibited from "representing" property owners with damage under the above scenario, the property owner is indeed without that "ammunition" they need to make sure they receive a full settlement.

Ultimately, although property owners paid their premiums that were based on the highest demo/rebuild costs, P&C insurance will try and settle that RTA $30,000 claim at a substantially lower dollar amount. If a PA comes into the picture and gets the insured their full $30,000, the insured is still left underpaid after the PA gets his/her cut: $30,000 - $3,600 at 12% = $26,400. Then, the insured's only option is to put their repair job out for bid at the max of $26,400. That's when the low ballers and deductible buyers start swarming and that's when the insureds get hurt.

Maybe P&C insurance will agree to add the PA's commission on top of the RTA settlement check? nah...

The arguments in favor of allowing only licensed PA's to "negotiate" with P&C insurance are specious and a sham and serve no one outside of the PA industry. The more we are proactive in exposing the sham and the people behind it (including ill-informed politicians and Judges), the better it will be for all legitimate contractors who do a great job in making sure their customers "return on investment" (premiums paid) is as high as it should be.

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