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Remodeling Contractor
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Discussion Starter #1
I'm about to jump into the very large pool of insurance work, again...

I've done fire rehab & even quoted it out, problem is:

I've never really wrote up the 1st contract the HO signs...
My mother, Marge, (original M in B&M) wrote all the contracts used in the company.
I'm trying to figure out the wording to use to cover my ass as well as the HO's.
Blah blah agree blah blah scope of work blah insurance co blah
I need to cover bases such as:
Dealing with insurance co to cover a scope of work (getting them to pay for "everything" the HO lost)
Being able to discuss changes to the scope (ie: HO had hard word under carpet but just replacing the carpet. Using the hardwood $ to replace other windows not damaged by fire)
Is it safe to "contract" the fact that the co. would be eating the HOs deductible, or just assure the HO you will?

What I hate is I can't ask my mom to show me an old contract...
I guess you really have no idea what you "take for granted"...

So, what I'm asking is:
Can anyone, or many...
Post wording they use in agreements with HOs when the price of the job can't be set b4 it is signed?
Giving the contractor control over dealing with the insurance co directly.

Thanks for listening to my rambling!
And I look forward to the replies

Billy Wheeler
B&M Services
 

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Hey Fast,
Can't you look at some old (hopefully not too old) contract from your company files to use that format?

If it's been awhile, it would be best to have a lawyer write these up for you. There are new laws almost every day. IM me if you want the name of mine who deals almost exclusively with construction law.

You don't want to try to write or modify a contract yourself nowadays, the insurance company WILL find a loophole and get you for way more than the cost of what a lawyer would have cost.
 

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Remodeling Contractor
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26 Posts
Discussion Starter #3
The files I found when I was cleaning out her house were too new to be from the insurance days (only about 6-7 years saved)
The fire rehab jobs were from 1986-1995, and the contracts I found don't cover the direction this could lead
 

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Remodeling Contractor
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26 Posts
Discussion Starter #5
I'm not sure if it's the fact I'm using Firefox or I have limited access because I'm "new"...

I can't, for the life of me, find a way to send an IM...

Also, I have the welcome message in my inbox & it says it's "full"
(just the 1 message)

I'd love it if you could forward the info to me, maybe I could reply to your message?
 

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I tried to IM you with the info but had no luck either.
Go to the green bar above, then "about us" then scroll down to "contact us" and tell them the trouble with trying to IM.
They are very responsive and will probably have the problem fixed within a day. Nathan (the administrator and founder of the site) will probably handle it personally.
 

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You might be able to hook up with a public adjuster, (the guys that negotiate with the Ins CO on the HO's behalf in return for 10% of the take). A good working relationship whereby you exchange leads and opportunities would benefit both parties.
These guys fight for everything that is due to the HO and more. You will have a good idea after working on a few of them the things the Ins co will pay for, some that you may not have considered. Ex. I just did a water damage job, and the HO got $350 to remove and reset furniture, I never really thought about charging for that.

The Craftsmen series of estimating books has a book dedicated to insurance pricing, you may want to pick one up, I think they also have a book on contracts.

Good Luck!
 

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Remodeling Contractor
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Discussion Starter #8
"Back in the day", the contractors in the area had many problems with the "public adjusters"
Partly because they always had a "brother, cousin, close friend" that was a contractor.
I've quoted about 30 fire rehabs & with the estimating software I have a good grasp on the line items that the insurance will pay for.
Including P&O, Content manipulation, Carpet & the hardwood under it, Landfill fees, R&RE vents, HVAC duct cleaning, Base service charges, Final cleaning...
We also had to fight with the fire fighters, they would bad-mouth the contractors that wanted to drop liturature & it was because they were remodeling "on the side" (2 on 2 off)

Maybe it's different here in the Rockford area,...
Maybe times have changed...
Maybe I should be a public adjuster? 10% just to create a scope of work, not a bad gig...

I'll look into the Craftsman Series of Estimating & see if I can find something that will help
Thanks for the reply!
 

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Bill, i also have done a fair amount of ins work, alot of what you are talking about was always handled by my private adjuster, he would go toe to toe with the HO ins company and make sure all those bases where covered, this left my contracts more straight forward. maybe you do it differently. G
 

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Remodeling Contractor
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Discussion Starter #10
I guess I was taught / brought up to follow a different direction as far as this goes.
Say they have an $80,000 loss
You eat their $2,000 deductible, then you give a PA 10% or $8,000
Now, before you even order a dumpster the job is short $10,000
The PA doesn't get the insurance to pay the 10% nor can it get the insurance to eat the deductible...
Sure, I know you add 10 & 10 to the job for P&O, but the company has it's own overhead, doesn't it?
I guess if you don't sub out any of the work what-so-ever, the shortcoming isn't so bad...
Once you sub out the drywall, hvac, electric, & roof... None of them is going to want to eat the 10% you gave the PA to work up the scope.
So, the way I see it is the adjuster that is working for the HO, not the contractor, is costing the HO 10% of their finished product?

If I'm looking at this wrong, PLEASE, tell it to me in a way I can understand. This is the way I see it.
 

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I guess I was taught / brought up to follow a different direction as far as this goes.
Say they have an $80,000 loss
You eat their $2,000 deductible, then you give a PA 10% or $8,000
Now, before you even order a dumpster the job is short $10,000
The PA doesn't get the insurance to pay the 10% nor can it get the insurance to eat the deductible...
Sure, I know you add 10 & 10 to the job for P&O, but the company has it's own overhead, doesn't it?
I guess if you don't sub out any of the work what-so-ever, the shortcoming isn't so bad...
Once you sub out the drywall, hvac, electric, & roof... None of them is going to want to eat the 10% you gave the PA to work up the scope.
So, the way I see it is the adjuster that is working for the HO, not the contractor, is costing the HO 10% of their finished product?

If I'm looking at this wrong, PLEASE, tell it to me in a way I can understand. This is the way I see it.
I have found, in most cases the PA earns his 10% by considering aspects of the claim that the average HO or contractor does not realize are on the table, whether it be cleaning fees for clothes, apartment rental fees..etc..Also, often these guys all know each other, speak the same language, and will not try and get over on the PA as they will on the HO. Additionally as the contractor you dont need the extra headaches, we have enough just to put the property back together, these ins companies can be a real PITA. G
 

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To do you justice, I have only listed a few key points and answers to your request.

As you may know, the insurance restoration field is a specialized field. I have worked both sides of the fence for the last 16 years as a restorer and adjuster for 39 different carriers.

The biggest mistake that most regular contractors make, when they try to enter the insurance restoration field, is that they do not have the proper education, correct equipment, qualified technicians or proper education/experience in how to prepare qualified insurance estimates for emergency services, mold and repairs. In addition, it also depends if you finance the job or wait till insurance funds arrive.

The majority of emergency service contractors collect the deductible up front and bill the carrier for emergency services. Full-service restoration contractors (those that handle emergency service and repairs) will usually start repairs or complete them before the insurance funds arrive. Yet, in today's economy, and, with insurance companies delaying pay outs, risk % has increased because you are basically financing the job and don't know when or if you will get paid.

While this sounds strange, those that operate this way get most of the work. This is the risk of being in a multi-billion dollar industry. So, this line of work is not for all contractors. In addition, you need to be prepared with technicians and equipment if you plan to promote 24 hour emergency services.

In addition to the items required above, and, if you plan on getting into this business full-time, the most important asset you must first address is someone will all around experience (someone who has actually done the work, knows how to write estimates and has some type of insurance background, people and communication skills, empathy, and marketing skills.

You need someone who isn't looking for a paycheck, but wants to have a career and help build a company.

If you consider my comments above, I highly recommend against teaming with a public adjuster. You need a qualified in-house person to run point on all insurance claims. If you try to bring PA's on your jobs, you will get a bad reputation with adjusters and carriers.

Now to your original question. You need a work authorization and a contract. I have used the same work authorization for 10 years throughout the country, which covers all types of property damage losses. It basically states that the insured is giving you full authorization to do whatever it takes to mitigate the losss for property and contents. Once you employ a qualified person to handle your insurance claims, then, you, in-house, can provide a full array of services to benefit the insured.

I tell people that I have the answer before you have the question.

Please call or e-mail and after some discussion, we can discuss how I can help you with the forms required and for your use. Some of the items you want to address are not simple black/white issues. This is where the experience comes in; otherwise you are opening yourself up to liability issues and lawsuits.

I'm trying to figure out the wording to use to cover my ass as well as the HO's.

Having a contract alone is not enough to protect you and the insured, if you don't understand insurance coverage and policy.

Blah blah agree blah blah scope of work blah insurance co blah

1) While a work authorization/Direct Authorization to Pay allows you to perform any and all services to mitigate the loss, it also opens you to liability issues if you don't know what you are doing.

2) Contracts. While my work authorization usually covers everything, so that I don't need a contract, a contract, in todays' economy, can outline draw schedules, change orders, lien rights, etc.

3) A Scope of Work is the computerized "line item, unit pricing" estimate that you write to be submitted. Again, this is not something you learn overnight.

Photos are a must. There is also a manner in which you need to learn to take photos.


I need to cover bases such as:
Dealing with insurance co to cover a scope of work (getting them to pay for "everything" the HO lost)

Example of Experience:

A GC friend of mine wrote an emergency service estimate on his own for $10,000, using Quickbooks. The insurance company questioned the estimate.

When I looked at it, I couldn't figure it out. I rewrote the estimate for $16,500 and the insurance company accepted.

On the same job, the adjuster wrote the repair estimate for $22,000. I wrote a scope for $42,000, and, today, they paid $38,000. I have to review their documents and go after the other $4,000.

I see so many contractors that leave thousands of dollars on the table because they don't know how to write an insurance scope.

Being able to discuss changes to the scope (ie: HO had hard word under carpet but just replacing the carpet. Using the hardwood $ to replace other windows not damaged by fire)

This is not reflected in your insurance scope. This would be reflected in your contract with a change order. Without more detail, the rule of thumb is that the carpet is your primary floor and this will be covered by insurance. Cheaper lumber could be used to build up the floor and the carrier may not pay for the hardwood floor.

If this is a true hardwood, the sub floor is most likely 3/4" plywood. So if you were only going to replace carpet, you must inform the insured that their floor will drop 1-1/2". If you don't keep the carpet the same level, the walls will also drop and you may need to use a larger base. This will effect casings and cabinets and drywall also.

Is it safe to "contract" the fact that the co. would be eating the HOs deductible, or just assure the HO you will?

I would not reveal this information to the carrier. It is none of their business. Yet, I am not sure why you would absorb their deductible. If you have the experience and salesmanship, you shouldn't have to absorb the deductible. I have never done that. Yet, I understand that if you are just getting your foot back in the industry, you, sometimes, have to do whatever it takes.

I tell HO that I don't do free estimates, and you either use me or your don't. I am very confident in my experience and quality of work....again, restoration experience is not something you learn overnight......It doesn't matter how long you have been a contractor, this is a specialized field.

What I hate is I can't ask my mom to show me an old contract...

Doesn't matter...I can help you.

So, what I'm asking is:
Can anyone, or many...
Post wording they use in agreements with HOs when the price of the job can't be set b4 it is signed?
Giving the contractor control over dealing with the insurance co directly.

See #1 Work Authorization above.

One more important point: You need to have a very strong understanding of detecting/monitoring moisture content and structural drying of a building before any repairs are made.

Oops! One more thing. For you to be successful, you need to make an investment in 1) a key person with "hands-on" experience and marketing/estimating skills (business/insurance construction/background) and 2) equipment/education.

Call or e-mail for further detail and I can help. This is too large a topic to discuss in detail online.

Mark
210-823-3864
[email protected]
 

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Listen to InsuranceClaims

Best advice I've seen on a blog in a long time! If you are going to do F&W work you really need to understand what the adjusters want and need. You may have to invest in specialized software which can run $3K per quarter, and/or be ready to negotiate line by line with adjusters and homeowners.

Do NOT eat the deductible! Are you crazy? It's not your fault the homeowner had a claim and they are getting reimbursed what their homeowners' policy said they would. Why are you subsidizing them wanting to do a job? If it wasn't an insurance job would you knock off $500 on a $3,000 job?

If you are going to be the G/C making the contract with the insurance company and homeowner, you better know what you are doing, have all the people and/or reliable crews, and be able to front money and wait on getting paid. MAKE SURE THE INSURANCE COMPANY PAYS YOU DIRECT OR HAS YOU LISTED AS A CO-PAYEE ON THE CHECK!!! Homeowners tend to get a check and forget it is YOUR money.

Insurance companies often have a "preferred vendor" program and for many of them it is a giant pain in the a** to get into those programs and/or maintain being in the programs. Some companies claim you have to have a background check on everyone involved on the job. So if you use 5 subcontractors and one of them hires a new employee, you have to know about it and do a BG and submit it to the insurance company. Plus the insurance companies try to squeeze you on prices in exchange for having you on the program and sending you work. Margins can be slender if you mess up anything at all. And you probably need to be an F&W specialist emergency responder in addition to being a GC to really make it work well. Good luck if you decide to go for it, but you probably need to do it in a big way.

P.S. I've seen what some of the "preferred vendors" do on a job, and a lot of them around here screw the homeowners either because they don't know/don't care on the replacement/repair side, or install lower grade materials/cheap labor because they are squeezed on the money by the insurance reimbursement being too low. There are a couple of companies around here I would kick out of my house if they showed up because of how I know they have treated homeowners.
 
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