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Last Post 06/23/2007 7:48 PM by  Ray Hall
Commercial vs Residential
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David Branch
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06/21/2007 3:54 PM

    Hi Everybody! This is my first time here. I'm not one of you so please forgive me if I'm violating some protocol. I am a retired plumbing contractor helping a friend go through his claim from State Farm. The bid is very detailed and has 99% of the stuff covered and even some stuff that I'm surprized the ARE covering! My question to you: This was a fire that partially destroyed a small commercial building yet the bid sheet heading says, "Summary for Fire - Dwelling".  And lots of the sub-catagories make comments that refer to "residential". Did the adjuster use the wrong program?

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    Ray Hall
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    06/21/2007 9:03 PM

    Not necessarlily, some of the estimation programs boiler plate the Area-rooms-scopes and do not have the ability to write in the best description of the area he/she was in. If the unit prices they used will get the work done, just look at the bottom lines as the unit prices should be about the same for most trades.  If you are happy and your customer is happy, just move on and say OK.

    ( I think I know the program and thats one reason I do not use it. Just think of the paper work you received as a badly written itemized estimate by a poor word processer inputer and move on)

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    David Branch
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    06/21/2007 9:58 PM

    Thanks for the reply Ray!

    I think they are using Xactware. The reason I asked was that some of the trades (Elec, Mech and Plumb) seem to be a bit low. And from your reply, I'm guessing there is no commercial bid sheet and it is all residential?

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    K ung Fu tzu
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    06/22/2007 7:18 AM

    Look for the notation on the estimate regarding the applicable database.  It's important that the adjuster used the correct price list for the area he is working as prices can vary dramatically from one area to the next.

    In Integriclaim (MS/B)  it will be on the last page.  There may also be some asterisks and other notations indicating whether prices were overwritten, etc.  You can check the correct database for the territory by going to the MSB website.

    In Xactimate, it will be on the front cover page with all the other indicative data.  Here is an example:

    Price List:  MOSL2S6C

    Again, the databases for Xactimate are zip code driven.

     

     

     

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    David Branch
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    06/22/2007 9:31 AM

    Thanks Kung-Fu,

    I do have Xactimate then.  Am I allowed to see a breakdown of the unit costs? I'm in a rural area 1 hour from the estimating point and I don't think they have travel time or else truck expence or maybe added material costs...I just don't know, something is off.  This is a small job (110K with all trades), maybe the prices don't get acurate until it gets larger??? Any feelings on these points?

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    StormSupport
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    06/22/2007 3:43 PM

    Hi Everybody! This is my first time here. I'm not one of you so please forgive me if I'm violating some protocol. I am a retired plumbing contractor helping a friend go through his claim from State Farm. The bid is very detailed and has 99% of the stuff covered and even some stuff that I'm surprized the ARE covering! My question to you: This was a fire that partially destroyed a small commercial building yet the bid sheet heading says, "Summary for Fire - Dwelling".  And lots of the sub-catagories make comments that refer to "residential". Did the adjuster use the wrong program?

    I do have Xactimate then.  Am I allowed to see a breakdown of the unit costs? I'm in a rural area 1 hour from the estimating point and I don't think they have travel time or else truck expence or maybe added material costs...I just don't know, something is off.  This is a small job (110K with all trades), maybe the prices don't get acurate until it gets larger??? Any feelings on these points?

     

    David, what specifically are you looking for?  Your  first post was regarding the overall estimate and if I'm reading it correctly, your question was about the header on the form which read "Dwelling".   Also, if I'm reading the first post correctly, there wasn't an issue with the amount of the estimate, and you even mentioned that there were items that were paid that you didn't expect to be paid.  I got the impression that the insured was satisfied with the estimate amount, that your question was regarding the form it was on. You even mentioned how detailed the estimate was. 

    I'm not quite sure where you are going with this second post.  If I understand you correctly, this is an estimate for a friend of yours, and not yours?  Your friend should have a detailed estimate which he/she is able to provide for you.  Since your second post deals with an issue of travel time and expense, I'm going to assume that  you're planning to do some of the repairs?  Not sure what your comment about the accuracy of the estimate have to do with your travel time or truck expenses.  If you're bidding for work on this particular loss, the amount calculated for repairs on a particular item really shouldn't be relevant to your bid.  If you need to add travel time or expenses when you bid the job, just give an honest bid and if there are issues regarding money, the insured may take it up with the adjuster. 

    The best suggestion is to go back to the adjuster who made the original inspection and estimate and question the adjuster.  Its impossible for anyone to give broad stroke answers to questions such as these without potentially giving the wrong answer and making it appear that the original estimate is not correct, when in fact, it may very well be on point. 

    Good luck to you and your friend.

    ~M~

     

    Do the right thing, ALWAYS
    ~Meg~
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    David Branch
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    06/22/2007 6:13 PM

    Thanks Meg,

    I sound confused because I am! The more I get into this the more questions I have. The original bid had all the items covered, it was the dollar amounts of those items I was trying to resolve. My buddy asked my opinion of the State Farm bid price vs his contractors (also a buddy) price. They were a ways apart and when I spotted the residential vs commercial, I thought I had found the easy answer (I was wrong!). The answers you all gave led me to believe that there was no difference between residential or commercial software...it was all the same. (is this true?) Then I asked about the specific trades (plumb, elec, mech) that may be higher in commercial and that a residential bid would not pick this up. It didn't really get answered so I'm looking for other reasons they may be off and that's when I asked about unit prices.

     

    Yes I have the detailed spread sheet in front of me and no, I will NOT do the work. I'm in the middle and trying to stay impartial. The more I studied the spread sheet I realized that the unit costs included material and labor and they were the key to the whole thing. I'm wondering if they are correct and how did they arrive at that dollar amount for each unit?

     

    For instance on the material; Is it bulk rate prices from a national catalog or single item prices in my town? We are an hour from the nearest Xactimate coded town so things cost more here. Do the material prices reflect that? Do they include waste? Do they factor in the little consumable items (nails, hangers, fuel, adhesives, caulk etc.) that you need on each job and just keep on the truck? There are more specific questions on the labor side but the bottom line question is the same; How did you arrive at this labor cost? Is there an allowance for the fact that this is dirty, rotten, hot work in an out of the way place and the subs are going to charge more for that?

    And finally, if some of the unit costs do need to raise, is there a way to do it?

     

    Thanks to all of you for replying.

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    Medulus
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    06/22/2007 8:13 PM

    David,

    There may be any number of reasons for a difference between an individual contractor and an individual adjuster's price. If we were dealing with an auto repair, there is a national standard, the Mitchell guide. There is no such standard for homeowners or commercial claims. There is far more diversity in materials and quality on a building. Frequently estimating programs will offer two choices of database - one for residential and light commercial, and one for heavy commercial. A commercial building such as a doctors office will have more in common with a residence than with a factory, so it would not solve any problem to separate claims strictly by the categories "residential" and "commercial". Each database will be adjusted for regional variation in pricing. These databases are only the beginning, however.

    1. It has been my experience, and likely yours as well, that if ten contractors and adjusters all look at the same six figure loss, there will be ten different bottom lines. These may diverge from each other by quite a bit.

    2. Material prices change without consultation of adjusting programs, so all prices may not always be completely up to date. After catastrophic events material prices may change from week to week or even daily.

    3. It would be virtually impossible to include every single variation in materials (e.g. every type,quality, and style of carpet or paneling). In fact, such a database would be impossible to search and write an estimate within a reasonable period of time.

    4. Some of the costs you refer to above such as drive time, etc. may be included in the base service charges at the end of an Xactimate estimate. Taxes, debris removal, construction cleanup, permits and fees, and overhead and profit may also be found at the end of an adjuster estimate rather than included in the individual line items.

    5. Adjusters vary in what they include in terms of details such as removal and replacing items for access to the work. Contractors vary in the same ways. For example, some contractors will charge to paint a wall. Others will charge to paint the wall and then add every trim item found on that wall, remove and replace every outlet on that wall, and remove and replace every wall hanging on that wall.

    The bottom line for me is that it is ultimately up to the adjuster and contractor to agree on a figure with which they can be satisfied. Those carriers who allow no variation sometimes do a disservice to their insureds. A good and experienced adjuster should know what is a reasonable request made by the contractor and what is fluff to raise the bottom line. All estimating programs with which I am familiar (Simsol, Xactimate, and Integra claim) allow the adjuster to change the components of the pricing (materials, labor, equipment) individually in order to adjust for differences in these component prices.

    My suggestion is that you speak to the adjuster who wrote the estimate and discuss what you believe to be the inadequate costs to see if the differences can be resolved.

    Steve Ebner CPCU AIC AMIM

    "With great power comes great responsibility." (Stanley Martin Lieber, Amazing Fantasy # 15 August 1962)
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    David Branch
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    06/22/2007 8:25 PM

    Thanks Steve, Ray, Kung-Fu and Meg,

    Thanks for welcoming a guy who didn't even have enough knowledge of your industry to even ask the right questions! Thanks to this board for not just blowing me off! Thanks for being professionals! Thanks to Meg and Steve for suggesting we just talk to the adjuster! You all took the fear out of it for me!!

    David

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    Catmannn
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    06/22/2007 9:46 PM
    David,
    Everything the adjusters have listed is in the norm. Pricing, Locations, Trades, Overhead, ect.
    Your friends next step is to contact a general contractor or contact a number of sub-contractors. Your friend will need to
    support any differences in his/her bids vs. the estimate from Xmate.
    Once your contractor or sub contractor total are more than the Xact mate estimate, at that time is when your contractor or subs will
    need co talk to the Adjuster with your approval to get the scope and cost settled.
    David, your Insurance Carrier will not bid against itself. If it does, run with the horses.
    It sounds like you have your act together and with your help your friend should make it thur the claim.

    Houtz
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    jlombardo
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    06/23/2007 7:01 AM
    Dave H.,

    Excellent answer....thank you for taking the time........

    Joe L
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    Ray Hall
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    06/23/2007 7:48 PM

    David: Its never really settled until a contractor agrees to do the job for the bottom line. With that said talk to the adjuster and explain and let him/her explain the line items.

    Please do not use "I can,t find any one to do it for the AMOUNT on the bottom line. Because, the adjuster can find 3 contractors within 50 miles of the risk. Many many contractors who do insurance work will take any x-mate estimate from an "experienced adjuster", and make a good profit.

    Please read the appraisal provisions in his (or your) policy. An inexpensive way to resolve "the amount of the loss".

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