When property damage occurs, policyholders have a few options when it comes to taking steps to protect and restore their property. They can perform a Google search for restoration companies, ask friends or neighbors for recommendations, call the agent and ask for guidance, or call the carrier’s 800 claims number to file a claim and await further instructions.
In the event of a covered loss, a call to the 800 claims number will result in the carrier either instructing the policyholder to call a restoration company of their choosing, or they will assign a “preferred vendor” or “preferred contractor” to the insured’s property.
Amidst the chaos of their emergency, insureds don’t always stop to ask questions about who’s coming into their property. Blind trust in the insurance carrier’s assignment of a contractor can sometimes result in a negative claims experience. Here’s why: most preferred vendors are managed by a third party whose main objective is to minimize the cost of the claim for the carrier, which means the focus is not always centered on the policyholder. It means the assigned contractor serves the Third Party Administrator (TPA), and the TPA serves the insurance company. In this scenario, who’s focused on serving the property owner?
When a policyholder files a claim, they sign an agreement with the restoration company, meaning the restoration company works for them, and not the insurance company. It’s important to note that not all restoration companies participate in third party programs. Policyholders should do their best to choose the most qualified contractor to restore their property.
Sometimes, when a preferred contractor is assigned by a carrier and TPA, the policyholder will decide a few days into the restoration process that they would like to have a different contractor of their choosing complete the work. Frequently, the second contractor will discover the property was not sufficiently dried, meaning mitigation services will have to be performed again before repairs can commence. This causes unnecessary funds to be paid out on the claim, which may affect the policy’s renewal.
Switching contractors during a claim is frustrating for the property owner who is dealing with multiple points of contact, numerous strangers in their property, an extended disruption to their life, and a justifiable mistrust of contractors and their carrier. Why do they go through this? Because they feared if they didn’t use the company the carrier assigned, their claim would be denied, or either the carrier wouldn’t pay for a contractor of their choosing and they’d be stuck paying the bill.
Here’s what most people don’t know: policyholders have the right to choose their contractor. In the state of North Carolina, insurance carriers are prohibited from “steering” insureds to one contractor or away from a contractor. Most consumers also don’t know that for each claim assigned to a preferred contractor through a TPA, the contractor pays a fee or commission to the TPA. The fee can be 5% or more of the total cost of each claim. This is important information, yet it’s not usually disclosed to the insured.
How To Choose
So, now that you know you CAN choose your own contractor, let’s talk about HOW to choose a property damage restoration contractor.
- Ask the agent. A service-oriented insurance agent is available to their clients in an emergency, especially an after-hours emergency. A great question to ask the agent is, “Who would you choose to work in your home or in your office?” Many times an agent will provide a list of three names. From there, online research is required.
- Online presence is a good indicator of a company’s quality of work. Is their website personable or generic? Does the website set the tone for a positive first impression and a high level of trust and comfort? Can you see information on who owns the company? Do you see actual photos of company employees and real jobsite photos? In the jobsite photos, are the work areas clean or covered in dust and debris? Those photos indicate how your property will be cared for. Remember, unaffected areas should be protected while work is underway.
- Find out how Contents are handled. In many cases, your Contents (personal property) will need to be protected, moved and stored out of the way to avoid being contaminated with debris. Find out how the company will take care of your property. Are they qualified to do it on their own or will they hire another company?
- Testimonials and Reviews indicate the kind of experience the company delivers. Does the company respond to reviews? If the review is negative, is the response combative or professional? Is the company turning their customers into raving fans?
- Search the NC Licensing Board for General Contractors: https://nclbgc.org. Type in the company name on the home screen in the “License Name” box to search for a valid license. (Note: You do not need a licensed contractor for emergency services or for repairs under $30,000, however, the licensing board does vet contractors annually, and a license indicates a higher caliber of professionalism and that a company has met certain financial stability requirements mandated by the state.)
- Search the Institute of Inspection, Cleaning and Restoration Certification (IICRC) Database (https://www.iicrc.org/search/custom.asp?id=4785) for a Certified Firm or a Master Restorer. A restoration company should at minimum have certifications in Water Restoration (WRT) Applied Structural Drying (ASD), Fire and Smoke Restoration (FSRT), Odor Control (OCT), and Mold Remediation (AMRT).
The tips above are helpful when a claim needs to be filed, but there are things you can do before you need help to know who to call in case of emergency.
- Know what companies serve your market, and know the impact they have in your community.
- Develop a personal relationship with your insurance agent. Know how to reach them when you need them instead of calling the 800 Claims number.
- Know your policy. If you live in North Carolina, there’s nothing in the policy that states you must use a “preferred vendor” or a “program company.” Also, know that you are required to take action to prevent further damage when you have a property damage emergency.
When dealing with water damage, time is of the essence. Microbial growth can develop within 48 hours and most policies have mold limits in place. A timely response can make a tremendous difference in the severity of the claim, and knowing how to choose a professional damage restoration expert can make the difference between a positive and a negative claims experience.