9 Things Your Insurance Adjuster Doesn’t Want You to Know
You've Been Through Enough
When it comes time to file an insurance claim many people discover their insurance company is in the business of collecting premiums, not paying for claims. You have faithfully paid your insurance premiums and it is reasonable to expect them to deliver on what they promised you. At 3Rs Construction & Remodeling, we understand “insurance speak”! We hope you never need to use your insurance, but if you lose your home to a flood or fire we have over 25 years of experience in dealing with rebuilding and working with insurance companies. When it comes to putting your home back together, we are the trusted contractor your happy neighbors have been using.
Here is a list of 9 things your insurance company hopes you don’t know!
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1. You can hire whoever you want to restore your home
In Oregon, the law says you are allowed to select whoever you want to do your insurance repairs. Insurance companies can provide you with a list of companies they recommend however they're not supposed to prioritize or show favor to any one company. You are not bound by this list in any way. If you have a contractor that is qualified and able to start work don't miss the opportunity.
2. You don’t have to wait
Insurance companies like to get a good scope of the damage however it is your responsibility to make sure no further damage happens to the property by taking steps to protect it. The longer you wait to protect your property from the elements and start mitigation the more damage will occur. If your contractor is able to start right away be sure to document what things looked like and what has been removed as a courtesy to your insurance provider.
3. You don’t have to go with the lowest bid
Occasionally insurance companies will ask you to get multiple quotes for the repairs, you are not obligated to do that and you are not required to go with the lowest quote. (your home was not likely built by a discount contractor, why should you have it rebuilt by someone who will have to cut corners to make the budget) Occasionally a provider will limit the amount they will pay to the lowest amount quoted however there are lots of ways an experienced contractor can help you remedy this.
4. You don’t have to get competitive bids
If your provider asks you to get competitive bids remember that you are under no obligation to do that.
5. Do not assume their estimate is adequate or accurate
When the adjuster comes, he or she will take all the measurements then send you an incredibly detailed quote for the repairs. The estimating program used by most insurance companies is called Xactimate and it was never intended to be the final authority. Its function was to create a starting point to get things in motion. Many inexperienced adjusters are unaware of the inaccuracies of Xactimate and can become stubborn when it comes to determining the real cost to complete the repairs. It is our experience the first quote is typically 1/3 to 1/2 of the actual cost of restoration.
6. Your policy’s “Face Value” is not the total amount available to you
Your policy determines the amount of coverage you have to replace the dwelling. There is a separate dollar amount for the contents and then there are some additional sources to pull from for code upgrades and county required improvements. These can be added to the total available and added to your claim. There are also federal and state dollars to help with hazardous clean-up costs not always covered in your policy.
7. Deprecation – “the price of doing it yourself”
Lots of people get confused about depreciation. Your insurance company will send you an initial payment to get things started. After that, they can make multiple payments as your home progresses, or a lump sum at the end. The maximum amount you can be paid at this point is the replacement value minus the cost of your deductible and depreciation. When the job is finished, if you can provide a “paid in full invoice” for the balance of your claim then they will pay the depreciated amount. (In our example below, the home will cost 175 K to rebuild, the policy has a low deductible of 2K and depreciation is figured at 30% based on the age of the home. See example below)
$175,000.00 (Cost to Replace Home and/or contents Pre-loss condition)
$2,000.00 (Minus your Deductible)
$52,500.00 (Minus Depreciation – the difference between the cost of item new and value of the item at the time of loss.)
$120,500.00 (Amount Owed to Policy Holder)
You can take that check, pay off the house, and put the rest in your pocket, or have the work done and prove it with a paid invoice. When you can show the work was completed the amount of depreciation will also be paid to you. That is why we call depreciation – “the price of doing it yourself” if you can’t prove the cost they will not pay for it.
8. You are not limited to put things back exactly the way they were
There is no expectation or requirement that you rebuild your home in the same layout or style as it originally was. This is often a good opportunity to add a bathroom, expand the kitchen, or add a guest room. The additional cost is not covered by your insurance. Talk with your contractor sometimes reworking the space can cost the same as it would to put it back the way it was.
9. Time is the great equalizer
In the beginning, time is not your friend. You must move quickly to get things in motion or you will delay your ability to complete this project by weeks, months, or years. If you reach an impasse with your adjuster, then the tables turn. Time is now on your side if you can wait them out sometimes the adjusters will get more reasonable. In most insurance companies the adjusters are on a time clock to get files completed and off their desk in a specified amount of time. The longer a claim takes to close the more attention they get from their supervisors. If it really gets unreasonable, involving an attorney can help but we usually recommend that as a last resort.
We hope this was helpful, if you know someone who is has been affected by Fire, Smoke, or Water Damage please send them the link to this page.
For more contractor tips about filing a claim and avoiding common mistakes that can cost you thousands of your dollars and time, download a FREE COPY of our e-book Rebuilding after a FIRE - A Contractors Guide to Navigating Insurance Claims
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