How to Hire an Insurance Claim Contractor
Dealing with a homeowners insurance claim and the insurance adjuster that’s been appointed by your insurance company can be difficult. However, it’s often a walk in the park compared to dealing with an insurance claim contractor.
You typically have a choice between picking a contractor that’s recommended by your insurance company or hiring your own contractor. In this article we’ll look at both options, and discuss how you can hire the right contractor for the job.
Should You Use a Contractor That's Recommended by Your Insurance Company?
When you’re dealing with a homeowners insurance claim, your insurance company will provide you with a list of recommended contractors. You’re not obliged to use any of the contractors on that list and can hire your own contractor.
The main advantages and disadvantages of using a contractor that’s referred to you by your insurance company, or recommended by them, include the following:
- Your insurance company has vetted the contractor which implies they’re comfortable that the contractor can complete the job.
- If you’re not satisfied with the workmanship of the contractor, you can file a complaint against them with your insurance company. Most contractors would rather fix a problem than risk not getting recommended for future jobs.
- A contractor will often try to prioritize and expedite insurance-related work in the hope that it would lead to more recommendations.
- An insurance company might get away with limiting the scope of a project to save money when they’re dealing with a contractor that they have recommended.
- Recommended contractors might not want to query things with an insurance company if it might compromise their relationship with them.
6 Questions to Ask an Insurance Claim Contractor
If you’re considering hiring a contractor, ask them to provide you with the following information:
#1. A Detailed, Written Estimate.
Ask the contractor to provide you with an estimate in writing. It should contain details about the work to be done and include a breakdown of material and labor costs.
#2. How Long Will It Take Them to Complete the Job?
It’s normal that you would like damage to your property, such as water damage or fire damage, to be repaired as soon as possible.
Ask the contractor when they can start and how long it will take them to complete the job. If possible, get them to include the time frame on their estimate. If you don’t, they may prioritize other jobs before yours.
#3. Their Contractor’s License Number and Insurance Details.
Obtain their contractor’s license details and verify that they are licensed to operate in your state. You’ll also need a copy of the general liability insurance policy, and a copy of the workers compensation insurance policy of the contractor. Make sure that they are up to date.
Note: In California, contractors need to be licensed with the Contractors State License Board (CSLB). Find out what the requirements are for your state.
#4. Do They Guarantee Their Workmanship?
Not all contractors will guarantee their workmanship, but many do. It’s advisable to ask your contractor what guarantee they offer and to hire a contractor that’s willing to provide you with a guarantee.
#5. What Experience Do They Have on Similar Jobs?
Experience plays a huge role! It’s not enough that they are licensed and should be able to complete the job. Ask your contractor about similar jobs they have done and if they can share testimonials from satisfied clients with you.
Alternatively, ask them if you can phone one of their previous clients to find out if they’ve had a positive experience dealing with the contractor. A good contractor that’s proud of the work they have done in the past should not have a problem with your request.
#6. Will They Do All the Work Themselves?
Not all contractors can do all of the work themselves. It’s normal that large projects may require several different contractors or that a main contractor will appoint subcontractors.
For example, a main contractor may screed the foundation of a floor to ensure a smooth and level surface. But they might appoint a separate flooring contractor to install the flooring.
In the above example, the flooring contractor will typically be paid by the main contractor. The main contractor will add a markup for themselves on the work done by the flooring contractor.
Ask your contractor if they will be using subcontractors. If they are planning on doing so, ask if they have vetted them and if they will accept responsibility for the quality of their work.
Note: It’s often easier to deal with a single main contractor who can manage and control the workflow of subcontractors. However, it can push up the costs of the project.
Reputable contractors know it’s reasonable for clients to request this type of information as part of the insurance claim process and won’t charge you for it.
Tips When Dealing With a Contractor
Get Everything in Writing
Everything you discuss and agree upon with a contractor should be reduced to writing. This will save you a lot of headaches when things don’t go according to plan. Ask them to confirm certain things in writing, but if they don’t send them an email to confirm what was discussed.
For example: “As per our telephone conversation this morning, I understand that debris removal is included in your estimate. Please confirm.” If they don’t want to confirm things in writing, treat it as a red flag.
Avoid Contractors That Go Door-to-Door After a Disaster
Some people go door-to-door canvassing neighborhoods after a disaster. Some of them might be legitimate contractors, but many are not.
Let them know that you have homeowners insurance but are willing to consider written estimates from licensed contractors. Keep in mind that they might not be able to complete work timeously if they’ve picked up a lot of jobs from other homeowners in your area.
Read the Fine Print and Get Approval From Your Insurer
Before you make a commitment to hire a contractor, read the fine print in the contract before you sign anything. In addition, obtain the necessary approval from your insurance adjuster. You can also ask your insurance adjuster to discuss estimates with your contractor before anything is agreed upon.
Don't Pay a Contractor in Advance
You should never be expected to pay a contractor the entire project fee before all the work has been completed. Be careful of contractors that require you to pay them an advance, often before they’ve even started working on the project.
Don’t fall victim to a contractor that takes your money and then runs off with it. If a contractor is desperate for money, they might not have the funds to buy material or pay their staff. It’s a big red flag.
Note: A contractor might request to be paid directly by your insurance company. This is not an unusual request – the contractor will provide you with a “direction to pay” form. If you have a mortgage on your house, checks from your insurance company will more than likely be made out to you and the mortgage holder.
Search for Reviews From Past Customers
Most contractors will tell you they’re the best contractor for the job and better than the rest. There’s no substitute for reviews from customers that have used them before. It’ll give you a good idea of what you might expect when you hire them.
Check out the contractor with your local Better Business Bureau. Look at sites such as yelp.com to read what their customers have to say about them and how they respond.
Hiring the right insurance claim contractor is critical. If you ask a contractor the questions we covered in this article and follow our tips, you might be off to a good start. It will help you to make an informed decision on which contractor to hire.
However, getting a satisfactory outcome for a homeowners insurance claim goes far beyond just hiring a good contractor.
Dealing and negotiating with an insurance claim adjuster can be difficult and time-consuming. They look after the best interests of the insurance company and not your best interests. They will always try to pay out as little as possible to settle your insurance claim.
Working with contractors can be equally difficult. Many will underquote to get the job and then cut corners to increase their profit margin. Hiring a contractor is one thing but managing one or more contractors is a completely different ball game!
If you have a relatively small insurance claim for only a couple of thousand dollars, you should be able to manage the process by yourself. However, if you’re dealing with a large or complex insurance claim, you should consider using a public adjuster.
Unlike an insurance adjuster, a public adjuster acts in YOUR best interests. They’re able to manage the whole claim process on your behalf. This includes negotiating with an insurance adjuster to get you a better settlement offer, and managing contractors!
Avner Gat, Inc. has over 15 years of experience as a public adjuster in Southern California. We protect homeowners from the games and fine print that insurance companies and contractors are known for.
Call us at (818) 917-5256 and let’s discuss how we can help you.