What is a preferred contractor or approved vender for home owners insurance?
So, many companies try to sell you on the fact that they are an approved or preferred contractor for your insurance company. Really, what does this mean and is it to your advantage? If you think logically, when you have a claim to file with your insurance company, your interests will be in direct conflict with the interest of the insurance company. In most basic of terms, you want the most coverage for your home while the insurance company wants the most economical solution to your loss. This is a natural business stance for them and they do what they can to limit the costs of repairs. Unfortunately, this means less coverage for your house.
Nearly all contractors who work with insurance companies use a third party software program called Xactimate for writing estimates for your project. You can read more about the use of Xactimate here. Click here Xactimate estimates are based solely on the scope of the work that is agreed upon by you and your insurance company. The prices for each line item are set by the staff at Xactimate. They study all the demographic areas and establish market value in each area. So, the preferred contractor is not going to reduce prices and do the same amount of work for a lower cost. Instead, they are going to agree to reduce the scope. So, when your insurance company sends out an adjuster, you will want a contractor there to help speak on your behalf. If this contractor is a preferred vendor for your insurance company, will they really have your best interests in mind?
Here are some basic questions to think about.
If a contractor is receiving referrals from the insurance company, is there something they are giving back to the insurance company?
I am not insinuating that anyone is getting kickbacks. As I explained before, the insurance company wants to limit the cost of repairs and in order to do that they must limit scope of work. The only way to do that is to have deals in place with preferred contractors to only perform certain work when handling a claim. The job gets done, but not always with the same level of quality. I’ll give you an example. Some carriers limit the drying time to 3 days. They do not want to pay for equipment past that time frame. However, some water can become bound in certain building materials and therefore require longer drying periods to get the water out of the material. If equipment is pulled and this water is left in there, you can end up with mold issues or rot issues down the road.
Will my insurance company warranty or stand behind the work of their preferred contractor?
Answer is no. Although they are preferred vendors, you hire them and therefore the insurance company has no liability over their work. If you have any issues with the work performed by the preferred contractor it will be up to you to take your concerns to the contractor. Your insurance company does not want any liability for the work being performed at your home. Hiring their preferred vendor does not offer you any protection beyond what the contractor offers you. So, make sure you know what type of guarantee the contractor you are hiring offers.
Are all preferred contractors licensed contractors?
In the state of California, you do not need to be a licensed contractor to perform water mitigation. Here is an article on the site if the California State License Board that states such a fact, as long as the work does not require anything structural. Click here This would also mean that they cannot contract to do any plumbing work, electrical work, or repair work. All they can do is remove wet materials (non structural), dry down wet materials, or clean up water damaged materials. So, this means that some of the preferred contractors for an insurance company will not be licensed contractors. Even the large franchises have some franchisee’s that obtained licenses and some that don’t. Make sure you ask!!
Can I choose any contractor that I want to handle my loss?
Answer is yes. Your insurance company has no control over who you hire. They try to push you in the direction of their preferred vendors as this is how they look to reduce the costs they pay out on your claim. Sometimes an adjuster will even make claims that the estimate of your contractor is higher than the estimate of their preferred contractor and that going with their preferred contractor will save you money. This is also false. You will not be paying the bill. Lowering the bill only saves the insurance company money. As explained previously, their preferred contractors only save money for the insurance company by reducing the scope of work that they write into their Xactimate estimates. Many times, the preferred contractor just accepts the estimate of the adjustor and only does the work that the adjustor approves. Beyond the problem of a reduced scope, most adjustors are not licensed contractors or fully certified in how to handle all types of losses. You really want to find a contractor that you trust and have them by your side throughout the process, starting with day 1.
Is JDB Design Build & Restoration Services a preferred contractor?
No. I used market to get jobs directly from the referral of adjusters. This situation was fine until the insurance companies that they worked for started to get more particular about who their adjustors referred. The big corporate companies made agreements with the insurance companies to be their preferred contractors in an effort to control the costs on paying out claims. I have always found joy in my work by providing high quality service to every one of my clients. I always have and always will want my clients to be the home owner. I felt as though the insurance company would be my client if I was on their preferred contractor list. I stopped seeking that type of referral and set forth to market directly to home owners. Not having my hand in their pocket allows me to run a profitable business without sacrificing the end product. I can make sure that everything that needs to be done to repair your home properly, safely, and professionally gets included in the loss. Nothing more, nothing less!
If I use my own contractor, do I need to get multiple estimates to show my adjustor?
If the contractor that you have decided to hire uses the Xactimate Estimating Software to write their estimates, then you do not need multiple estimates. Remember, with Xactimate there is no argument over pricing, just on scope of work. I make a guarantee to my clients that they will only be responsible to pay their deductible. All other work that is done will be covered by the insurance claim. If I do work that I feel necessary and cannot get the adjustor to approve it, then I eat those costs. I make this guarantee because I stand behind my assessment of what needs to be done to ensure that your home is repaired properly and everyone involved is safe. I also have the knowledge and documentation to show why the work I perform is necessary.
So, when do you need multiple estimates? If you are using a contractor that does not use Xactimate then you will need to have estimates from other contractors to show that the estimate from your contractor is competitive and close to market price.