DO I HAVE PROPERTY DAMAGE?
If your property has sustained a significant catastrophic event, the damage may be readily apparent. This may include broken windows, damaged siding, a missing roof, or even destruction of the entire structure. However, damage is not always easy to recognize. You may have seen hail covering your lawn or trees blown over by the wind but don’t see signs of damage to your property. Consider that most roof damage requiring replacement is not visible from ground level and the consequences of not repairing a damaged roof can be seen in the above images.
If damage is not visible following a weather event, please contact us for a free inspection. When JRB Enterprises inspects your property, we will provide detailed information regarding our findings as well as recommended course of action. This allows you to make an informed decision as to the feasibility of incurring an insurance deductible if a claim were to be filed. In fact, many insurance agents readily recommend that policyholders have a contractor inspect the property prior to filing a claim. This eases the burden on adjusters who often become overwhelmed by the number of inspections and reports they must complete every day. In the end, reputable contractors want the opportunity to do business with you but also don’t want to waste anyone’s time in having you pursue a frivolous claim.
FILING A CLAIM
Once you determine the necessity of filing an insurance claim, simply call your insurance carrier. Most companies have an online process or option to report a claim via calling their toll-free number, but even your local agent can guide you through the process. You will need to provide your policy information, date damage occurred and type of damage you believe is present. You will be provided a claim number and assigned an adjuster who will contact you in order to schedule a meeting. He or she will then inspect your property and generate a report detailing their findings.
Even if your damage is obvious, it’s always best to obtain the services of a reputable contractor who will be present during the adjuster’s inspection of your home or business. The presence of JRB Enterprises is not to instruct, influence or interfere with the adjuster’s duties but to compare our scope of observed damages and resolve any differences. One may simply see damage that the other does not and having your adjuster return at a later date to address any differences will significantly delay completion of your repairs. These meetings are to identify damages and are not the time or place to discuss pricing, policy matters, etc.
INSURANCE COMPANY RESOURCES
Allied – 800-282-1446
Allstate – 800-54-STORM
American Family – 800-374-1111
Amica – 800-24-AMICA
Auto Owners – 517-323-1200
Chubb – 800-CLAIMS-0
Encompass – 800-588-7400
Farmers – 800-435-7764
Liberty Mutual – 800-2CLAIMS
Nationwide – 800-421-3535
Progressive – 800-776-4737
Safeco – 800-332-3226
Shelter – 800-SHELTER
State Farm – 800-SF-CLAIM
The Hartford – 800-243-5860
Travelers – 800-CLAIM33
USAA – 800-531-8222
Federal Emergency Management Agency (FEMA)
YOUR INSURANCE RATES
Most States prohibit an insurance company from raising the rates of an individual policy due to damage sustained from an “Act of God.” Insurance companies do however assess the risk of an area and may increase rates if there is a high potential for loss, possibly even refusing to renew policies and leaving a market altogether.
The response time for your adjuster depends on supply and demand. You may hear that your claim is assigned to a “CAT Team” which simply refers to a “Catastrophe Team” of adjusters dedicated to your area. These teams greatly improve the efficiency of resolving claims and consist of adjusters from all over the country. Further, local offices may have been damaged and these teams can rapidly respond with mobile command centers (See Catastrophe Response).
Adjusters may be employees of your insurance provider or, more commonly, independent adjusters (IA) under contract. Regardless, they are required to provide an accurate accounting of property damaged by the storm and a written estimate as to the cost of replacement or repair. Following the adjuster’s inspection, you may be provided with an immediate estimate and check, or more commonly, receive the report and initial funds only after a supervisor has approved the adjuster’s findings.
YOUR INSURANCE SETTLEMENT
If you have an “Actual Cash Value” (ACV) policy, you will receive one check for the value of your damaged items less any applicable depreciation and deductible. This money is yours to keep but failure to repair bars future coverage and major items (roof, structure, etc.) may jeopardize continuation of your existing policy. Many policyholders are surprised to learn of State specific endorsements for their policies, such as USAA deeming roof surfaces and exterior fixtures as non-recoverable ACV items in Oklahoma regardless of coverage type. (See example Colorado claim.)
If you have a “Replacement Cost Value” (RCV) policy, your payments will be in stages. The initial payment is the ACV value which is the value of the damaged property less depreciation and your deductible. You can literally keep this amount with the same warnings as previously mentioned. If you repair the items and incur the full depreciated replacement amount, your insurance company will release a second check for what is called “Recoverable Depreciation.” Insurance only pays the replacement cost when the depreciated item is actually replaced/repaired and the expense is actually incurred. There may also be a separate check for damaged personal items (grill, lawn chair, spa cover, etc.) as well as payment for approved contractor supplemental requests (permit fee, corrected pricing, etc.). You should only incur your deductible amount for replacement of damaged items under an RCV policy.
YOUR MORTGAGE COMPANY
If there is a lender affiliated with your property, the check issued by the insurance company will be made payable to both you and the mortgage company. Upon filing a claim, immediately contact your lender and inform them of the pending claim. They will send you a packet containing various documents which must be completed and returned to the mortgage company. This often includes a conditional lien waiver for the contractor to complete, a certification to be submitted once repairs are completed, a declaration of intent to repair, release form, a notarized contractor statement and third party authorization form. We’re familiar with the process and will assist you in complying with the lender’s requirements.
Once you receive your first check, you will sign it and provide it to your mortgage company along with the completed forms, signed contract, and a copy of the insurance estimate. Generally, they will then release 1/3 of that initial amount with additional increments to follow based upon completion of project stages. Upon notice of final completion, they may schedule an inspection and then ultimately release the final 1/3rd payment. Remember, this is only regarding your first insurance check.
Once insurance releases any subsequent amounts, you’ll have to sign those checks and send them to your mortgage company as well. A request for your mortgage company to release the additional payments will be submitted, but it is your responsibility to communicate with your lender to ensure the timely release of all funds following our requests.
WHEN AND WHAT TO PAY TO THE CONTRACTOR
The cost of your repairs should not exceed what your insurance company has deemed appropriate for your loss. Any disagreement in pricing must be resolved by your contractor and insurance carrier prior to repairs being started. Exceptions to this rule may include items you’ve agreed to upgrade at an additional cost or additional work not covered by your claim.
Due to scammers that prey on storm victims, never release any payment to the contractor prior to material delivery. You should take into consideration that contractors have the burden of funding countless projects while awaiting incremental payments from the insurance and mortgage companies. If you have a large quantity of material or a special order item, it is well within reason for a property owner to release funds equivalent to the material value once it is delivered to the property. Additional payment should only be released upon completion of each segment (roof, siding, interior work, painting, gutters, etc.) with appropriate valuation for each.
Prior to your adjuster arriving, JRB Enterprises prefers to inspect your property and generate a detailed scope of repair. This estimate consists of measurements, evidentiary pictures, replacement cost for each item identified as damaged and citation of applicable building codes for each item. More importantly, we use the same estimating software as the majority of insurance carriers which is inclusive of monthly pricing updates for each city. JRB Enterprises disputes many of the “market prices” set forth by the software; however, it greatly assists in claim management whereas it’s difficult for a carrier to challenge their own pricing mechanism. Simply handing such report to your adjuster upon his/her arrival greatly expedites a hassle-free settlement.
We ensure that any concerns you have are addressed and appropriately accounted for, regardless of our interest as a contractor. For instance, if your grill is damaged by hail it’s not difficult to obtain the replacement price via simple internet search and include it in our comprehensive report. This saves you time and effort in submitting your own documentation and reduces the amount of activity occurring in your claim. JRB Enterprises can only provide information to your carrier; you have the ultimate authority to decline or accept any settlement offer they may present.
We ask that you sign a contingency agreement with third party authorization prior to us undergoing such efforts to facilitate your repairs. A great amount of time and resources is expended preparing your reports and we incur charges for obtaining satellite renderings of your property as well as utilizing subscription based estimating software. If your carrier denies coverage, the contract is null and void without further obligation. (Simply give us written notice that we are relieved of any contractual performance under the claim.) In the likely event that the carrier approves the scope of damages, we have a contract to perform the indicated repairs for the amount set forth by the carrier. Any scope of repair or pricing differences will be resolved by the contractor and carrier (based upon demonstrable market conditions) and our contracts our strictly for the final replacement cost value established by your insurance, nothing more.
Like Colorado, many states have laws allowing a homeowner to cancel a contract within 3 days of contract signing or upon denial of a claim by a carrier. This is of great benefit to property owners who are pressured into signing a contract by overzealous door-to-door salesmen.
Insurance and mortgage companies only release payment upon satisfying contractual obligations. Some claims consist of roofing, siding, gutters, drywall replacement, painting, decking, fencing and any other conceivable home repair. In order to expedite release of funds following completion of major project segments, we may distribute the segments into separate contracts. This is especially practical if you have special order items such as windows, decorative copper or custom slate that will incur lengthy manufacturing delays.
If you have an ACV policy, your insurance payment will consist of the depreciated value less your deductible. Since you would be expected to pay the replacement value out-of-pocket, a suggestion is to wait until off-season to have minor repairs performed whereas material and labor prices are considerably higher for contractors following significant storm damage. Most contractors will not provide competitive bids when inundated with insurance claims as will be explained under this section.
If you have an RCV policy, you will receive your depreciated value less deductible. You have the “possibility” of recovering the depreciation ONLY IF THE EXPENSE IS INCURRED. For example, a $10k claim with $2k of depreciation has an ACV value of $8k. Less a $1k deductible equals an initial payment of $7k. If your contractor bills $10k for services, your carrier will release the full $2k of depreciation. However, if your contractor were to bill you $8k, no additional amount would be released whereas it was not incurred. In an RCV policy, all depreciated amounts can be considered “use-or-lose.” The effects of not using your depreciated amounts in favor of obtaining competitive bids will be discussed in the following section.
If a contractor rebates your deductible amount and bills only $9k, your carrier will simply subtract your deductible from the incurred amount and only pay $8k. Contractors may offer “sign advertising agreements” in order to cover your deductible, but many states are enacting legislation prohibiting this. If any amount is deducted from the total without issuance of a 1099 (for values in excess of $600) or disclosure to the insurance company, it represents serious criminal offenses. As an alternative, we compensate you for providing qualified referrals whereas it does not involve reductions to your claim.
COMPETITIVE BIDS FOR INSURANCE
Insurance companies use estimating software with region-specific price lists to determine the market value of both labor and material. This has become the norm and the adjuster’s primary function is determine whether you have damage and the extent of damage as it relates to the guidelines set forth by your carrier. Price shopping is not a concern with insurance claims; quality, warranties and craftsmanship should be the deciding factors rather than cost. This is one of those subjects that confuse a lot of clients, so we’ll approach it a few different ways.
Most contractors offer free insurance “inspections” and not “competitive bids.” It is illogical for a contractor to price a project below market value with no benefit or cost advantage to the homeowner. Contractors are financing projects while waiting in excess of 6 months for release of payment in addition to supplying the insurance and mortgage companies with extensive documentation and forms. It would be difficult to find a contractor who would deal with insurance requirements, protect your interests, comply with lender requirements, and then wait 6 months for a payment that falls below market value. Further, competitive bids below market value act to skew market conditions with a negative impact on homeowners. As an industry standard, roofing crews generally see a 10% pay increase following a catastrophe due to grueling labor demands and suppliers always increase material pricing. Issuing a competitive bid prior to labor/pricing adjustments is nothing short of market homicide.
Companies may give you a low-ball estimate and then have you sign a contract for insurance proceeds. Avoid these people whereas it’s nothing more than bait to get your business. They can estimate that your complete re-roof will be $1, have you sign a contract for insurance proceeds, and then bill the insurance company for the full market value. An “estimate” has no bearing on final payment to the contractor by the carrier. They’ll simply say their “estimate” was to establish the scope of repairs to be completed, not set forth pricing. Salesmen are taught to use this low ball tactic if a property owner requests a written estimate for an insurance claim.
Here is an actual example of what happens when markets are misrepresented: Norfolk, NE is a rural town an hour outside of Omaha, NE. Due to local 2-man roofing crews giving competitive bids, Norfolk was priced 36% lower than Omaha all while having higher material prices and additional costs to obtain material and labor from Omaha. Being a slow growth rural area, there were no major contractors there. Management and crews from Omaha were required in order to keep up with demand which required long-term hotel expenses. Projects were delayed due to lack of adjusters and contractors were operating 23% above the Omaha pricing while being paid 36% less. Many commission based adjusters quit (some in the middle of inspections) and countless Omaha based contractors lost interest. The local “Dad and Son” roofing crews are critical to small communities, but they could neither finance all the projects while awaiting insurance payments nor satisfy the demand for repairs. Ultimately, a lot of people didn’t get their repairs completed that year and many pointed out that their 2011 claims for the same damage paid higher amounts. The pricing certainly did not decrease between 2011 and 2014, it was merely the effect of competitive bidding that failed to reflect actual market conditions.
Simply put, warranties are nothing more than ink on paper. A true warranty is a company’s willingness to protect their reputation, which should inspire confidence in the quality of their workmanship. At some point in time, every contractor is destined to make an oversight or install a product that later fails. It’s how the company responds to and corrects the problem that gives a warranty meaning. JRB Enterprises will actually be here following completion of storm repairs to address any issues that may develop with your project.
Further, don’t be fooled by manufacturer “limited lifetime warranties”. Length of warranty once suggested the thickness/weight of shingles (25-yr, 30-yr, 50-yr) and many HOA covenants still use this standard in an attempt to achieve uniformity. (We will meet with your board to discuss replacement material if you fall into this category.) Now almost all material is “limited lifetime” and seeing as to how no business can succeed with limitless liabilities for all of eternity, those exclusions promise to void coverage when appropriate. Odds are, you’ll get hit by a storm, sell your house, or pass-away long before the material would ever fail.
The industry standard is 2 years for labor warranties and the first storm following installation generally reveals any deficiencies in workmanship. Performing 3rd party assessments for warranty claims has taught us that leaks and failures occurring one year or more after installation are more likely to be attributed to other factors. Contractors generally don’t fear offering extended warranty periods, but it can have a negative impact on their ability to secure lines of credit whereas this is treated as an active liability.
*The foregoing is a general guide for home and business owners with possible storm related property damage. The information is neither presented as legal advice nor representative of the individual policies and procedures of the insurance carrier. Please call us for a no obligation consultation regarding your individual circumstances.