Leland,

Thank you for the definitions.  They sound either verbatim or extremely similar to the definition I had previously read on the Insurance Information Institute website a while back.

Now comes the determining factor.  How can the actual prices charged, which were in the contract, not be viewed as a true replacement cost figure?

The adjuster had a copy of the contract with the prices spelled out for varying items we suspected we may encounter, rather than leaving it open ended on a T & M basis.

He told me when he met with me prior to starting the job, that he hopes we can get started very quickly, since their were gaping holes in the homeowners house and detached garage only being protected by a tarp and that inclement weather would soon be coming in.

As stated in the other thread and in the beginning here, I kept him informed as to all of the lineal and square foot quantities on a daily basis, with an accumulative total added up at the end of the job.

Now, 3 1/2  weeks after we are 100 % done, he informs me that the Good Hands people will not be paying the prices in my contract and that they do not match their pricing.  He would not even tell me which items or how much he felt we were off on.  These are the same prices I charge for all competitive bidding projects and have been relatively the same for several years, with no significant increases, except for the initial asphalt shingle portion of the estimate. 

My contract is with the home owners, but it has been relied on in good faith from the acceptance of my proposal, that they had no issues with any of the specifications or pricing and that the adjusted settlement would be forthcoming upon completion.

Both the home owners and I relied on this good faith understanding to proceed with the contract and provide the necessary documentation and it would seem to not serve justice well if I had to lien the home owners property for work that was required and counted on to be paid for via their insurance contract.

What are my options, without soliciting legal advice?

Ed

Just one minor addendum to the conversation with the adjuster.

He stated that we were in agreement with the entire scope submitted.

He just now, after having my contract with line itemed add on costs, is stating that those charges are higher than he is willing to pay.

Thanks so much for your input. 

Ed

Larry,

Without forcing you to read through the entire 6 pages of posts on the 2 LYR T.O post, just below this one, I will highlight the entire scenario summary.  Wind damage from 8-23-07, with a very large tree falling across the entire home and also on the detached garage.

1st adjuster only measured house at 40 % of actual size.

2nd adjuster showed up and said there is nothing he could do.  Everything seemed correct. 2 minutes at home.

3rd adjuster gets on roof with me there and we measure together.  It is the exact dimensions I stated.

House = 1 lyr comp shingle

Garage = 2 lyr comp shingle

1/2" or 3/8" cdx on house and 1" x 6" plank board decking on garage.

Start Job

Holy Moley!  Someone cut back the original layer of shingles on both the house and garage and there is 1 more layer on each structure.

Also!!!  There is another plywood decking under the viewed plywood decking on the house.  WTF!  Yes, thats right.  Plywood then shingles then cut away bottom row of shingles.  Install plywood on top of original decking and shingle roof.  Then the shingle roof that was observed during the estimate.  The gutter apron hid the sub level decking during all estimating procedures.

I e-mail every single day the amounts of wood being replaces and back it up with photos of every step of the progression.  Rafter replacement up the wazoo.  Decking required to be removed to get to the rafters.

I request;  Urgent Need for your immediate attention.  You need to come out to the job site.  No reply.

Every day, I repeat this request and send e-mail photos with written tallys of amounts of wood replacement required.

I set up web site forum with over 200 progression photos for him to receive electronically, since he is not returniong any messages at this stage.  The roof is in progress and I can not assume liability, so job proceeds.

website address to view Alvarado Photos from November, 2007:   www.rightwayroofing.freeforums.org

Mid job and post job inspection done and okayed by village inspector.

Done with job, now he responds and says he will meet me at 10:00 am the next day.  I show up at 9:30 am and my gutter installer was there since 8:30 am.  He is no where to be found at the home.  I wait until 10:30 am to call him to see how late he is running.  He states that he did not think I would be there, so he went there earlier, just to see that the job was done.

Invoice submitted and he says we are in agreement with the scope of work required and done.  He says the only thing he needs is verification from the village as to why the plywood decking needed replacement.  (SEE THE PHOTOS.  A TREE FELL ON BOTH STRUICTURES AND CRACKED AND DISLODGED MANY RAFTERS.  DUH!)  He wants a copy of the code book from 1995 CABO which this village uses, since he spoke with the head of the building department and was told what was needed.  Now he needed me to get him a copy of the code book.

I scan and e-mail him the copy.  This was the only item according to him holding things up.

Now, I have been done with this job and got him his code reference he requested and once again, I am geting no contact from him.  We have been done with this job for 3 1/2 weeks and I have not even been paid a deposit yet. 

Now we are at the point of determining why my contract prices are not what je says he is willing to pay.  I have not changed or upgraded my pricing list just for this job. 

That is what brings me to the,"What Is Replacement Cost Question".

I will provide any additional information you may need to properly answer my question and guide me in this procedure.

P.S.  I think that the previous response gave me some workable information and I want to thank that poster very much.  Was that Leland again?

Thank you for joining in and assisting in this discussion and hopefully, find an agreeable solution.

Ed

No, it is not a difference of only $ 100.00

I wish!

I have not been told directly by the adjuster what his figures are.  I sent him my invoice based on the per lineal foot and per square foot prices in my contract, which he had in his possession prior to requesting us to start expeditiously, due to the oncoming inclement winter weather.

I have been in business for 24 years, and have evolved into a locally recognized company name in my area.  NW Suburbs of Chicago, by the way.  During a recent T.O.M.A. (Top Of Mind Awareness), campaign the local newspaper did, my company was ranked 2nd in local branding recognition.

I spoke with the home owners daughter last night, (Hispanic Family, and the daughter is about 23 years old and translates English/Espanol very fluently.), and she told me that the mortgage company received about $ 5,000.00 from the insurance company so far and that the adjuster told her about $ 15,000.00 more is all they will be paying.  He also told her that I was overcharging them.  I feel that was completely unethical and way out of bounds for him to make a comment like that after the contracted work was done very professionally.  It hints towards libel or slander, with malicious intent, which may harm my good standing with my customer and any future referrals from them.

At one point, when I spoke with him to ask why he missed that appointment with me when the gutters were being installed, it seemed as if everything was in agreement with the entire scope required.  Heck, I was e-mailing him every single evening with quantities and photos.  He even had told me that I would be entitled to an additional 29 % for Overhead and Profit, since we did such extensive work requiring multiple trades.  I did not ask for that, but since he said I was entitled to it, I will gladly accept it.

My original contract for the house and detached garage tear-off of shingles and replacement and remove and replace gutters and downspouts was $ 10,232.00 which could not include any totals for rafter removal and replacement, plank board decking removal and replacement, and plywood deck sheathing replacement.  There was no way in the world that any of the 3 adjusters or I could have envisioned that there was an additioal layer of shingles and an additional sub-layer of plywood decking in place on this home or an additional layer of shingles only on the detached garage, since the bottom course of shingles was cut back to intentionally hide this fact from the building code enforcement officials.  The total additional costs ran about $ 13,000.00, bringing my total to approximately $ 23,149.00.  Based on the instructions given to me by the adjuster at the end of the job, that I would be entitled to that 29 % premium for O & P, I also included that in on the invoice.  I was not even aware of this factor, so my original cost is my main beef, but if in fact there should be a mandated additional amount added to my original invoice, then I guess it would seem appropriate to request that be added to the total due.

Here are the prices in my proposal:

R & R 2" x 4" rafters = $ 6.00/ft

R & R 2" x 6" rafters = $ 7.00/ft

We had to strap the remaining unbroken rafters together during the deck sheathing removal, so they would not sway and crack the interior ceiling drywall.

R $ R 1" x 8" wood soffit = $ 5.50/ft

R & R 1" x 6" plank board decking = $ 3.50/ft

R $ R 1" x 6" wood fascia = $ 4.50/ft

R & R 1/2" cdx plywood decking, $ 52.00/sheet

Nightly tarping with sections of 2" x 4" to hold the tarps down were required due to the wind gusts that week ranging from 35 mph to 45 mph.  Also, while replacing the decking, our actions were impeded because the homes attic was filled with about 18" to 24" of loose blown in insulation and if we removed too much decking at once, the winds started to blow the insulation out of the attic space.

When I inquired on a contractor discussion forum to see if my carpentry prices were in line with the trsdesmen on that forum, they seemed to think that my costs were substantially too low.

Remove original hidden layer of asphalt comp shingles = .50/sq ft  This is priced at the cost of an original layer and not a 2nd layover layer, since it was seperately attached to its own deck sheathing.

I am rarely the lowest bidder on any roof that we do, but I do not subcontract out, nor hire any low paid "Day Laborers" for my crew.  The crew members that work for and with me have been employed full time, year round for nearly the past 9 consecutive years.  I pay higher wages than a typical illegal subcontractor set ups may charge to a roofing contractor who prefers that method, but it is not operpaying of wages or overpricing of estimates.

There are several other established roofing contractors in my area who charge nearly identical as my company pricing, for comparison.  Smaller, relatively newer start up one man shows obviously charge less and even sometimes significantly less on their bids than I do, yet I remain in business after 24 years when most of the lower priced companies fail and go out of business.  I have copies of approximately 135 other roofing companies bids collected over the years, so that I know what the competition is specifying and pricing their jobs and for what exact amounts.

Would a dedicated crew of professional true Carpenters be able to perform the rafter removal and replacement quicker?  Probably yes, because although we "Can" properly perform those additional tasks, it is not our every day routine.  But, how much would a trade specific Carpentry or General Contractor have charged, without knowing what they were facing?  Surely, they would not have been able to peform the other roofing aspect of the job as efficiently as our dedicated roofing crew.

I hope this accurately gives the complete picture, so that this commentary can continue to move forward.

Thank You All Sincerely,

Ed

Leland, I just want to say that I really appreciate the thoroughness of your responses.  I can take something out of each one of your replies and will be able to utilize them in business, both now and in the future.  Thank you very much.

Also, he did not supply me with a copy of his estimate, even though I have requested it several times.

It seems as if he does not want to deal with me, the contractor who the home owner hired, at all.

As an example of that, after he missed the appointment on November 14th, the day we were 100 % complete with all phases of the job, when I called him ans inquired how late he would be, after I had been waiting there for an hour already, he told me that he didn't think I would be there, so he just showed up earlier.  I also asked him why there was no attempt at all for him responding to any of my contact calls and e-mail while the job was in progress and I was trying to make sure everything was clarified foer him and approved.....Well, his response to that question was that he only has to deal with the insured party, meaning the home owner.

Once again, I will request the adjustment figures from him, but he told me before, that he only needs to supply that to the homeowner, not the contractor.

Ed

Understood!

I will be meeting with the home owners tomorrow, as they are really ticked off at the way the Good Hands people tried to establish an adjustment on an incorrect initial measurement, which only provided for less than 40 % of the original base contract amount.

Is there a source I can tap into for a fee, to have a complete and thorough full scope of adjustment done from someone who is adept at the Exactimate or Marshall Swift estimating programs?  Or whichever software that All State uses?

At the bottom left corner of the original adjustment estimate the home owners gave me to review, there is the following script:

Estimate (MS/B 0120) and then the claim number just below that.

I would venture to guess that is the Marshall Swift Bockman(SP) estimating software I saw mentioned in the software threads.

Ed

Ed,

Allstate, with developmental cooperation from Marshall Swift & Boeckh (MS/B), uses their own flavor of "IntegriClaim, a construction cost estimating program that many contractors across the nation are quite familiar with.

Please note that the default MS/B prices they use and present to their clients are (supposedly) based on AVERAGE construction costs in a given region of the country. So if you are 50% higher than them, you are, (theoretically), still in the fair market price range for your area.  

The weight of your commentary seems to indicate that other consumers and contractors in your area may be running into the same Allstate construction work scope and cost methodology they have been habitually trying to promote for a number of years now.

The 29% cost factor they disclosed is simply a base mark for the various individual speciality trade contractors mark-up placed in the "Contractor's O&P" line item, which line item is reserved for a general primary contractor. Many adjusters, home owners, business owners, and contractors, do not realize how they are misusing that line item, which could also be throwing their figures off.

Too, they "allow" another 20% for general primary contractor O&P involvement if the work scope is "complex enough" to "require" a general contractor.  Both the 29% and 49% O&P cost factors are not based on sound construction business cost accounting methods, and a fair and open market is what general contractor's work in. 

Too, depending on how far you want to research this issue, you could ask your client to show you how their agent estimated the construction costs to replace their house. It may be MS/B data originally used to define anticipated replacement procedures and costs is not being referenced in their claim adjuster's estimation data.  

http://www.accucoverage.com/SampleEstimate.htm

(AccuCoverage costs contain labor and material, normal profit, debris removal and overhead as of the date of the estimate. Costs represent general estimates that are not to be considered a detailed quality survey. Your estimate is based on the typical construction type for your home’s style and year built. Please discuss this with your agent.)

Just because the adjuster has your estimate in hand and understands your bid does not mean it is correct. This does not imply either that he is giving you permission to repair the home this can only be done by the homeowner who should, however doesnt have too wait for the adjuster to complete his job. Sounds like someone jumped the gun on this one.

Thanks,

Irving Sewell

Irving,

Just to clarify, since this topic spanned 2 seperate threads. 

Upon meeting with the adjuster and having provided him a complete copy of the signed proposal agreement between the home owner and ourselves, he stated that he wanted us to get started as soon as possible with the roofing and carpentry repair work, since the home had gaping holes through the shingles and decking and were only protected by someone elses protective tarping job. 

I can not see at any point where we jumped the gun to start with the project.

The adjuster requested us to start as soon as possible.

We had a signed agreement with the home owners.

The adjuster had a copy of the signed agreement.

He was notified every single day as to what items needed replacement and to the exact quantities, along with providing pictures on a daily basis.

Once we were started on the project and discovered the illegaly applied hidden layer of shingles and the additional layer of plywood decking, and finally discovering the extent of the rafter damage, it would have not only been negligent, but professionally unconscionable to leave the home owners waiting to see if the adjuster would ever return a phone call or e-mail, with the exception of after the first day, which he responded that he had gotten the e-mail and photos and authorized the fact that all of the described additional work required was affirmed and necessary.

It was a contractual obligatgion with the home owner, to proceed in good faith, since the only other option we would have had, was to abandon the job and go work elsewhere awaiting a return call or reply to any of the daily e-mails.  Who would assume the potential liability had we had to leave a strpped off roof bared down to the broken rafters with only a tarp to protect it, had we even considered that to be an alternative?

Remember, after I initially notified him and sent photos, he agreed that the additional work was necessary, but he had not remained in contact with me at all from that day on and intentionally showed up more than 1 1/2 hours for our scheduled end of job appointment on the last day we were working there to install the new gutters and downspouts.

Respectfully,

Ed

Mr. Contractor: Just have the insured send in a sworn proof of loss to the insurance company for the amount of the loss, by registered mail. Also send your documantation and photos and he/ and you (with a direction to pay) should get a joint check within 5 days. If the property has a mortgagee call them for instructions and you may not need to have them included if they are confident their interest in not impaired, or just ask for a three party check.

What is the definition of replacement cost coverage ? This seems to be a hard question for many as it is not in the definition page of the HO-3 (last) ... "new for old; except the betterment will not be paid up front in all claims".

Well guys, lets put my own situation aside for a moment.

What seemingly started out to be a simple question, seems to not have a definitive answer, or does it, and some insurance companies just try to skirt around the contracted value.

I looked up the definition of "Replacement Cost Coverage" on the Insurance Information Institute, and this is what they state as a definition:

That seems to allow for the actual costs incurred up to the maximum dollar amount listed on the declarations page.

If Insurance Company X pays one sum and Insurance Company Y pays a different sum and the contractors standard everyday pricing is slightly higher than both X and Y, whos price is correct?

From the definition, it would seem that the actual price up to the limits of the policy would be the only cost that matters.

Besides trying to chisel down the value of the loss, would there be any other reason that I do not see, that could create this disparity?

P.S.  When the situation begins to unfold in the actual job I have initially posted about, I will most definitely keep all of you good folks aprised as to the outcome and how it arrived there.  You all have been extremely gracious by continuing to explore this topic, and I would make certain that you all get to hear the final outcome.

Thanks,

Ed

edit:

I dug up this example from the Insurance Information Institute as well:

The settlement amount depends on which type of policy you have. Having inadequate insurance can affect the amount of compensation you get. Replacement Cost and Actual Cash Value Replacement cost provides you with the dollar amount needed to replace a damaged item with one of similar kind and quality without deducting for depreciation—the decrease in value due to age, obsolescence, wear and tear and other factors. An actual cash value policy pays you the amount needed to replace the item minus depreciation. Suppose, for example, a tree fell through the roof onto your eight-year-old washing machine. If you had a replacement cost policy for the contents of your home, the insurance company would pay to replace the old machine with a new one. If you had an actual cash value policy, the company would pay only a percentage of the cost of a new washing machine because a machine that has been used for eight years would be worth less than its original cost. Suppose, also, that the tree damaged your 15-year-old roof so badly that it had to be completely replaced. If you had a replacement cost policy, the insurance company would pay the full cost of installing a new roof. If you had an actual cash value policy, it would pay a smaller percentage of the cost of replacing it.

Leland,

I have very well learned much from your posts and others and am proceeding with your advice.  An appointment with the home owners is sceduled for this evening to discuss the recommended courses of action.

This discussion was to have taken place this past weekend, but the ice storm we had here negated that opportunity.

I have printed out all of the recommendations and have a draft prepared for this evenings meeting.

I too, felt that harping on my individual circumstance was becoming redundant, at least until further action takes place, therefor, that is why I used my last post to turn this discussion around in more generalities about the understanding of how replacement cost coverage is interpreted differently from multiple view points.

Thank you for the condensed version in your recent post.

Ed

I have watched this thread as well as the original one and have to respond to the post above by Irving.

It is my understanding of the claim process a claim has been presented by the insured based on the contractor estimate. This was given to the adjuster who as I have read, agrees with the scope. It appears the adjuster did not do his own figures at that time but agreed with the repair procedure. I can agree with the contractor that some cost are going to be added after starting as it is near impossible to see all the different rafters and or possible ceiling joists that may be damaged. It is also imperative to start repairs as soon as possible to mitigate any further damages.

The insured going with the contractor and his scope & figures at that time has presented their claim to the Insurance Company.

It is then the Insurance Companies responsibility to refute the claim or give their value of the claim. For them to wait till after the work is done is unethical as well as in my opinion, bad faith. I think with all the documentation the contractor shows, they would not loose this in a court of law, though I am no lawyer.

To say the contractor jumped the gun is a little much. The insurance company had the opportunity to refute the damages or the amount before work was started. It also appears to me the contractor starting, helped to mitigate any further damages. The adjuster did not refute the scope or the cost, therefore it would seem he accepted the estimate he was given. The adjuster could have at least checked the unit cost to see if he agreed.

With what I have read I would be for the contractor on this claim. I also have MS/B Integra on mu computer and have compared it to the Good Hands people's estimates and they are less than mine using up to date data bases. When I purchased Integra it stated it would hold up in a court of law.

How do the Good Hands people back theirs up when it is less and supposedly the same program.

Plus if I remember correctly the second adjuster out stated he could not do anything, with the 3rd adjuster admitting the measurments were off.  What does this tell you about the adjustment on this?  It seems someone worried more about his own earnings on the assignment than doing the job right. 

Excuse me if I am wrong but from what I have read it appears the final adjuster only knows how to enter what is on the Integraclaim Database and he has and no feel for what the job entailed with all the little extras.

I agree with the posts to go up the ladder to the supervisor and higher if necessary.  If you documented as you stated, you have the upper hand as the adjuster did not until after the job was completed. Not that I am agreeing with your scope or prices, ( which I am sure are in line), but the way this came down, you should be paid on your billing.

I must also say if you were not used to the 29% o/p he was talking about it should be taken off your estimate as you already had it included with your regular pricing.  I think the Good Hands people use this as a sales pitvh to make you think you are getting something more.

Something I forgot to put onprevious post.

Another things is, I also use & have Exactimate on my computer.  I have done reinspections in the past on Preferred Vendors and they used Exactimate and the company had me use Integra for comparison. The Exactimate always seemed to be higher on the daily claims I was reinspecting.  I have also had people tell me they think Integra's bottom line is higher but I never experienced that.

...

Ed

The full amount due is what your actual properly calculated invoice amount was. You had already included your profit and overhead in those figures. Some contractors show O & P as a line item, others include it in their unit costs. Either way, I don't think you are OWED more than you were asking for. Now, the adjuster may need to add the O & P to his estimate, since his unit prices don't include all the profit and overhead that your original prices contemplated. Once the adjuster adds the O & P to his estimate, if it gets him close enough to your original figures, he can then recommend using your original figures to pay the claim and conclude the loss. I really don't see anyone taking advantage of homeowners or contractors, if the final amount paid ends up being your original figures, less a deductible.

Then that is what I am going to expect.

I guess I was thrown by him telling me at the beginning of the job that I would be entitled to the additional O & P, since he already had my signed contract with the line item costs for any potential add ons.

Thank you for the simple clarification.

Ed

Ed you may have mentioned this in your prior posts but do you use any kind of estimating computer program or do you hand write all your estimates? As adjusters we are required to use one of the readily available programs. All of the contractors down here in Florida also use the programs. We almost never have a disagreement on final costs when all parties are using a program. Our disagreements are generally on scope of damages. If you had been using one of the programs the O&P issue is clearly broken down for all parties to see.  You and the adjuster would also be working from the same or similar line item pricing guidelines.  Thats not to say as a contractor you don't have the ability to adjust the line item pricing for your particular job.  After all no one knows real world repair cost better than a contractor that is actually purchasing the materials and hiring the labor.

The short quick answer, is, No, I do not use one of the software products available.  If I were to pursue and even chase after the insurance resoration side of the business, their would be a significant potential of increased volume with less sales and marketing efforts required, so therefor, my prices could adjust downward slightly.

The longer answer is as follows:

My pricing is calculated on our own companies historical records of work hours from similar style jobs.  Sometimes it is an exact science, but in reality, no two men, nor two jobsite situations are ever identicle, and at best, these records are assumptions, which I attempt to cover any potential adverse condition discovered, so that even the poorest performing crew member can provide the work to a satisfactory end result, that I would still be earning a profit from the task.

The pricing that is figured for the intitial base bid must also be priced competitively to remain viable in the open market where customers typically contact at least 3 contractors prior to selecting the contractor they are most comfortable with.

The pricing for various different sized lumber removal and replacement is based on taking observations from the past and determining what the realistic time to do all of the tasks requires.

For instance, in a similar roof without the hidden surprise factors, but all decking is being removed and replaced, you encounter just one broken 2" x 6" rafter.  If I only charged the price per foot for that one 16 foot rafter, I would be doing that task at a loss.  There is the drive to and from the lumber supply and the wait in line time and the meeting with the home owner to explain the damage found and the necessary required repair and taking photos for documentation and getting them either developed or loaded onto the hard drive to be printed out.  Therefore, for a minor add on, a different cost must be charged.  If the task becomes repetitive, then the charge per lineal foot becomes fairer to the home owner.

I have only seen the free version of Craftsman Renovation Estimating, and found their price guidelines to be severely amiss.  Upon further reading though, they state many additional factors which can sway the pricing, that could easily be missed.

The prices I charge keep me in business, at least for the past 23 years.  If I were to charge at an "Average" price of all of the contractors around, I would be one of the Department Of Labor statistics.  Minimally, at least 80 % of all contractors are out of business within the first 5 years of existence.  Of the remaining 20 %, an additional 80 % go out of business within the next 5 years.  Therefor, after 10 years, only 4 % of the original group being reviewed are still in business.

If a fairer, "Average" pricing structure were to be used, it would only include contractors who have been in business for at least 10 years.  When I hear the term for comparisons sake to my pricing referring to "The Going Rate", for certain charges, I immediately re-translate that to, "The Going Out Of Business Rate".

In an open free enterprise system, I believe that  the fairest price is from a contractor who can remain viable for the peace of mind offered with the length of the warranty period. 

If the programs such as Exactimate or MS/B were available for a set fee, at best, those numbers would just be a method of checking up on myself and my pricing structure, but it would not dictate my pricing.  I do wish that I had access to a free usage and the knowledge level to manipulate the program correctly, so that I could be better documented from the point of view the insurance industry understands.

Ed

Odie,

I had to think about my previous response a little and I began to sense that I waivered from what I was originally told.  I have heard here and elsewhere that there is an O & P for each individual facet of the job, or sub-trade activity.  (That O & P would already be part of the pricing provided and agreed to in the signed contract.  Also, by the adjuster insisting that we get started as soon as possible conveys the message that the contract and all pricing in the contract are implicitly accepted.)

I also was specifically told, that I would be entitled to an additional contractors O & P of 29 % based on the multitude of various trade tasks I had scheduled, supervised, and implemented.  (Not his words)  He just said that I would be entitled to an additional 29 % general or contractors O & P.

So, if there is O & P for co-ordinating everything, that is not the same as the individual trade tasks O & P.  Am I right?

By the way, I sent a final e-mail to the adjuster and am going up the chain of command depending on if he responds at all and what his response would be.

Ed

Well Bob, I think for discussion purposes, the 29 % figure stated or the 20 % figure you say is standard is irrelevant.

The point is, that he stated I would be entitled to it.  Okay, so per the AllState Smoke and Mirrors method of calculating the totals, they would be adding this figure onto their "Lower ThanTypical Standard" rates and then fool home owners and contractors into believing that they are coming out ahead.

Doesn't this bring us back to the original question?

What is the definition of replacement cost coverage?

From everything I have read from sources sited and looking them up myself, the only limitation is the amount covered per the policy limits and also dependant on whether or not the scopes of work are agreed to.

How, in a free country, where consumers have the option of who they choose, can another party state that a contractors prices are too high, based on their software only. 

Wouldn't the true value of replacement cost be the actual cost per a contract?  (That needs some clarification.  As long as the prices were not raised to take undue advantage of the insured and their insurance company.)

What is the legal basis for another party to say that any contractors prices are incorrect?

Ed

In that same breath, was he saying that he OK'ed your estimate, and in fact he would fatten it up 29%? This makes no sense, because at the end of the day - he has totally ignored your findings, and did his own sheet. I have not heard mention of the adjuster using your estimate, or revised estimate as a "starting point" for the basis upon which to consider adding O&P.

What is Replacement Cost? it is the REASONABLE and NECESSARY cost of repairs. If you have ever sat in on Small Claims hearings, the judge often uses the term "reasonable". If I bring in an estimate to fix my house, my car, and had a buddy write it up for double the going rate, that is not reasonable. I am not saying your price is too high - I don't even know what your price ended up being. But these things can be measured, the tasks described, and compared to historical prices for those tasks. Or they can be put out to bid (like government jobs, street improvements, etc.)

Sometimes the value of things is very easy to establish - you look in the Kelly Blue Book, or see what something sells for on Ebay on the open market.

Simple homeowner claims often involve some flooring, drywall, and paint. There are enough historical prices to draw accurate values for these. The guy brings in flooring quotes, and as long as he isn't replacing rental-grade flooring with wool Berber, we can have an accurate discussion.

IMHO, you could take 100 adjusters in a room, and maybe 5 of them are experienced with framing hip roof issues.  What is involved in surgical repairs that did not total out the entire area. What is involved - what temp bracing, where to stop the repair, what non-damaged rafters are connected to a ridge rafter or hip rafter that needs to come out - etc.

I have seen estimates that call out the time needed to do some of these odd tasks - and at least they allowed for the task, but the time alloted isn't even enough to do a round trip to Home Depot and wait in line.  So again it has to be REASONABLE for you as well.  The adjuster is sitting at his desk, visualizing how many hours to do something - may not be thinking in terms of a 3 man crew = 24 hours in a work day, not 8 hours.  The mistakes that can occur are without limit - and you need to just compare the estimates line by line, then compare them to the real world of what was done.  Something will stand out.

So you are going to get garbage estimates. That doesn't mean that the contractor can pull a number out of thin air - which is why I mentioned on your original thread that the best way to deal with insurance repairs is TO GET AN AGREED VALUE after the emergency work is done to mitigate further damage. If the holes were so bad they wouldn't support a tarp without ponding, then some thin plywood could have been secured over the openings and temp braced and tarp over the ridge and down the other side - secured with 1 x 2's until the value of repair is set in stone. Insurance companies rarely approve an "open checkbook" type of time and materials billing. They expect the adjuster to keep an eye on the cookie jar, they are afraid of the claim going out of control. That is why an adjuster should start to get very nervous if repairs are underway and there is no agreed figure. And the contractor should be nervous - I know you were. You were nervous for a reason, there wasn't a firm agreed repair figure.

And when the multiple layer thing comes up - if the increase in value cannot be resolved within a day or so - button up the membrane and put it on hold.

Hip roof framing is quoted in Xactimate 2 ways, there is a formula for SF of area that includes the ridge and all jack-rafters coming off the ridge, and I think that price comes out higher than the other method. But your guy is using MSB - and I haven't done hip framing with that software. The point is, the value of repair should be "reasonably" priced as opposed to over-priced, and that usually can be allowed for with software if the person writing the estimate doesn't overlook sub-products or tasks that are not included in the items he selected.

Do you personally have a copy of the MSB estimate? I assume the homeowner shared that with you - even if the Allstate adjuster didn't.

On Monday, I am having the homeowners call the claims office and request the adjusters estimate, Again, except this time from the main office and supervisor.

This has been requested several times so far, prior to the job, after the job and when we had the discussion about the pricing.

To date, he has not responded or provided his version of the estimate.  Friday, I sent My Last e-mail to him, trying to follow the chain of command and will have the home owner go up the ladder.  If he does not respond this time, then we must deal with the next level as previously suggested.

Is there any rational reason that he has not provided his version of the estimate to the home owners or to me as of yet?  Is this supposed to remain a secret until the job is done and the contracted prices are invoiced?  Or, is this the insurance companies method of trying to see if a contractors invoice comes in at less than their estimate and thereby reducing the amount paid?

If the insurance companies estimate comes in at a higher dollar amount than the actual contracted invoice amount, I do not think they would object, would they?  I venture to speculate this occurrs from time to time.  Do they pay out the additionally estimated funds?  No.  So, when a slight difference occurs in the other direction, now they use this non-response and delaying tactic to hold onto the amount due.  Shouldn't this be a case of, "Whats good for the goose is good for the gander?"

On Monday morning, I will see which direction this will head next.

Ed

No. I know you aren't in California, but here it is LAW that the estimate has to be provided to explain the settlement. It is just common sense really.  

You are dealing with a staff adjuster from Allstate. He should have full authority - or be able to get authority directly from his manager. I am an Independent Adjuster. I work for lots of different Insurance companies, some are very full assignments where you negotiate an agreed repair figure with the insured or contractor, subject to the carrier's final approval.

Other carriers just want us to do an inspection and send them our estimate, without going over it with anyone else (less work for the adjuster, less pay, and the carrier can make any coverage or estimate changes they wish). If we do one of those, where we don't share the estimate with the Insured or his contractor, we put the following comment in our report:

[Please note that we have not sent a copy of our estimate to the insured. Section 2695.9 (d) of
the California Regulations requires the insurer to provide a copy of the estimate upon which
settlement is based to its insured. We can provide a copy to the insured if you so advise us.]

Here in California this particular law is only a few years old - but it has been my practice for over a decade in every state I have worked because it is just the right thing to do.  State Farm requires a copy of the estimate go out with the settlement.  If you have a fairly large loss - how else is the Insured going to know what is (or isn't) included in the scope of repair you are paying for?  Explaining that stuff over the phone without having everyone reading the same sheet of music is maddening. 

Even with a simple loss, you need a written estimate sent to the Insured.  They can take it to a carpet store, explain that the insurance company is paying up to the closed doorway - but he wants to pay the difference to carpet the undamaged rooms.  Same with roofing - what slopes are being considered.  This is just a basic and standard action.  What if depreciation is held back prior to completion of repair?  That stuff has to be explained too - and you cannot do it without a line-item estimate.  Are you 100% certain that the dollar amount "verbally" relayed to the Insured is the full Replacement Cost Value, and not the initial check at ACV?  Do you know the starting point before deductible?  All of that will be found on the estimate.  When it gets complicated by advance payments, and supplements, it is spelled out on the Statement of Loss.

BTW, if the Insured is working with a contractor, and it is not one of those super-limited assignments, I will share my findings and negotiate an agreed figure directly with the contractor and inform the Insured as things progress. It makes no sense to try and cut the contractor out of the loop - the claim will never settle.

Ed,

As was mentioned on page two, Allstate's special version of MS/B IntegriClaim's 29% "Contractor's O&P" line item does not reflect a singular general primary contractor's overhead and profit cost factors, but rather all of the singular specialty trades O&P.

(The word "Contractor's" (singular sense) verses the word "Contractors" (plural sense), and their two very different meanings, financially, can muddy up staff or independent adjusters replacement scope and cost when one is misusing IntegriClaim). MS/B can verify that fact.

The 29% cost factor the "adjuster" disclosed to you relates to the individual specialty trades contractors O&P, NOT a general contractor's O&P. They "allow" another 20%, or more, on top of the sub-trades 29% when a general contractor is involved. I have Allstate estimates that show 49% O&P cost factors.

Too, Allstate supporters contradict themselves a lot. The following multi-trade loss estimate they have disclosed to the public shows sub-trade contractors 29% O&P loss values, not a loss value per primary general contractors' O&P of 49%.

Notice how the "OP" column does NOT show a line-by-line sum. Now why is that, and, how many of their clients actually know about these loss value issues?

Replacement cost values of a structure estimated at insurance agents desks may be very different replacement cost values estimated by an adjuster.

www.allstate.com/content/refresh-attachments/cat-claim-estimate.pdf

Bob,

People do not pay insurance for patchwork indemnification effects that devalue their property.

Ed,

As for more insight regarding Allstate, and actual replacement cost values before a contractor is considered by someone insured, consider the following;

www.state.wv.us/wvsca/docs/fall06/33172.htm#Footnote2

Dales,

Both of your provided links led to extremely eye opening causes of concern in the typical methodology abused by AllState in regards to paying the O & P. 

I take note regarding the ommission of the O & P amounts on their form.  Intentionally deceiving both their adjusting staff and the insureds on where line items should be placed.

I see that they paid for the entire home in the case history footnotes, which was more than 3 times the amount of the initial claim being rebuked, even if it were to have included the O & P.

Do you have any case records of the actual matter at hand, regarding what a replacement cost should be?  Is it the amount they estimate it to be?  Or, is it the actual contracted amount for the work performed?

By the way, from the Friday e-mail to the adjuster insisting that his version of the estimate be forwarded, there has been no response, yet again.

I have left a message for a supervisor to contact either me or the homeowner, if they once again state that they need the home owners permission to discuss the claim with me.

Thanks a lot,

Ed

Hi Dales, if you are referring to my example of not paying for carpet beyond a closeable doorway that isn't damaged by a covered loss, or non-damaged roof slopes, I suppose we should start another thread - as those are standard industry procedures. I just mentioned them as one of many reasons why things go off the rails if the adjuster doesn't provide a copy of his estimate to the insured - and I always send one to the contractor if one is involved.

It's like pulling string on a ball of yarn.  Where do you stop?  It isn't reasonable to re-carpet the entire house when a small area is affected.  I always include any area that doesn't have a closing door.  Let's not mess up this thread - if you disagree with this practice then we can start another thread. 

In California, we have strict requirements to allow for a "reasonably uniform appearance" and I agree that patchwork (usually) is not OK.  Judgement lies in where to stop the bleeding, where to draw the line.

With a focus on Ed's grief - it will remain a mystery until a copy of the estimate is made available.  That is adjusting 101, and as a bare minimum it should have been sent to the homeowner.