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Who Does a Preferred Insurance Vendor Really Work For?

Dealing with one or multiple contractors is often the most challenging part of an insurance claim. You typically have a choice between picking a preferred insurance vendor who works together with your insurance company or hiring your own independent contractor.

An important consideration is, who does a preferred insurance vendor really work for? Do they strive to complete a job to your satisfaction or that of your insurance company?

Read on to find out why preferred insurance vendors typically act in the best interests of your insurance company and if you should make use of their services.

Woman talking to a contractor

Preferred Insurance Vendor Vs. Independent Contractor

Preferred Insurance Vendor

Preferred vendors have an established relationship with your insurance company. They are the vendors your insurance company recommends when you need work done on your property after suffering damage caused by a covered event, such as fire damage.

Preferred vendors have to agree to a discounted price list, including labor and material, in exchange for referrals and lower marketing and advertising costs.

Independent Contractor

An independent contractor is a licensed contractor that is not recommended by your insurance company to do the necessary work to resolve your insurance claim. It does not mean they don’t work with other insurance companies as a preferred vendor – it only means that, in your case, they are not on the list of preferred vendors.

Unlike a preferred insurance vendor, they don’t have to agree to a discounted price list. As such, an independent contractor might charge more than a preferred insurance contractor, but they have fewer reasons to cut corners to keep their costs low.

You are allowed to hire your own licensed insurance claim contractor.

California Law

As per Section 2695.9 of California’s Fair Claims Settlement Practices Act, you are not obliged to use a preferred insurance vendor recommended by your insurance company.


(b) No insurer shall require that the insured have the property repaired by a specific individual or entity.

(c) No insurer shall suggest or recommend that the insured have the property repaired by a specific individual or entity unless:

(1) the referral is expressly requested by the claimant; or

(2) the claimant has been informed in writing of the right to select a repair individual or entity and, if the claimant accepts the suggestion or recommendation, the insurer shall cause the damaged property to be restored to no less than its condition prior to the loss and repaired in a manner which meets accepted trade standards for good and workmanlike construction at no additional cost to the claimant other than as stated in the policy or as otherwise allowed by these regulations.


Should You Avoid Using Preferred Insurance Vendors?

Architect and contractor shake hands

Using a preferred insurance vendor (recommended by your insurance company) has advantages and disadvantages. It includes the following:


  • Your insurance company won’t recommend a contractor if they’re not comfortable that the business has the skills, experience, and expertise to complete the job.
  • If you’re not satisfied with the performance of the contractor, you can file a complaint against them with your insurance company. A preferred vendor would typically rather address a customer complaint than risk losing out on future jobs from your insurer.


  • Since a preferred vendor works off a discounted price list, their margins are under pressure and this might cause them to cut corners to save money.
  • Recommended contractors might not want to query things with your insurance company if it might compromise their relationship and future business dealings with them.
  • Preferred insurance vendors need to complete more jobs to offset the loss of income from working off a discounted price list. It might cause them to rush jobs so they can start working on new ones as soon as possible.


In principle, contractors should work for homeowners, not insurance companies. However, if a contractor receives most, or a significant portion, of their leads from insurance companies, they may become dependent on referrals from insurers.

It can be argued that, should this be the case, they are working for insurance companies, not homeowners, as they might be reluctant to act in the best interests of homeowners if it could cost them future business.

Working with contractors can be time-consuming, difficult and frustrating. If you’re dealing with a large or complex insurance claim, consider using a public 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 the best possible settlement offer you’re entitled to under your policy, and managing contractors!

Avner Gat, Inc. has over 17 years of experience as a public adjuster in Los Angeles, covering 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.

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