Become an informed insurance consumer

Contrary to the popular belief of far too many property owners who haven't suffered damage to their properties as a result of a severe weather or other disastrous event and therefore have never had to file a claim with their property & casualty insurance company, as supported by "The Insurance Hoax" and "What Your Insurance Company Doesn't Want You To Know Regarding Your Insurance Claim", the likelihood of any of them initially being offered a full, proper and fair settlement payment on their insurance claim is less than 5%.  More often than not, they (you) will be offered a percentage settlement that is far below the real, true and accurate (RTA) cost of repairing the damage. 

Unauthorized Practice of Public Adjusting (UPPA) Laws

One of the biggest financial scams ever perpetrated against the American insurance buying public

For decades, professional construction contractors have negotiated with property & casualty insurance companies on behalf of their insured property owner customers in order to affect real, true and accurate (RTA) property damage insurance claim settlements that would allow the contractors to properly account for all of the damage and make the repairs in a professional manner.  Because of the fact that professional contractors know better than anyone overall (including insurance adjusters) how much it really costs to repair storm or other insurance covered damage and charge accordingly, the P&C insurance industry thought they could save money on claims payments by falsely claiming that contractors "cost" the insurance industry millions of dollars every year by over charging.  If they could get legislation passed into law that prevents, restricts or prohibits contractors from negotiating on behalf of property owners with damage they knew they would be many millions of dollars ahead - each and every year, fully disregarding the fact that their insured's will be left unfairly underpaid those same many millions of dollars legitimately owed to them by their insurance companies.  So they did...

Insurance policies are required to be written in such a manner so as to be easily understood by a person of average intelligence.  In other words, the average insured property owner.  Unfortunately however, most insurance policies are intentionally written in such a manner so that, unlike professional construction contractors who can understand and interpret policy language, most insured's cannot.  With that in mind, although the people behind UPPA legislation knew better than to directly prohibit insured property owners from asking and allowing their contractors to negotiate their insurance claims on their behalf, the effect was the same.  Insured property owners can still negotiate their own claims (at least for now) but because 99% of insured's have no real understanding of how the claims process really works and what they are up against, those insured's who do attempt to negotiate settlement of their own property damage insurance claims are at a tremendous, often costly and stress inducing disadvantage. 

Sponsored and written by the P&C insurance industry and passed on to American Legislative Exchange Council (ALEC) funded state legislator members to introduce in their own states and pass into law as "consumer protection", UPPA laws have hurt and continue to hurt insured property owner customers in a big way, all across the country.  

P&C insurance industry crony legislators, commerce and insurance commissioners and others in positions of power who want to keep their after public service career options open put their support behind the legislation they know full well is anything but consumer protection but present it that way to their constituents (AKA tax paying, insurance premium paying voters) in the hope that none of them would be the wiser.  Under the guise of "consumer protection", those and other interested parties pushed for legislation that would control the populace (in this case an estimated 75,000,000 + insured property owners from around the country) and ill-informed less experienced citizen legislators voted/vote in favor of the misleading legislation so they can/could tell their constituents they were "lookin" out for them” when the next election cycle comes around.

The simple truth;  P&C insurance, departments of commerce and insurance, departments of labor and industry, and all of the P&C insurance industry friendly legislators, lobbyists and related individuals who supported and still support UPPA legislation nationwide, do so with the full and complete knowledge that by limiting, through law, the rights of insured property owners by requiring them to either pay a public adjuster (and/or an attorney) to negotiate on their behalf - which will likely get their claim fully paid, or, trust their insurance companies to deal fairly with them - which will likely not, P&C insurance will save hundreds of millions of dollars every year by not having to fully and properly pay their insured's claims. 

Premiums for property and casualty insurance policies are logically, actuarially based on what it would cost a property owner whose property was damaged to have the damage repaired using the real, true and accurate (RTA) cost that an experienced professional fully licensed and insured contractor using quality materials and experienced installers would charge in the near future.  However, the initial insurance settlements that most insured's are offered are typically based on the "survey" costs of lower quality materials and less experienced contractors who may or may not carry general liability (GL) and workmen's compensation (WC) insurance.  Those pricing surveys are conducted by a subsidiary owned and controlled by the same organization that advises property & casualty insurance companies on how to price their premiums.  The end result is that the P&C insurance companies charge premiums based on higher near future potential settlement costs and then typically attempt to pay their insured's claims at below current pro contractor real, true, and accurate (RTA) market rates - if they offer anything at all above the deductible.   

For example:  Assuming the real, true and accurate (RTA) value/cost of your repair is $40,000, more often than not, through their staff and/or independent adjusters and in house claims managers who always have job security in mind, the insurance company you send your premiums to will usually attempt to dramatically underpay your claim.  If the RTA cost of your repairs is $40,000 and your insurance company offers you $25,000 and you accept their offer, you will forever forfeit the additional $15,000 owed to you by them that you will need to properly complete the repairs. 

Using the above wind and hail damage claim example where the insurance company only offered $25,000 on the RTA valued claim of $40,000, we'll compare the old claims filing process to the new UPPA process.  Always keep in mind that contractors cannot force insurance companies to pay claims in excess of RTA values. 

Under the old process, insured's would sign a contingency agreement or similar repair contract with a contractor that promised to complete the repairs after the insurance company agreed to properly, fairly and fully pay for the repairs.  An insurance adjuster would meet with the contractor and eventually negotiate a final price - which, at the true current RTA value, would have been $40,000.  In 95% of cases, the adjusters initial claim settlement offers would be (as is the case presently) much less than the $25,000 mentioned above.  Eventually, if the contractor is well versed in the process, he/she would move the settlement offer as close to the real, true and accurate (RTA) $40,000 pro contractor price as possible then agree to complete the repairs at the stated price.  Within a relatively short period of time, the repairs would be completed and the insured's could move on with their lives. 

Under the relatively new process with UPPA laws in place, similar to the ranch claim described further down, the insured's would still sign a contingency or similar repair agreement contract with a contractor but because the contractor is now prohibited from negotiating with the insurance adjusters and claims managers and they offer the $25,000 as all they will pay, the contractor and the insured are both stuck.  If the contractor "dares" to confront the adjuster and/or claims manager regarding the underpayment attempt, the contractor is often threatened with penalties for violating UPPA laws.  The insured's who are perfectly within their rights to confront the adjusters and claims managers who are making the underpayment attempts likely have no idea how to deal with those people and are therefore dependent on their contractor for help that the experienced contractor can no longer provide.  The insurance company is now free to play the waiting game so well defined by Rutgers Law Professor, Jay M. Feinman, in his book, "Delay, Deny, Defend: Why Insurance Companies Don't Pay Claims and What You Can Do About It".

Although the contractor has moved the claims process as far as they can without violating UPPA, once the insurance company claims manager says that's all they're going to pay, the insured's only options are to either hire an appraiser, public adjuster or attorney to move the claim to fair and full price or give up and hope the contractor can complete the repairs at the insurance company's less than sufficient price.  If the insured hires a public adjuster to move the claim towards RTA values, they will typically pay the public adjuster a fee ranging from 10% to 15% of the entire claim or 25% of the additional $15,000 (on the $40,000 RTA claim).  When it comes to that point, many months may have already passed.  Any fee paid to a public adjuster is then deducted from the contractors RTA contract price.  Notes:  1. Most thinking appraisers or public adjusters will never contract with an insured if they believe they cannot increase the total settlement to the RTA price.  2. Most people don't even know what an appraiser or public adjuster is or does.  3.  Insurance companies understand and take full advantage of #'s 1 and 2.      

Reality…as an example, a severe wind and hail storm comes through Anytown, USA and causes $25,000 in damage on average to 5,000 properties. In Minnesota, for example, there are approximately sixty licensed public adjusters and, according to one Minnesota public adjuster I talked with several years ago, most of them have little interest in working claims of that size. Suppose just ten of those public adjusters are interested in taking on those relatively small wind and hail damage claims. How long would it take those ten public adjusters or even all sixty, to adjust those 5,000 claims? Forever! P&C insurance knows that while few property owners with damage even know what an appraiser or public adjuster is or does, those who do may actually hire one who will likely get the claim paid at top dollar.  

But the rest of those property owners, at least in states where UPPA laws apply (which, at this point in time, is most states) and therefore, their contractors are prohibited from assisting those property owners on their claims, will be left having to trust their P&C insurance companies to deal fairly with them and fully pay those claims.  And, because the P&C insurance industry, through ALEC and the public adjuster lobbyists, has been successful in getting legislation passed that prohibits (in most states) public adjusters and contractors from having any meaningful free enterprise, free market working relationships between them, many contractors are often reluctant to bring them into the picture.  

The simple truth is this, the construction industry has matured over the years and has caught on to what the P&C insurance industry has been getting away with for decades.  As a result, P&C insurance and its minions whose livelihoods depend on upholding the myths and fallacies described here and elsewhere have chosen to fight back. But, because they have no substantive arguments in support of their claims, they must spin and obfuscate in an attempt to frighten their customers and the general public by laying the blame on knowledgeable professional contractors who are simply holding the P&C insurance companies accountable to do the right thing.      

The current reality of the UPPA push as of late?   Believing they’ve made progress in getting contractors out of the way by prohibiting them from negotiating their insured customers claims, the same busy body bureaucrats and other P&C insurance industry connected individuals are now pushing to place restrictions on public adjusters and insured plaintiff's attorneys.  Several years ago, ex-TV editor and weather reporter Mark Kulda said the following during a local TV interview regarding the use of public adjusters: "On any insurance claims, rather than hire a public adjuster, most homeowner's claims are handled successfully. If you do have a dispute the best source is to always go back to the insurance company first”. Kulda is currently the V.P. of Public Affairs for the Insurance Federation of Minnesota who was and is likely still working on a bill that would tighten regulations on public adjusters. Along with falsely blaming contractors (pre-UPPA legislation), for pushing up claim amounts and therefore premiums, he and others in similar positions are now also blaming public adjusters and attorneys for doing the same thing.

Another quite transparent and feigned excuse the P&C insurance industry and the public adjuster lobbyists uses to support UPPA laws that prevent contractors from negotiating their customers claims is that doing so results in a conflict of interest.  In the real world, free market pro contractors who contract insurance covered repair claims want to achieve the same goal as any other free market business - maximum profits and income.  However, the only way they accomplish that is by helping their insured customers to achieve maximum claims settlements that are not unlimited but rather simply relative to the insurance premiums they paid.  Since P&C insurance initial settlement offers that are typically based on inaccurate low ball pricing are not relative to the premiums paid by the insured's, they are therefore not free market but rather forced market.  

The insured whose contractor cannot confront the insurance company adjusters and claims managers are held hostage until they either hire and pay an appraiser, public adjuster or attorney or simply give up.  If they give up and accept whatever lowball offer their insurance company gives them, the insurance company is illegally and unjustly (financially) enriched.  If the insured hires a public adjuster who moves the total price to RTA, they must then subtract the PA's fee from the contractors contract price which then violates the terms of the contract...and that's just the way the insurance industry likes it.  They care not that an insured (or thousands of them) get into a dispute with their contractor.  All they care about is paying out as little as possible.

In economics, a free market is an idealized system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other (self proclaimed) "authority" - such as a P&C insurance company.  When an insurance company says they will pay no more than their initial low price offers, they have, in effect, "set" the price of the claim while knowing full well that doing so clearly violates fundamental free market principles.  Their out when that is the case, is to slightly increase the claim offer upwards in order to appease the insured customer and hope they will accept the insurance company's next "final" offer.  On the "ranch" claim discussed below, (with no appraiser or public adjuster involvement) even though the insurance company increased their "final" offer at least six times until their final settlement offer met free market RTA pricing, they never paid more than they should have.  Moving P&C insurance companies to fully, fairly and properly pay their claims at RTA free market rates is not, as they continuously claim, overcharging but rather, simply moving them to pay their claims at RTA free market rates that are relative to the premiums paid.  Again, contractors cannot force insurance companies to sign insured's claim checks.

The P&C industry's and public adjusters lobbyists false cries of conflict of interest between insured's and contractors are not substantive.  An objective analysis easily reveals that the real conflict of interest is between the insured's/contractors who expect to be paid fairly and fully and the insurance companies who want to pay as little as possible.  That's why P&C insurance industry formulated and pushed for the UPPA state by state nationwide legislation in the first place.   

Until UPPA is done away with or at least made more insurance consumer friendly, the contractors proper next move when an insurance company has refused to pay any more on any claim is to refer their insured customers to an experienced and vetted insurance claims appraiser and/or public adjuster and/or insurance attorney who will, for a fee paid by the insured out of the insurance claim proceeds, assist in moving the claim forward to full and final settlement.

In June of 2017, a severe wind and hail storm that came through the northern Twin Cities (MN) suburbs caused nearly $1 billion in damage to approximately 33,000 mostly residential properties.  Estimated damage per property = $30,000.  It is a certainty, based upon my many years of experience, that, before considering UPPA restrictions, each of those property owners was unjustly underpaid on their property and casualty insurance claims, on average, by a minimum of $2,500 dollars.  Because of UPPA restrictions placed on contractors ability to negotiate their insured customers claims on behalf of their insured customers, those insured's were likely also underpaid by another $2,500.  Money saved by the insurance companies just on that storm alone by intentionally underpaying their customers claims would equal an estimated $165,000,000 dollars.   Following is just one example of how troublesome it can be for property owners to get their claims fully and fairly paid and get on with their lives.

In 2008 (Pre-UPPA), I contracted with the owners of a large ranch property in the north metro area of the Twin Cities of Minnesota to assist them with getting their insurance company to fully pay their wind and hail storm damage claim.  Although it took four inspections (1 initial and 3 re-inspections) to get several independent insurance adjusters to admit and agree to full payment for all of the damage to five different buildings, the insurance company did eventually pay the entire claim at full RTA values.  In the June 11, 2017 storm (Post-UPPA), the insured's property was again hit by severe wind and hail that caused essentially the same damage as the 2008 storm and they again asked for my help in assisting them as a consultant on their claim that was contracted through another contractor.  Having been dissatisfied with the way they were treated by their previous insurance company, they had switched to another of the top five P&C insurance companies (not to their benefit as they learned on their 2017 claim).

After numerous re-inspections to reveal damage missed and omitted by the adjusters and with labor and material rates substantially higher than in 2008, the insured's new insurance company repeatedly denied legitimate damage and delayed final settlement of the claim for a number of months.  Believing they (the adjuster and the insurance company claims managers) could intimidate me with the threat of UPPA penalties if I attempted to negotiate their claim with the insurance company on the insured's behalf, both took their time in responding to my demands to move the claim to final settlement.  They believed (per UPPA) they could continue to and did, stall the claim with the expectation the insured's would either give up the fight and accept their low and insufficient offer or, if they even knew what a public adjuster is or does, hire one who would, upon moving the claim to proper full payment, take a substantial cut of the claim as their fee.  They also knew that hiring a public adjuster to process the claim from a storm of that magnitude (thousands of same storm claims) would delay the claim even further. 

If a contractor refers a claim to a public adjuster, although the public adjuster's fee will be subtracted from the total contract price, the contractor may still earn more money than if he or she had agreed to do the work for the price offered by the insurance company prior to a public adjuster's involvement.  

Seven months after the storm and five re-inspections later to cover damage that the adjuster repeatedly and intentionally omitted, the insurance company offered to pay $72,736 as the total and final claim payment to the insured's.  The $72,736 claim settlement offer which was just slightly higher than what the insured's previous insurance company paid on the claim nine years previous did not include payment for additional damage discovered after the re-inspections and also did not include what is known as General Contractor Overhead and Profit (GC O&P).  Having been educated by me about what GC O&P is and when it is due on a claim, one of the insured's asked the second independent insurance adjuster why no payment for contractor overhead and profit was included on their loss reports.  He lied directly to her when he told her that GC O&P was included in the line (damage description) items on their loss report.  The independent insurance adjuster, two local insurance company claims managers and a Denver, CO based senior catastrophe claims director later all refused to pay the GC O&P owed on the claim saying that the claim, which involved replacement of damaged roofing, siding, screens, shutters, gutters and downspouts, cupola repairs, house wrap, satellite repairs/re-sync, deck repairs, sanding and painting, furniture manipulation, electrical work, coordination of porta-potties, materials measuring, ordering and distributing dumpsters, installer scheduling, dump trailers, permits, window repair and more - amongst the five different buildings, was "not complex enough" to warrant the payment. 

Lack of complexity is not a valid reason for withholding GC O&P from any insured property owner.  Courts across the country are nearly 100% in agreement with the following regarding when GC O&P is owed:  "If it is reasonably likely that an insured will hire (need) a general contractor to complete the repairs, GC O&P is owed on the entire amount of the claim" even if the insured does not do so.  Having made the above perfectly clear to the insurance company claims representatives and employee's mentioned above, on February 2, 2018, I sent to the insurance company's main claims office an email with a notice warning them of the potential negative publicity and legal challenges (criminal insurance fraud charges) they might face if they did not honor the GC O&P precedent as described through the above links and agree to fully, fairly and properly settle the insured's claim.  On the morning of February 5, 2018, the #3 claims manager from the insurance company called me and agreed to a final and proper settlement to the insured in the amount of $96,946.  The insured received the final $24k + payment five days later.

Sub-contractor Overhead and Profit payments are usually included as part of the line items shown on insurance adjuster loss reports.  General Contractor Overhead and Profit (GC O&P) payments however, are not and are, instead, (should be) added to the subtotal of the loss report.  IF YOU SEE NOTHING ON THE INSURANCE COMPANY LOSS REPORT SENT TO YOU BY YOUR INSURANCE COMPANY PERTAINING TO OVERHEAD AND PROFIT PAYMENTS, ASK YOUR AGENT, THE INSURANCE ADJUSTER AND THE INSURANCE COMPANY CLAIMS MANAGER TO EXPLAIN WHY IT IS NOT INCLUDED AS PART OF THE INSURANCE CLAIM SETTLEMENT OFFER FROM THE INSURANCE COMPANY. 

You pay premiums to your insurance company for coverage based on future RTA rates, therefore, it makes sense that your P&C insurance company should settle your claim at least at current RTA rates rather than attempt to leave you less than whole.  You deserve no less.  If however, your insurance company disagrees with you, your contractor and even the evaluation of other professional contractors as well as public adjusters, they may choose to send one of their paid for structural engineers to conduct a "forensic investigation" of your claim. 

"Hired Gun" Insurance Company Paid Engineers


"State Farm has ordered an independent investigation in to one of its vendors and suspended work with Haag Engineering Co. based on an Oklahoma jury's finding that the insurance company used Haag reports to maliciously deny policy holder claims, a newspaper reports."  Insurance Journal   Okla. Couple Awarded $13 Million in Lawsuit Against State Farm May 30, 2006

Although HAAG engineering didn't have to pay for what the jury determined were malicious claims denials based on the reports they turned into State Farm, they did likely lose millions of dollars worth of engineering assignments from State Farm and other insurance companies who had used them prior to the law suit.  I can imagine what the cost would have been (or would be) to any engineering firm who believed they could get away with defrauding and did, in fact, directly defraud various Government agencies whose stated mission is to protect consumers from such practices - tens of millions of dollars, perhaps...

(Google "Hurricane Sandy lawsuits engineers")

Although the term, "forensic investigation" sounds impressive, in regards to the inspection of roof damage claims by engineers, it really is not.  Anyone willing to pay a few hundred dollars to do so can become "certified" for wind and hail roof inspections in about a week.  In the great majority of cases, these folks ("certified" insurance adjusters and "forensic" engineers) will typically report the following on completion of their insurance company paid "forensic investigation" of the typical roof wind and hail damage claim - even in areas where every other home in the area was damaged:  No wind and/or hail damage but evidence of foot traffic, wear & tear, thermal expansion, improper installation, manufacturers defects, lichens, moss, anomalies, mechanical damage, intentional damage, improper maintenance, etc. - anything but actual wind and hail damage. 

Based on the engineer's (ambiguous) opinion that any damage found is anything but wind, hail, flood or other property damage, the insurance company denies the (your) claim.  In regards to insurance claims as above, it is generally accepted that ambiguity should always fall in favor of the insured over the insurance company due to the insured's lack of bargaining power.  The insurance companies then claim their denials are substantive because they relied on the opinions of an "expert" engineer and therefore should be shielded from lawsuits.  The engineering companies and their engineers then hide behind what is known as the "Doctrine of Privity" which says that since the insured(s) and their contractor are not parties to the contract between the insurance company and the engineering company, the insured(s) and their contractor have no standing.  When the insured's are injured however, when a legitimate damage claim is falsely (implying knowingly) denied by an engineer, the engineer and the insurance company have both harmed society which falls outside the protection of the Doctrine of Privity.     

Average per claim engineer fee for their roof inspection service?  Around $750 for a basic inspection.  Low average per (residential) claim savings to the insurance company who relied on the engineers opinion that damage was not weather related?  $8,000 to $10,000 dollars.  Fortunately, more and more juries are seeing the light these days and are disregarding insurance company paid engineers supposed expertise and authority on the subject.

Simple common sense combined with experience tells us that there are those who will put money and job security ahead of reality and truth. Engineers aren’t hired by insurance companies to find roofing, siding and related wind and hail storm damage, they are hired to disprove the existence of it. There is simply no other reason a P&C insurance company would hire them. If they don’t, per their opinion, deny legitimate damage, the inspection assignments will eventually dry up. This doesn’t mean that all individual engineers who conduct storm damage inspections for the engineering companies who contract with P&C insurance companies to do such work are corrupt. It does illustrate however, where their loyalties are and why that should be taken into account by any reasonable person.  Damage, is damage, is damage.  If it is there, insurance company paid engineers need to approve it and P&C insurance needs to pay the claim.

The call for an insurance company paid engineer is less likely to be made when an experienced and well trained pro contractor is assisting property owners with their claims.  If however, an insurance adjuster or in house claims manager believes a contractor is less experienced and not well trained in the process, either may attempt to intimidate the contractor as well as the insured property owner into accepting the insurance adjusters claim underpayment or denial.  If the insured property owner does not, based on advice given to them, accept the insurance adjuster's/claims manager's claim underpayment or denial, the insurance company may then call to have one of their paid for and likely biased engineering "experts" inspect the claim.

State Farm penalized in suit over tornado claims    Sandy Flood Insurance Issues Said to Be Focus of Criminal Probe     Evidence of fraud in Hurricane Sandy reports    Okla. Couple Awarded $13 Million in Lawsuit Against State Farm     Guilty Pleas to Falsifying Reports on Hurricane Sandy Damage   Supreme Court Upholds Hurricane Katrina Fraud Verdict Against State Farm      How Engineers Scam Homeowners After Disasters

If your insurance company informs you that they will be sending an engineer to inspect your roof and/or other property for damage, go online and Google the following - "(name) engineering company complaints".  If you find that the engineering company has complaints against it and you are properly concerned, you may be within your rights to deny them access to your property and demand that a truly independent engineering firm not connected to or paid by your insurance company conduct the inspection.

Settling your claim...the wrong way and the right way - "free" estimates?

You've been paying your premiums and your property has sustained substantial damage...what do you do next?  Rather than following "conventional wisdom" or any P&C insurance company's recommendation to get several free estimates, the correct approach - for property owners with insured storm or other property damage - is to choose to work with a well trained and professional restoration property damage contractor who is willing to make a commitment to you by way of a "contingency agreement" contract that states that if the contractor is successful in helping you to achieve full and fair payment on your claim, you agree to have that contractor do the work.  A properly written contingency agreement contract will state that if the insurance company legitimately denies your entire claim, the contingency agreement contract will become null and void and you will owe nothing to the contractor. 

Whether titled as a Proposal, Agreement or Contract, as long as it contains an offer which is typically an offer to ensure the accuracy of the insurance company's claim settlement offer to make sure that all damage is accounted for and to complete the repairs as listed in the insurance company's final settlement offer that all parties have agreed to in exchange for consideration - the insured's promise to pay the contractor for the repairs and the insured's acceptance of and agreement to the terms, a legal and binding contract is established.  That, of course, makes much more sense then obligating yourself to a straight contract based on a "free" estimate written prior to coming to an agreement with the insurance company on what will be paid and at what price if the insurance company legitimately denies payment for items written into the contract.

After you have signed the contingency agreement contract, your properly trained professional property damage restoration contractor will meet with your insurance company adjuster to assess the damage.  If an insurance adjuster has already inspected your property prior to your signing of a contingency agreement contract with your contractor, it is likely that the insurance adjuster missed damaged items and/or underpriced repairs.  If that is the case (95 + % of the time, that will be the case), your trained professional restoration contractor will inspect your property for damage then compare his/her evaluation and pricing to the insurance adjusters estimate which would have been sent to you by the insurance adjuster. 

That estimate is called a "loss report" or "scope of loss report."  Keep in mind that, since the loss report that forms the basis of your claim is sent to you directly, you are never in the dark regarding what work is proposed and at what price.  If your contractor finds that your insurance company missed and/or underpriced damage they will tell you and urge you to call for a re-inspection where your contractor and preferably a new insurance adjuster will meet to conduct a re-inspection.

If an insurance adjuster has not inspected your property prior to your signing of the contingency agreement contract you will want to make sure that your contractor knows when an adjuster will be doing so.  The when is determined by you when you demand that an insurance adjuster conduct their inspection on a specific date and time chosen by you.  Your contractor whose training qualifies him or her to know best what is damaged and how much it will cost to repair the damage will meet with the adjuster to point out the damage then audit the loss report you will receive a few days later from the adjuster.  If damaged items are missing and/or the pricing is too low relative to the premiums you paid to your P&C insurance company and the true cost of repairs in your area (again, 95 + % of the time, that will be the case), your contractor will be happy to speak with the adjuster or in house claims representative at your request regarding any discrepancies' in order to make sure your claim is fairly and fully paid.   He or she is still however, per UPPA restrictions, prohibited from negotiating the final price of the claim. 

More on contingency agreement contracts:  Contingency agreement contracts are not blank contracts.  Commonsensically, they are legal and binding agreements/contracts that either convert into a full legal and binding contract if the insurance company agrees to pay for the repair work as listed and priced by your contractor and approved by you or become null and void if the insurance company fully and legitimately denies your claim.  If your contractor's original estimate of the repairs is, for example, RTA at $25,000 and your insurance company eventually increases their settlement offer to an amount close to that RTA amount, it is in the best interests of all involved to agree on that amount as final then proceed with the repairs.  Know that staff and independent P&C insurance adjusters regularly miss, omit and/or deny legitimate damage worth hundreds of millions of dollars every year.  Everything that gets written into your contingency agreement contract is taken from the loss reports that are sent directly to you by your P&C insurance company so you will always know what work has been approved and at what price.  The only time the total price of your repair work might be higher than what the insurance company has agreed to pay and you have agreed to accept is when you have asked your contractor for an upgrade from the original materials that were damaged.

"The contractor is charging too much?"

Often, after an insurance company adjuster or in house claims manager has reviewed an insured's repair quote prepared by the insured's chosen contractor, they will call the insured and tell them their contractor is charging too much - even going so far on some occasions to imply that a contractor "is trying to rip them off" and suggest to or tell the insured to get other estimates.  Another common ruse is to tell insured's they know of other contractors who will do the job for much less.  This is nothing more than a bad faith attempt on the part of the insurance company adjuster or in house claims manager to cause the insured (you) to question the integrity of the contractor, cause strife between the contractor and the insured (you) and cause the insured (you) to consider illegally breaching their/your contract with the contractor.  Besides being bad faith, it is also Tortious Interference (i.e., causing harm by intentionally disrupting a contractual relationship or harming a business relationship or activity, for example, by raising suspicions or telling lies or simply implying that something is true).  Wayward staff and independent insurance adjusters concerned with staying employed commit the above offense on a regular basis.  

The fact that a contractor estimates property damage higher than an insurance company initially offers rarely means the contractor is pricing the repair costs too high.  Usually, it means that the insurance company is offering the insured substantially less than they should be paying relative to the premiums paid by the insured.  The insurance company does not care if the insured gets into legal trouble by breaching their contract based on the errant advice of a wayward insurance adjuster or in house claims manager.  Typically, all they care about is paying out as little as possible on each claim - and staying employed.

Remember - your signed contingency agreement or similar contract will initially include everything including cancellation clauses (additionally, often separate) that will make up your contract except a description of the damaged items and the pricing.  That description and the pricing will all be shown on the loss report that your insurance company adjuster or in house claims manager sends to you.  Once your contractor properly estimates the damage and costs then agrees that the final loss report is accurate and includes all damaged items at a fair and proper RTA price, you and your contractor will simply transfer that information onto the contingency agreement contract that has converted into a full contract because the insurance company has agreed to fully and fairly pay your claim as a result of your contractor's efforts on your behalf.  At that time, you can then choose the colors, types of materials, etcetera, that you want as well as include any upgrades that you agree to pay extra for. 

Since, overall, contractors, in general, typically know better than P&C insurance company hired adjusters what needs to be repaired and what it should really cost, insurance companies, as illustrated previously, don't want them involved.  If your insurance company attempts to pay you $20,000 on a claim that a professional, fully insured professional restoration contractor would legitimately charge $30,000 for, that "costs" the insurance company money, at least in their eyes.  Part of the job of the your professional restoration contractor is to help you to make sure the insurance company pays you fully and fairly for all damages on your claim.  In the above example - $30,000.  That "extra" $10,000 in the example above belongs to you, not the insurance company.

With a contingency agreement contract, even after your right to cancel has expired you are still under no obligation to the contractor if the insurance company legitimately denies your claim - legitimately being the key word.  That should be clearly spelled out for you in "plain English" on the front of the contingency agreement contract and/or elsewhere.  If it is not, ask the contractor to confirm in writing that they will abide by those terms.

Since you pay insurance premiums based on the real, true and accurate cost to hire a professional restoration contractor to complete the repairs, your insurance adjuster's "scope of loss" report should reflect those true costs rather than the below market pricing typically offered by insurance adjusters using the P&C industry's mandated repair estimating software programs.  You can trust your professionally trained restoration contractor to make sure that your property damage claim is paid at the maximum and proper RTA amount by making sure that all of the damage is accounted for.  That way, your contractor can afford to take the time to complete your repairs the right way and use top quality materials and installers.

Do you have a mortgage on your property?

If so and your claim exceeds $10,000, you and your contractor will be required to submit paperwork to what is usually a third party "mortgage loss draft processor" who will oversee your claim and make sure that all of the repair work is completed before the final claim payment is released to you. Nothing wrong with that, but, be prepared to deal with what often becomes one of the most frustrating and infuriating parts of the insurance claims process. 

Although Countrywide Mortgage (Balboa) handles most of their own loss draft processing and Sterling National Corporation (previously known as Z C Sterling) handles a fair percentage, most of the loss draft processing done throughout the USA is handled by a Atlanta, GA based niche financial services subsidiary whose parent company - Assurant Financial, was recently fined millions of dollars for selling "forced-placed" home owners insurance policies that were often priced as much as ten times higher than typical voluntary homeowner insurance policies. These people, while responsive to their customers (banks and mortgage companies, et al) demands, assume that no one else – such as insured's who want to get paid so they can pay their contractors so they can pay their employee's, subcontractors, and suppliers - will figure out who’s in charge and therefore, they play fast and loose with the payments that are ultimately owed to you.  Your professionally trained restoration contractor is also trained on how to help you through the process to make sure it goes as smooth as possible. 

In regards to contracting for storm damage repairs, doing the actual repair work is only 25% of the job - the easy part.  Dealing with and going up against multi-billion dollar P&C insurance companies, their independent and staff adjusters, in house claims managers and their lawyers who are typically reluctant to fully pay their insured's claims is 75% of the job - the hard part.  If you want to make sure you are paid all of the money owed to you by your property & casualty insurance company on your damage claim you need an experienced and well trained professional restoration who understands the process from both the construction and the insurance side.

Additional advice and warnings

Never accept a claim settlement offer from any insurance adjuster or insurance company claims manger before you have had a trained professional restoration contractor inspect your property for damage.  If your insurance company claims department has refused your legitimate demands for full and proper settlement payment and your contractor can offer you no more assistance because of UPPA, you need to ask your contractor for a referral to a qualified appraiser, or, a licensed public adjuster or well versed insurance attorney who is allowed to fully negotiate your insurance claim with your insurance company. 

Regarding contractor offers to "bury" property owner insurance deductibles and property owners acceptance of such offers, many states have already passed and other states are considering passing laws that prohibit the practice.  Whether or not passed as law in any particular state, the actions of all parties involved in such schemes could be construed as insurance fraud and, if discovered, the insurance company would likely have standing to, at the very least, demand the insured and/or the contractor pay the same amount "buried" back to the insurance company.        

A very small minority of property owners with damage mistakenly believe that they can, after a contractor has done all the work in making sure that all damaged items are accounted for and properly paid for - in other words, fulfilled their obligation, cancel their signed contract then hire a different, often less experienced contractor to do the repair work for less money while pocketing some of the insurance proceeds for their own personal use.  This could be construed by the insurance company and others as insurance fraud.  Many insurance adjusters who know the insurance company's they represent want to keep payouts low will often attempt to cause the insured property owner to cancel/breach their contracts and choose a less experienced contractor who will do the job for less money.  Doing so would likely be an enforceable illegal breach of contract.  If any attorney advises you that doing so is acceptable, you probably need to find a different attorney who is more interested in protecting your interests than in getting paid a small fee while exposing you to potential legal trouble.

People who sell Property and Casualty insurance policies are some of the nicest people you'll ever meet.  Many insurance agents join numerous civic minded organizations and do many good things in their communities - just as they are trained to do by the insurance companies that hire them.  Doing so brings in business!  But, when it comes to helping insured's with their claims, by design, there is not much they can do to help.  Their job is to sell and service insurance policies, not adjust claims.  So, even if you've worked with your P&C insurance agent for many years and maybe even gone golfing together, don't be surprised to learn that your relationship with your P&C insurance agent may be of little interest to P&C insurance companies in general when it comes time to get your claim fully and fairly paid.

Want to make sure that your insurance company pays you everything they owe you on your insurance covered property damage claim?  Put your trust in a ICCOA approved professional property damage restoration contractor.  You'll never pay more but you'll likely be paid much more on your claim then you otherwise would have so you can afford to get the job done right.


Larry M. Burtis, Founder - BURCOS Group of Companies / 3RSystems, LLC

Board Advisor - American Policyholder Association (APA)

Associate Member - Contractors Association of Minnesota     

BURCOS Group of Companies supports the American Policyholder Association (APA) in its mission to provide aid to property owners seeking benefits at the time of loss.  Insured property owners can join the American Policyholder Association (APA) for free.  To learn more and to learn how the American Policyholder Association (APA) can help you in your time of need as an insured property owner, visit the American Policyholder Association (APA) website through the link below.   NOTICE:  The American Policyholder Association (APA) does not take a position on Unauthorized Practice of Public Adjusting (UPPA) laws.


American Policyholder Association (APA) members include professional restoration construction contractors, insurance appraisers, Public Adjusters, and insurance plaintiffs attorneys - all who have sworn to adhere to the highest ethical standards in their fields.  If you are in need of help from any of the above with your property damage insurance claim or just have questions about your claim, feel free to contact me through the email link on the "About" page link at the top of this page and I will direct you to the appropriate American Policy Association (APA) member nearest to you.  


Disclaimer - Other than offering my experienced opinions as a matter of reference, I do not give accounting, tax, insurance, investment or legal advice. If you need accounting, tax, insurance, investment or legal advice, I recommend that you consult with a licensed accounting, tax, insurance, investment or legal professional practicing in the area of your concern.  

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