Working With Insurance Companies - Understanding Loss $$


#1

Indemnified Structures & Premiums Intrinsic Replacement Cost Values
Actual Cash Value = Depreciated Replacement Cost Values From Predetermined / Pre-Paid For Replacement Costs Charged Policyholder Consumers By Insurers

Generally, constructing / “placing” a structure requires a financial investment.
Generally, reconstructing / “replacing” a structure requires a financial investment.

Generally, the future replacement costs of a structure is established at an insurance agent’s desk.
Historically, the process for placement/replacement of a structure requires physical human effort.

Historically, building construction professionals place and/or replace structures.
Historically, a general / primary contractor contracts with another to place/replace structures.

Historically, indemnification insurance protects against potential future financial loss.
Historically, future financial losses are actuarially/statistically predetermined per future loss values.

Generally, structures do not come into existence by labor and material costs alone.
Generally, structures require construction labor, materials, tax, overhead, and profit costs, to exist.

Historically, general contractor (G.C.) involvement builds intrinsic construction values into a structure.
Historically, insurer replacement costs account for a prospective G.C. to replace/reconstruct a structure.

Historically, insurers charge consumers for future replacement costs of a structure, via premiums.
Historically, premiums account for a future prospective [general] contractor’s involvement costs.

Historically, premiums must reflect viable and verifiable indemnification underwriting.
Historically, actuaries, statisticians, underwriters, and contractors, understand replacement costs.

Historically, contractors account for labor, materials, tax, overhead, and profit costs toward projects.
Historically, replacement costs are determined by local market construction cost range.

Historically, insurers rely on local/regional construction cost range to help determine premium costs.
Historically, “Construction Cost + 10% Profit” math is used to place/replace/repair structures.

Can widespread contingent illegal windfall profit be made by insurers, (by them devaluing / omitting future reconstruction cost values intrinsically woven into a placed structure), via synthetic loss claim value estimating practice presented to an uneducated / unsuspecting consumer public?

In order to factor costs to replace a structure, does charging for market qualified prospective general contractor involvement on the premium end, then omitting said contractor’s (10% overhead and 10% profit) construction costs in loss claim values, equal actual future loss values being properly paid to policyholder consumers?

Does charging consumers for future prospective general contractor costs to replace a structure mean insurers do not owe G.C. overhead and profit costs they have charged a policyholder for when only one trade work [roofing] loss value is owed a claimant?

Who put the roof on a new structure, the G.C., or the roofing contractor alone?

The G.C. using his sub-trade contractor is the actual value of the roofing system to the policyholder.


#2

If I worked for only 10 % Overhead and 10 % profit, I would be at a substantial loss, unless I eliminated the overhead, which would mean that I would have to be exclusively dependent upon referred work and insurance work. Those are too cyclical if one stays in the same community instead of moving to the storms.

The rates are biased with what they can Find someone to do the work for, rather than what is should go for on the open market with free enterprise.

The selection of the contractor is not only the selection of the Materials and Labor, but the selection in Trust and Quality and Experience.

Their is no objective manner to differentiate between a one year old contracting company and a 25 year established contractor using their pricing formulas.

Ed


#3

I only do roofing and have gotten paid O/H and Profit once in a few hundred claims.

Last week though got the paperwork from a claim with the roof and little bit of facia and gutter that’s being paid 10% O/H and 10% Profit.


#4

I think what ClaimHawk is trying to say is that the insurance companies double whammy the policy holder.

  1. How much would it cost to completely rebuild this home if it had to be done. X dollar = Y premium.

  2. Claim filed, lets pay what a jack leg would charge for this work.

So the policy holder isn’t really getting what they’ve been paying for all along.


#5

There are a ton of loop holes in the insurance industry.

A lot of money goes into Mexico from policy holders.


#6

Doug not sure how your responce applies to claimhawks post.


#7

The insurance companies plainly state that the insured can use what ever contractor they chose to make the repairs.

They can use a conctractor that charges $200 per square or use a contractor that charges $400 per square. Heck if they want to they can even do the work themselves. They can also use a contractor that charges overhead and profit and one that don’t.

If say a house needs to be rebuilt what would make you, Ridgewalker, think they would pay a jackleg to do it? The insurance restoration companies I used to sub from always got what they wanted to rebuild homes from fires, floods, and tornadoes.

All the contractors I know including myself use Xactimate. Most of the areas pay ok except interior and windows which most insurance companies pay for replacement/repair with an estimate. Windows for example are paid from Xactimate about 1/4 to 1/5 actual cost.

In the Xactimate program there is break downs for each line item which explain materials and labor costs. On top of that there’s the 10 and 10. Most insurance companies want to see 3-5+ trades in order to pay overhead and profit. Some want copies of invoices from subs and contact phone numbers.

It’s really apparent a lot of insurance won’t give out overhead and profit unless they have to.


#8

[quote=“dougger222”]The insurance companies plainly state that the insured can use what ever contractor they chose to make the repairs.

They can use a conctractor that charges $200 per square or use a contractor that charges $400 per square. Heck if they want to they can even do the work themselves. [/quote]

Well yes and no. The insured can use whatever contractor they chose as long as it is “close” to regional pricing. If $200 is the going rate they will not pay $400 a square. They actually can go after that contractor for “Price Gouging”

Yes the home owner can do the work themselves but they will not get all the depreciation back. They will get money from receipts form materials plus resonable labor cost. They will not get the full claim amount.


#9

[quote=“Jayman931”]

[quote=“dougger222”]The insurance companies plainly state that the insured can use what ever contractor they chose to make the repairs.

They can use a conctractor that charges $200 per square or use a contractor that charges $400 per square. Heck if they want to they can even do the work themselves. [/quote]

Well yes and no. The insured can use whatever contractor they chose as long as it is “close” to regional pricing. If $200 is the going rate they will not pay $400 a square.

They actually can go after that contractor for “Price Gouging”

Yes the home owner can do the work themselves but they will not get all the depreciation back. They will get money from receipts form materials plus resonable labor cost. They will not get the full claim amount.[/quote]

Define “Price Gouging”

If I charge a home owner my fair market value, the same prices per item that I charge other home owners, who are not insurance casualty clients, so what if I wind up at $ 400.00 per square.

I am very interested in the response, because I actually had one adjuster insinuate that to me on a job last year, where I charged the exact prices that were in my contract per every line item, which he had a copy of before the job started and was completely aware of and had previously approved.

For instance, I had a price of $ 5.00 per foot for 2" x 4" rafter replacement.

He calculated it out to encompass the square footage of the decking at .27 cents per square foot.

Most if not all carpenter and roofing contractors I requested a reply from on another forum stated that my price was fair and even on the low side, yet the adjuster still had the audacity to insinuate price gouging.

I have charges filed against him and his company for Financial Interference With A Contract.

Ed


#10

$5-6 dollars a foot is more than fair. You may have undersold that. (Prices vary by region) Some adjusters are know-it-alls. I would think any adjuster would know the difference in price of material/labor/mark up between decking and rafters.

I don’t know the exact definition. But here is a good example. Its not regarding roofing but you’ll get the idea.

oag.state.ny.us/press/2002/f … 4a_02.html

If you have a 4/12 25yr shinle roof and you are charging $400 dollars a square for a basic roof you are price gouging (except in Miami Dade County)


#11

Here ya go… New Yorks Law

The state’s price gouging law prohibits businesses from charging “unconscionably excessive prices during periods of abnormal disruption of the market for consumer goods and services.”


#12

This is my opinion only, but I feel that the added administrative work, meeting with adjusters, waiting on check endorsements, and finely waiting an unreasonable amount of time to get paid a final balance on a job warrants higher then normal prices.

I’m a contractor, not a bank. I don’t float the note and neither does the home owner.

Under regular circumstances, a home owner has all his money and he’s planned to have a new roof put on. He picks his contractor, pays a deposiit, the roof is completed and he pays as soon as it’s complete. The key word is “Planned”.

Also consider; what would prices be if on Monday every one in your community decided to get a new roof and you have 200 calls the first week for new roofs. Would your pricing stay the same or would supply vs demand effect your pricing.

Why is it ok for the oil and ore industry to raise prices because of supply demand issues but it’s not ok for contractors to?


#13

[quote=“RidgeWalker”]

Why is it ok for the oil and ore industry to raise prices because of supply demand issues but it’s not ok for contractors to?[/quote]

Oil is traded like a commodity. Speculation is also a big factor. Oil companies didn’t just “raise” thier prices. Traders inflated the pricing.


#14

Ok so if traders inflated the pricing, what criteria are they using to justify the inflated prices?


#15

no criteria…because they can…and they can make alot of money. The government actually threatened to make laws against it. I really didn’t wanna get into a long discussion…but i’ll give you a quick rundown.

Most commodities you have to put down 50% to buy them…so if you want 1 million you have to have 500,000 cash to buy it. Then the price goes up a little and you sell it. (its almost like a loan…and banks will insure the loan because they know oil isn’t gonna drop in half so their money is safe) The problem is…with oil commodities you don’t need 50% you need 5 or 10% (not sure exactly the percentage) so everyone in their brother started inflating the market to make money while the consumers paid for thier profit at the pump. The U.S government actually considered creating new laws to prevent this but to this day didn’t. Just gave a few threats…I mean would you penalize the people that got you in office?


#16

[quote=“Jayman931”]Here ya go… New Yorks Law

The state’s price gouging law prohibits businesses from charging “unconscionably excessive prices during periods of abnormal disruption of the market for consumer goods and services.”[/quote]

That is my point exactly.

The same prices I charge on the open market are the same prices I calculate for insurance related work.

Therefor, since I have an ongoing historical record of maintaining my pricing across the board and it is accepted on the open fair market, it would be unconscionable to even preclude that my prices are gouging.

He tried to verbally bully my final invoice down to match the errors he made throughout the entire claims process. Actually, he was the 3rd adjuster sent out even prior to work being initiated and all 3 of them did not get the scope of work correct, for the obvious square footages and necessary work required.

Where they really screwed up was on the hidden damage, that could not be ascertained until the roof material and deck sheathing was removed. At that point, even unknown to me, there was another 2 layer roof and another layer of deck sheathing that was hidden from any perimeter view even upon examination.

All of this additional work was verified via daily photos and descriptions via e-mail and phone voice mail messages, with no return calls or commentary, until finally after the job was complete and the previously accepted contract prices were now deemed by that adjuster to be price gouging.

Ed


#17

theres always the state insurance board…You were in the right…that adjuster was clueless but his hands might have been tied. Sounds like a raw deal.


#18

I’m buying oil commodities then!


#19

I write all my estimates with Xactimate which is known in the insurance and contractor field to pay higher than any other estimating software. There are some that come close but they are not nearly commonly used as Xactimate.

That being said if I charge for and do all the line items in my estimate how would that be price gouging? Most of my roofs are written at $350-450 per square. Some roofs go higher if they are 40-50 year laminate shingles. Got one paid recently, a 10/12 50 year lifetimae laminate at $680 per square. Now consider there are contractors out there who either have no idea what insurance companies pay or don’t care and charge $200 per square for the same roof I just wrote for $400 per square?

Keep in mind in my area there are Mexicans who tear off and install for $55 per square.

All the roofing companies I bid against charge the insurance company one price and an out of pocket home owner another price.

Just like contractors, there are good and bad adjusters. Called one adjuster bad this Spring and she hung up on me!!! Considering she said several times she wasn’t going to buy the roof then said she wasn’t going to pay any more money on the roof and she did on both accounts, I won.

In the last month had one adjuster tell me to shoot frozen paint balls on the roof and another to just use a ball peen hammer. Another told me to dig into the roof with my Haage gauge so the picture would look better. Then there are adjusters who won’t pay for hail damage.

My agent has been selling insurance for over 20 years and he tells me he’s still learning the insurance game.

Here in Minnesota the commissioner of insurance reports bad faith claims to the insurance providers. There is a $350K fine if the insurance company loses.


#20

[quote]I write all my estimates with Xactimate which is known in the insurance and contractor field to pay higher than any other estimating software. There are some that come close but they are not nearly commonly used as Xactimate.

That being said if I charge for and do all the line items in my estimate how would that be price gouging? Most of my roofs are written at $350-450 per square. Some roofs go higher if they are 40-50 year laminate shingles. Got one paid recently, a 10/12 50 year lifetimae laminate at $680 per square. Now consider there are contractors out there who either have no idea what insurance companies pay or don’t care and charge $200 per square for the same roof I just wrote for $400 per square?
[/quote]

We use Xactimate as well dougger and it is the most comprehensive way in my opinion to accurately find the price to charge for replacing a roof. The added benefit is that if I’m accused of price gouging I’m pretty well protected because I don’t dictate the prices, Xactimate does. The fact is that a roofer who bids a roof that dictates $450/sqr for $200/sqr is most likely just a roofer and not a businessman.