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Last Post 12/27/2006 1:18 PM by  Tom Toll
contractor reconciliations
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earthwindnfire
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12/21/2006 2:09 PM

    Hi All- I've been at this for quite some time now, but I always am interested in fine tuning the techniques. Please weigh in on how you would deal with the following adjuster/contractor scenarios:

    #1: The contractor has "advised" the insured on what they "should get" if the adjuster is fair with them, before you ever get there. In other words, this contractor is acting somewhat like a PA. They have overscoped, and want to be with you and the insured when you scope so that they can argue each and every item as it goes into the computer or the scope pad. You are automatically the bad guy in the insureds eye due to the unrealistic expectations the contractor has given the insured.

    #2: The contractor won't go by the Xactimate pricing, and supplies sub-contract bids for all trades (his buddies of course)

    #3: The contractor won't break his numbers down for you to review when they are higher than Xactimate. They just say "that's what it will cost" and leave you to deal with the homeowner. This is especially hard when it's a cat and the insured can't get anyone else to come out and bid the job.

    My method so far has been to tell the contractor that I can e-mail my est to the other contractors in the area and they would likely accept the numbers. Just because you have a contract with my insured doesn'r mean I have to use your numbers. This works to some extent, but I bet there are some other great methods that you are using as well.
    Please share!

    It's not where we go, but what we do when we get there that defines who we are.
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    Ray Hall
    Senior Member
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    Posts:2443


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    12/21/2006 5:21 PM

    This is an adjustment problem and you should be the one to settle the loss, as you will not get paid unless you close the loss. This is really a big game and you are over in the corner of a three leg stool.

    In no special order do the following: Tell both the insurance company will not accept lump sum bids, and the insureds contractors bids must be broken down like yours. If they will not cooperate tell them you will send in both estimates and not recommend payment and ask the company for thier advise.  Do this but put in report how you really feel about the correct scope and amount, and point out the conflicts.

    The carrier will back you and probably send out a check for your estimate  (good faith-fair dealing). Then recommend to the carrier for you to get a competive bid on your scope with you not being present and not showing your old estimate. If its more than your first payment send the differance, pay the 2nd contractor for his work and close the file. The next move will be the insureds, and it will a non event as the company has been fair and reasonable.

    Part of your job is to agree on the scope of work with the insured/contractor and it sounds like it is a scope problem, and you have training to deal with unreasonable insureds/contractors.

    If the company and the adjuster can not agree on scope (amount of loss) suggest appraisal if the differance if $50,000. or more.  Its just not an easy quick buck job. ** I would not use Exacta Mate in this conversation in any manner, If they turn in an itemized estimate on note paper (if its fair and reasonable) it can be a proof of loss.

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    Ray Hall
    Senior Member
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    Posts:2443


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    12/21/2006 6:24 PM

    An Adjuster should never mention the brand of software to a homeowner , contractor or any adversary for the insured.

    The puter is a tool with out a brain and can not bail you out of problems claims; but can get you into the conspiracy theory if you bring it up. Its usally brought up by contractors who use x-mate as the contractor/insurance adjuster bible and it is infalible.  I disagree in many cases and so does the public.

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    katadj6
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    12/21/2006 11:54 PM

    A) You suggest that the contractor has a contract with the insured. Normally money has to exchange hands before there is a valid contract.

    B) If the contractor has a subject-to agreement or any other type of non binding agreement, even if signed by the insured, it is , (in most states) not valid.

    C) Your scope of loss should be presented to the company with a notation that the insured nor their potential contractor do not agree. Suggest to the carrier that they send a reservation of rights letter to the insured, that will make the insured aware of the seriousness of the situation.

    D) The contractor's estimate is just that , "an estimate", just as is your scope of loss. Many times items are under or over priced on a unit price basis, and that may be a reason for a supplement, if this would occur.

    Sounds like you have an uncooperative insured, being led by the nose by their contractor. As stated above your assignment is to close the file.

    You do this by preparing a proper scope, submitting it for payment and explaining in detail what has transpired. You do NOT have the authority to settle the claim, only the carrier can do that.

    If you follow the rule of law and address the 3 "C's", Cause, coverage and cost you have done your job.

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    Jud G.
    Advanced Member
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    Posts:509


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    12/26/2006 11:17 PM

    One wise adjuster taught me to consider the application of Occam's Razor in any opportunity that presents itself with multiple solutions.  While it specifically applies to the development of scientific theories, its effect can easily be realized in other situations as well.  So, keep it simple and choose the answer that suits your style.
     
    Start off on the right foot.  Address both the contractor and homeowner and indicate that your goal is to seek out the fairest solution as governed by their policy.  As an IA, do everything possible to generate the most value out of their policy while remaining in the context of coverage.
     
    As a general rule, seek to find coverage or "think like a policyholder, but settle the claim like an adjuster." Using common sense, drop reminders to the contractor and especially the policyholder of your goal.
     
    If I have a contractor seeking to act as my shadow on a large loss, I give him/her my thanks for granting me access, but tell him to beat it until I get my own scope and estimate done.  If he follows you around before you have a general handle on the cause and cost of the loss, he will attack you on every issue before you are aware of which battles would have been most profitable to pick.  Worst case scenario, the pesky contractor will back you into a situation involving detrimental reliance.  So on all large losses or those involving possible coverage issues, get a non waiver signed or send a reservation of rights letter ASAP.
     
    Once my estimate is complete, I will address in this order:  1) The matters we can agree on.  2)  Bring up areas/questions where I can and do decide in their favor.  3)  Discuss the obvious coverage issues that are easily black and white or non-negotiable.  4)  Bring up coverage issues where other adjusters typically have problems with and elaborate on how it may/should be afforded in their favor.  5)  Then discuss the gray areas such as repair vs. replace, matching/line of sight issues, etc. (It is assumed that the parties involved are clear on the level of authority you have as an IA- “subject to the review and approval...” )
     
    The key point I wish to make is to establish an amicable rapport from the start- regardless of how hostile the initial reception was by the contractor and insured.  Be a Gentleman to the insured and contractor by setting unnecessary differences aside and kill them with your kindness and respect.  This will often curb the insured's respect to your favor.  Secondly, your approach will also allow the insured & contractor feel like they are in control while you have bought time to establish the facts and collect your thoughts.  Once you get to number "5)", everyone (including you) will be more inclined to agree to the bottom line.
     
    I have to remind myself often that it is the adjusters who provide great customer service that get their claims settled and closed quicker than the ones who have the smarts, but lack in Customer Service/Negotiation skills.

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    johnpostava
    SIMSOL.com
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    Posts:140


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    12/27/2006 11:29 AM
    I could not agree with Jud more. Kill them with professionalism and kindness and never take a difference of opinion (or scope) personally - it is just the business of money. We all want to make our insured's whole whenever possible but human nature can play funny tricks on anyone's personality when money is the issue.

    Agree on what you can agree on, have the carrier send a payment for the undisputed damages (it does not matter if the insured cashes it or not - it is a sign of good will) and work out the rest. Supplements are always available if valid and worst case is appraisal. If everyone concerned is reasonable and honest in nature, I have always been able to settle my losses (no matter how far apart our first estimates were).
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    Tom Toll
    Moderator & Life Member
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    Posts:1865


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    12/27/2006 1:18 PM
    John, I use the same technique as you do and have been very successful with that line of thought. I have had contractors ask me if I used Exactimate and if I were not, my estimate would not be fair and correct. Where they get this information, I don't know. Proper scope is the key to settlements. If you have scoped properly, your estimate will reflect a true value of the loss. Some adjusters get in  a hurry and miss a lot of damage. I have seen this too many times. I have worked behind some adjusters and some that title themselves as General Adjusters, and found they left out a lot of damage in their scoping.

    Creating a technique for scoping and sticking with that technique will help an adjuster scope more thoroughly. I always start on the outside. Roof first, then exterior walls. I always start on ceiling first on the interior, then walls, and finally, floor. I always put my General Conditions as the last line of scope, to include final clean, dumpsters (if necessary) and any other item not included in the interior scope. I use scope sheets that Janice and I have developed through the years and it leaves nothing to chance if followed as it should be.

    I always tell the contractor that the use of software to estimate is only a tool to determine loss, regardless of its name.
    Success is not final, failure is not fatal: it is the courage to continue that counts.
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