This is about a ten minute read.
In this article you will learn about the two types of restoration contractors and how to choose the right restoration contractor.
Knowing this stuff will make your life much, much easier some time in the future. Why? Because numbers tell us that about 1 in 7 households will file an insurance claim of some kind in any given year.
That may seem incredulous, but only until you consider the short list of what can trigger an insurance claim: overflowing toilet, septic or city sewer back up, excessive rain, fast melting snow, leaking or broken water pipe, cracked ice maker supply line, hot water heater failing, hose left on an exterior water bib that freezes, excessive rain, failed sump pump, mold growth from a poorly insulated exterior wall, and attic mold growth from water intrusion due to ice dams. And this is the short list.
Now that you see the need, lets talk about the two types of restoration contractors; captured and independent. Captured, also called preferred or program contractors by insurance carrier, have negotiated with the insurance companies to become “preferred or program” contractors in exchange for higher volume of business through referrals from these insurance companies. That is why I prefer the term “captured” to define these contractors. Their revenue stream has become captured in this exchange process. They are the ones who automatically get the call from the insurance company when you call the claims line. On the other hand, independent contractors are just that; they are independent, not beholden to insurance companies in any way. They get their work from local presence and quality work. They work for you, and have no financial relationship with the insurance company.
So what is being negotiated in these agreements between insurance companies and captured contractors? Among other things, allowable billable cost and, in some cases, the allowable methods the restoration contractor can use. These negotiations live outside of your policy. They are between the insurance company and the restoration company. At least part of the business motive behind this is that insurance companies can save a lot of money when they get to tell the restoration contractor what that contractor can do and how much they can charge. That is, they can create pressure to greatly reduce payout on claims by guiding both the pricing and operation of restoration contractors that enter into these agreements. To paint a clear picture, it’s like an insurance company telling the surgeon what tool and procedure to use as that doctor operates on you.
As you can imagine, this can lead to a conflict of interest. If the captured contractor sent to your home or business by the insurance company knows they may not be paid for what actually needs to be done, or that they will be kicked out of the “preferred contractor program” and lose a steady stream of referrals if they work outside their agreement with the carrier, how much more likely are they to cut corners? Second, the captured contractor realizes that if they satisfy the insurance company, even if the customer is NOT well cared for, their next customer is just one referral away from the insurance company.
To be fair, there are carriers and restoration companies out there that have entered into these agreements that both do excellent work.
How are independent contractors different?
Independent contractors secure their work through their own local presence and quality work. When they arrive on the scene they have one, singular, focus. That focus is to take care of you in the shortest time possible. There are no divided loyalties. They are not beholden to the insurance company in any way. For the independent contractor, taking care of you means “People first, then property.” Good ones make sure you feel cared for and that your home or business is cared for in the best possible way. Acting otherwise is business suicide, because you will tell others, including your agent and insurance carrier.
Now that you know the two types of contractors, lets talk about how to pick the one restoration contractor you want to work with.
First, you get to choose your restoration contractor. Nobody else gets to make that decision for you. If you are told otherwise by anyone associated with your insurance carrier ask this question. “Would you please show me in the Policy In Force where I have waived my right to choose my restoration contractor?” At that point, they may tell you that you can choose whom you want, but they will only reimburse up to the amount that a preferred contractor would pay. Now you ask a similar question, “Would you please show me in the Policy In Force where your coverage of my loss is limited to what you would pay a contractor you refer?” At this point, they will likely realize they are dealing with an informed consumer, back off, and tell you to call who you like.
Second, listen to word of mouth. The new word of mouth is social media. Get online and find local restoration companies. Then read reviews. Assuming the reviews you are reading are natural (not purchased), decent, and local, more reviews win the day. This would be a good time to read my blog post, “Can You Trust Online Reviews?”
Second, make a few calls BEFORE you have a flooded basement or mold growing in your home. Here are a few questions to help you interview restoration contractors.
- How did you learn your trade? (A combination of experience AND professional training are the benchmark.)
- How do you select, train and manage your employees? (Do they go through an interview and background check?)
- What restoration certifications do you have and why? (Professional companies make a commitment to their employees and customers by having people on their team appropriately trained.)
- Will you have your insurance provider send a letter of notice directly, that demonstrates appropriate coverage for restoration work? (This is non-negotiable and restoration coverage requires a “non-standard” policy. This is a policy that specifically covers restoration work and usually is not part of general business insurance. If they answer with anything but “Yes” move on to the next contractor.)
- Do you work with sub contractors and if so, how are they managed? (At a minimum, sub-contractors need to carry their own insurance, which you need to get a copy of from the sub-contractors insurance provider.)
- Are you the person who will arrive on site when I have an emergency? (It’s always good to know who will arrive at your home.)
- What is your average response time to investigate a situation? (Fast matters most. The longer water is in your basement, or any part of your home, the worse it gets. Investigation is the process that begins to determine the extent of the damage. It does not include setting any drying equipment.)
- What is your average response time to start extracting water or treating mold once I decides to work with you? (The answer will give you some clues about whether the company is taking on more work than they can handle. In a water loss, within a couple hours is the norm unless your area is experiencing a weather event that that affects many homes at the same time.)
- Can I expect 24/7/365 response if I have an emergency, and how do you cover your phones? (Small companies may not use a live answering service. In this case they likely have someone on call that should return your call in 30 minutes or less.)
As I said, choose your restoration contractor before you need your restoration contractor. You can plan ahead for this eventual need. Make those interview calls today.
Until next time…
Eric Nei the Cleaning Guy