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Admin
547 Posts |
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JimF
USA
1014 Posts |
 Posted - 02/14/2003 : 10:04:51
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I'm 6'2" and 240 pounds, so no, I don't have a little 'Shorty' man complex...
**(Sorry Roy: The gentleman asked an 'off topic' question, so as a gentleman, I was required to provide an answer which was also 'off topic'. You may remove both as off topic as far as I am concerned.
But then again, more and more posts would appear to be off topic on more and more threads, and yes, I am guilty as well: thought that was what the Moderators were for?) |
Edited by - JimF on 02/14/2003 10:15:49 |
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Newt
USA
657 Posts |
Posted - 02/14/2003 : 11:44:29
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I thought the comments from Cheryl were OUTSTANDING, we are fortunate to have her input.
She also laid out some good advice, because this could be the next mold type feeding frenzy. |
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CatDaddy
USA
310 Posts |
Posted - 02/14/2003 : 13:14:18
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I respect your opinion CCarr. All I ask is you respect mine. I know we dont agree on everything and thats ok. Lets you and I just try to maintain our composures during these debates. It doesnt have to always be a war with us. If it is of no significance if we disagree from time to time then everything is going to be fine. We'll give our points of view and go on down the road. I think we both have alot to add.
(Thats all I have on that Admin.)
Now back to the O&P discussion.
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Dadx9
USA
143 Posts |
Posted - 02/14/2003 : 13:55:11
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| In regards to this topic. Many have posted about the right way to do this. I maintain that we still have to adjust the insured and the claim. |
Don
"To be held in the heart of a friend is to be a king."
Bruce Cockburn |
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katadj
USA
315 Posts |
Posted - 02/14/2003 : 22:16:43
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Amen DX9, But when was the last time that you were "allowed" to properly adjust a claim?
For me it was in 1992, Hurricane "Andrew" , when we had responsibility coupled with the authority, to do the job,
Since that time, our "profession" has made a progressive downhill move toward, responsiblility without authority, (this never has and never will work).
Only when we are returned to the proper status of the professionalism that we enjoy, will we be able to properly preform the assigned tasks, enjoy the fruits of our labors, and hold our heads high.
"Unto thine own self , be true", compliments of the imortal bard. |
Edited by - katadj on 02/14/2003 22:18:24 |
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Cheryl Joyce
USA
45 Posts |
Posted - 02/15/2003 : 00:23:05
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The claim proceeds amount is based on "going rate of customary and ordinary pricing for the scope involved, (even if O & P qualify) for the geographical area in which it occurs." None of these facts change with any claim. There are variations of items which can be done, but the facts of the process do no change.
Properly handled by carrier, the insured does not even have to get the work done. This is why the carriers pay ACV (which includes the O & P) and retain the holdback or depreciation, according to the wording of the policy. No work completed, no remainder of the claim to be paid. Oh yeah, that little issue of "proof that the repairs have exceeded the amount of money they have already been paid" before getting the remainder of the holdback / depreciation. So the insurance carrier is still not concerned about the O & P- there is no more paid for the claim if no proof of the money has been spent in actual repairs. So what they save in depreciation they pay out in O & P and it too can be depreciated until the work is under signed contract or completed.
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Newt
USA
657 Posts |
Posted - 02/15/2003 : 09:30:57
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The NFIP adjuster manual spells out the O&P, if the insured does the work he is paid 10%, he is not paid for his labor, since it is figured in the estimate. They did a good job of spelling it out so the adjuster is not put in jepordy. So all the mud puppies doing floods best not leave it out. This is in the new manual, available on the FEMA web site, for any one who wants to download it.
I have the new policies and have been digging in this manual for a few days now. May never use it but it makes good reading. |
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katadj
USA
315 Posts |
Posted - 02/15/2003 : 12:02:14
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Clairification of NFIP payment of OH&P, taken fron the Standard policy:
H. OVERHEAD AND PROFIT
The overhead and profit percentage must be applied to the depreciation total and reflected in the
ACV loss figure. Overhead and profit is not applied to the following items:
1. Carpeting
2. Insured’s own labor
3. Outside service charges such as plumber, electrician, or appliance service calls
4. Repairs made by the insured (However, an allowance can be made for the insured’s time
and expense in purchasing materials, not to exceed 10 percent.)
(Bold Added by poster)
Overhead and profit is warranted only if a general contractor has been hired to make repairs.
The adjuster must document the general contractor’s involvement. The NFIP Servicing Agent or
the WYO company has the option of withholding the overhead and profit until the repairs are
completed or until a contract is signed. |
Edited by - katadj on 02/15/2003 12:05:46 |
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CatDaddy
USA
310 Posts |
Posted - 02/16/2003 : 11:30:22
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I am not sure what is meant by someone stating "they are not allowed to properly adjust a claim." We all have our opinions on how claims should be handled. My advice is to handled each situation the way you were asked to handle it. You're given guidelines and policy language to follow. Follow them. I realize that an IA has the opportunity to work for lots of carriers and things are handled differently with each. Sometimes what one does might seem easier and make more sense than how another one handles the same situation and you get frustrated during the times when it may not seem reasonable to you. Try not to cloud your mind with what you did somewhere else and what YOU think and use the guidelines you're given.
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Ghostbuster
476 Posts |
Posted - 02/16/2003 : 19:47:55
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I know we're at the tail end of this thread, but my take on it is on the liberal side.
Consider this, when I , as a competent amateur, fixes something, I do it for the cost of parts and suppies and rented tools. My 'labor' is not worth what a SHOP labor rate is. (I'll get back to the term SHOP labor in a minute.) Therefore, I am being overpaid on the unit cost on the line item of the estimate. This does not include a O&P factor.
When we write an estimate, we're supposed to write it for what a 'honest' contractor will do the job for, and this includes any required O&P. I contend that to withhold O&P because an enterprising Insured might make a profit is ludicrous because that same enterprising Insured has already made a profit on the repairs he/she has done. The carriers are trying to hold back the 20% gravy when the damage has already been done. Thus the carrier saves 20% on claims payment and 20% on a fee bill.
My point is O&P should always be added, when appropriate, (I.E. several trades), to the estimate regardless of who does the repairs.
Now, as to labor Shop Rates. All too often a carrier will focus on an individual workers labor rate instead of the Shop Labor Rate that pays the worker. For example, CCARR & JIMF Septic Service charge $25.00/hr to their customers but pay me, the worker, $9.00/hr. $25/hr is the Shop Rate, $9/hr is the laborers rate. We must always couch our estimates based on the Shop Rate rather than the Laborers Rate.
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Gary
USA
5 Posts |
Posted - 02/16/2003 : 21:16:06
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Here is a thought for discussion. The story went something like this. Years back GC did the majority of the work when a house was built. As time progressed, they started using more and more subs. They would request estimates form the subs; add all the sub estimates together plus their portion of the estimate and give the bid to the home owner. The more subs they used the less they were making on a house. They remembered all the money they were making on material “mark up” and now the subs were making “all that money”. The time spent on coordinating subs was now a large headache and paid little money. He thought, I will have to go back and do all the work myself or make some additional money by charging O&P (this was the first phrase that popped into his head, by the way). And I will add, this was a good decision under these circumstances. After all, a GC using only subs needs an equitable way to make a profit. Here is the problem. Many of the contractors, which request O&P are not entitled to it as outlined above. They are dong all the work themselves and just want an additional 20% above the “fair price” to repair the damage. If the Fair price is not fair then change it. 20% added to every line item in the estimate is not always a good idea. ( Now, the “fair price” would be a good discussion under another thread.
I would like to see O&P paid “If incurred”. Let the contractor provide proof to the Carrier what portion of the claim O&P should apply, cost associated with supervising Subs. We would not make as much but it would be fair to the carrier.
If the insured was offered 5-7% to supervise the work themselves on a loss that would qualify for O&P, I think the majority would chose not to use a GC. 20% would be reasonable for a GC with all the cost associated with his business; less of a % would be appropriate to the insured with no Overhead Cost.
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CatDaddy
USA
310 Posts |
Posted - 02/17/2003 : 06:34:41
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Very good points Gary. I have seen claims where overhead was paid to an insured to coordinate repairs for a large loss and "I" think that is fair. Not to open a can of worms, but I have also seen where the insured was a licensed GC and he was paid O&P because of it.
I believe it should be added on a case by case basis.
Ghost brought up a very good point that an insured profits when he completes his how repairs because his labor is cheaper than what was allowed in the estimate. I dont know if "profit" is always the situation but he definitely benefits. He still has to recover the amount of his deductible. All that being as it may, I dont agree with you in the idea that since "the damage has already been done" that it makes sense to pay the overhead and profit to the insured that completes his own repairs. If someone stole your tires, why should you go ahead and give them the whole truck? |
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CCarr
Canada
1200 Posts |
Posted - 02/17/2003 : 07:14:59
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Gary's first paragraph certainly does bring some 'history' to bear on the situation, that had slipped my mind. Years ago, for sure, a general contractor was a lot less reliant on subs; and as a consequence the GC margins were tangible and larger. 'These days', a GC seems to be evolving more and more into an administrative / project management role, which changes the price points that are relevant to their overhead and profit.
Gary's 2nd paragraph has merit, but administratively it would be cumbersome for carriers to undertake the steps required to determine "if incurred". It creates another layer in the process, and it seems carriers have a stronger wish to shed layers from the current claims processes.
I would like to emphasize a point made in my 2/12 @ 22.57 post on page one, that carriers are paying out too much cash to insureds on settlements; where allowed labor rates are aligned with contractor pricing. Ghost echoes this in a somewhat different way, I think. I suggest that the cash payments - aside from OH&P considerations - are an incentive to insureds to 'take on' the repair project themselves; in an effort to 'render out' the fat from the allowances for their own gain.
The 'birth' and growth of the preferred contractor, is related in part to this situation.
In summary, I feel the system needs two fundamental overhauls. First, the 'cash' paid to insureds should reflect labor rates associated with the intent of a cash settlement, i.e. the insured is being compensated for the damages with the understanding he may or will do the required repairs. Somewhere in this thread I think, it was suggested that labor and material be 'depreciated' on cash settlements; I understand the intent of that statement to be consistent with my thoughts, but 'depreciation' is not the correct concept. We should apply labor rates in estimates consistent with how the settlement is being fashioned - cash allowance for the insured to do his thing, or an estimate with the requisite knowledge that a contractor will do the repairs. Secondly, if the 'first' is implemented, then I agree with Gary's suggestion of a 5 - 7% overhead allowance being provided with the cash allowance payments to the insured.
The first step must be done before any review of overhead allowances can be considered. To do otherwise, just adds excess to already existing fat in allowed labor rates. |
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Newt
USA
657 Posts |
Posted - 02/17/2003 : 07:18:09
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If a person does his own work, it will normally take him longer to do it so he is not doing that great on the profit side. The labor is figured into the estimate. On the down side he is going to have more waste as a rule, because he will buy more than he needs and can't use what is left over.
He will have overhead in the use of his tools and procurement of materials. He is not going to profit very much and this profit is not for the loss, it is pay for his time and effort.
I still think the NFIP program has a fair policy that allows 10%OH for the insured who does his own work. And at their option, pay it when the work is completed. The carrier will pay 10% less if the work is done by the insured, I think their argument is petty and almost spitefull not to pay the insured at least the OH willingly. |
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Paying GC Overhead and Profit (O&P)
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