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khromas
USA
103 Posts |
 Posted - 03/03/2004 : 19:10:51
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The insurance industry uses a vast amount of research from multiple sources in determining the estimated amount of a particular repair. Contrary to popular belief, the amounts are NOT just 'pulled out of the air'. I can't think of a single estimating platform out there used by any carrier that is not also available for use by the construction industry itself.
The fact that a high percentage of adjusters came from the construction industry is also considered as often carriers will allow price overrides under certain circumstances. (From experience, you have to do some serious 'splaining to your manager to justify the override but it can be done.) I was expected to use my 20+ years of construction experience in adjusting a claim, that's why I was hired at a higher salary level than a newbie out of college. When I started with a major carrier back in 1996, I was appalled at the price being paid per square for roof replacement by the insurance industry because I KNEW from business experience what the my cost for installing a new roof had been. It was impossible to change due to the shear inertia involved in the processes.
Since you have already shown you are very hand's-on in the entire situation, let me suggest you do this, regardless of which roofing company you ultimately use.
1) Make sure the roofing company clearly outlines ALL of the materials they will be using on your roof. (They don't have to reveal their prices but they should provide you with a material list.) Go to Home Depot or Lowes and price these items yourself.
2) Keep an accurate count of the number of workers on the job and break them out by whether they are laborers (clean-up, hauling stuff) or 'roofers'.
3) Ask them point-blank what they are getting paid. (You will probably need to be able to speak spanish or have someone translate.)
4) Ask them if they are covered by insurance if they get hurt on the job. (You will probably get a blank look in response!)
5) Ask where they take the tear-off debris to. Call that landfill and get the price involved.
6) Try to think up any other costs you think may be involved.
Add up for yourself the value of all these items.
Come back here and share with us what you discover.
Thanks, |
Kevin Hromas |
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gloverb
USA
54 Posts |
Posted - 03/03/2004 : 19:51:58
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khromas,
I have a partial answer to your question regarding differences in pricing by a roofing contractor, & there may be reasons that are not as "sinister" as you think. In addition to being an adjuster I also own a construction company that specializes in insurance homeowners losses; so, I can see it from both sides of the fence. I rarely ever do roof work because there is simply no money in it if you do it the right way, unless you do a ton of them.
We are approved contractors for a number of carriers, & none of them pay enough for roof work. I can't back this up, but I would bet you that the large majority of roofing contractors don't carry workers' comp, they treat their workers as contractors, & carry the very minimum liability limits. This means that the ligitimate contractor pays 12-15% more because he carries these, & the others do not.
For 3-tab, 25 yr shingles most carriers that we deal with pay about $100.00 per sq.(No O&P on roofs) Thats on/off, includes shingles, felt, & drip edge. Just material costs alone will run about $40.00 per square. 2 yrs ago material costs were about $30.00 per sq. in fact if you check back 10-15 years ago I believe you will find that carriers were paying $90-95 per sq. 10% increase in 10-15 yrs. That is not much. My liability premiums from last year to this year alone almost doubled.
Labor rates generally run $20-25 to take off & $20-25 to put on. So, $40-50 in labor, $40 in materials & $12-15 in indirect insurance premium costs, & you still have to make a profit. That's $92-$105 per sq in cost, & you get paid $100 per sq. Most contractors, & businesses, try to run 35-40% profit margin. 3-tab needs to pay $130-140 per sq for the contractor to carry wc, liability, & pay his employees a reasonable amount.
I have talked with several of the carriers about the this, & the answer is always, "Because we can get roofs done for this amount"
Now to really answer your question, it may have more to do with competition than with "dishonesty". What I mean is, most homeowners could care less what it costs as long as it means no more out-of-pocket expenses. Contractor comes to them & says, " I'll do it for the amount of the adjusters estimate." The homeowner says, "OK".
However, when you throw that same contractor into a competitive bid situation then the game changes. The contractor thinks, "I would rather reduce my profit rather than lose the job."
This is where the contractor that has less overhead(ie-wc,liabilty,etc) has the advantage over the contractor that carries all of these.
My company is an approved contractor for several carriers. I will work from their estimate, or in many instances, they accept mine; however, I have no competition in these cases. If i did the same work, say as remodel instead of covered loss, my estimate would probably be less because now I have 10 other contractors to compete against.
I hope this helps to at least give you a view from the other side. Most contractors are honest & depend on referals & repeat business. It is the few bad apples that give all contractors a bad name. |
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CCarr
Canada
1200 Posts |
Posted - 03/03/2004 : 21:05:59
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Kevin, let me remind you as one of the "us adjusters", that you do not "work for" the Karens' of our claims world. It is important for adjusters "to be constantly reminded of who it is we all really 'work for'"; and we do not "work for" the policyholder.
We can be supportive of the Karens' on behalf of all insured people, we can have empathy for the Karens' of the claims world, we can help the Karens' of the claims world; but we do not "work for" Karen or any other policyholder in our capacity as an independent adjuster.
Karen and her problem, like any other policyholder who has presented a claim, is the medium through which we apply our craft; so a determination can be made by an adjuster if money is owed under a contract that the adjuster is not a party to, but was hired by a party to that contract.
I do believe I recognize the intangible intent of your statement, in regards to "working for" Karen. But, aside from Bill Cook thinking we may be ploding into his pasture; there are a lot of people who may have read your comment, and taken it as "insurance gospel", as some may say. |
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Ghostbuster
476 Posts |
Posted - 03/03/2004 : 21:11:04
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Yeah, yeah, yeah.
Let's flip the coin over and go at it from the other direction. It is not a matter of the carriers pulling a price out of the air, (with the exception of Metropolitan P&C that I witnessed in Dallas in 1995 when it hailed), it is more likely a case of the contractor pulling a price out of the air. I have seen this game played often where any kind of contractor will mentally estimate a job cost, take a look at the customer and size them up for things like wealth, gullibility, are they anxious to get it done?, etc, and then add a 'sucker factor' to the total. Then, when the customer squawks, they can fudge and hem and haw and act all hurt when they knock off $50.00 from the phony $500.00 sucker factor. Then they giggle all the way back to the truck and drive off with a check in hand.
Now...who's the bad guy? The adjuster, the customer, or the contractor? In this wicked little drama we act in, life can get very confused. And, we haven't yet shone the light on the games the customer plays on us all.
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khromas
USA
103 Posts |
Posted - 03/03/2004 : 22:02:08
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Responses in order -
Ben -
I am not going to recap my construction resume' extending over 20 years. Suffice it to say I am intimately aware of ALL the costs you have referenced. I do question your assertion that "some" carriers are only paying $100 per square off/on. Care to name names as validation? I question the accuracy of the labor costs stated. The typical roofing crew (general laborers at least) are rounded up at the 'day labor' sites or the corner Stop-N-Go in the lower socio-economic neighborhoods of town. Reality isn't pretty. (I didn't say any of this was fair.)
Also, your profile states that you are both an IA and a contractor? I hope there are no conflict of interest issues at stake. Surely you are not assigned claims to both adjust and then repair?
Clayton -
My reference to "work for" was offered in a nebulous fashion. The insurance policy (product) is manufactured by the insurance industry and offered for sale in the open-market to the homeowners (consumers). The adjustment of a claim is the "servicing" of the product. Substitute 'automobile' for 'policy' and the business paradigm always come back to the principle that if no one buys the product, no one involved anywhere in the chain benefits, so we actually do work for the policyholder. (Not to be confused with the "working for" services of a PA.) |
Kevin Hromas |
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KileAnderson
USA
875 Posts |
Posted - 03/03/2004 : 22:19:58
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I have a theory about why so often we find that an insurance price book for roof replacement is off by several hundred or sometimes thousands when applied to the real world. When pricing specialists are putting together their pricing surveys it is pretty easy to call Lowe's or Home Depot and say what are you getting for a square of 3-tab 25 yr shingles? What about a roll of felt?
Nails? Drip edge? Those prices are usually right on, most of the time I have found they are a little higher than the big home improvement stores and when high volume roof contractors buy their shingles by the truck load they get them even cheaper. Material prices are never at issue.
What is at issue, however, is labor. Some contractors have local reputations that many homeowners are more than willing to pay for (especially when they think the insurance company should foot the bill, "I have replacement cost coverage that means you have to pay whatever it costs to replace it"). Unfortunately nowhere in the insurance contract does it say we will pay whatever your favorite or the most highly thought of contractor in town is charging. There are also the contractors who charge exactly what the insuance price book says is the going rate for the area and they are the ones who answer the survey when the pricing specialist calls. The problem is I believe that very few contractors actually give a fully accurate estimate. I firmly believe that most roofers, when insurance is not involved add 2 or 3 or 4 squares to their estimates. I mean, how many average homeowners know exactly how many squares they have on their roofs or even how to figure it out? So these roofers make an additional $500 or so on every roof because they are just overestimating everything. They get used to this and eventually it gets figured into the pricing. If they did every roof at the price they tell everyone they are charging and then charge for the work they actually do they wouldn't make a profit. Then along comes Mr. Insurance Adjuster with his dad-blasted tape measure and knowledge of geometry and the Pythagorean theorem and suddenly this house of cards collapses.
I had a roofer come into the office the other day. He said he'd been doing roofing for 30 years and he looked like he was telling the truth. His estimate was $1000 higher than mine and he said it was because mine was 8 squares short. So I pulled out my sketch and my calculator and we sat down and I did the math while he watched, added the required 10% and came to the same total used in my estimate. He said but you forgot to add for starter and ridge caps. I looked at him and said yes I did, that's what the 10% is for. He said no, that's the waste, you have to add a square for each valley too, you loose alot there in the overlap. There were only 2 small valleys and the roof was not very steep. I just looked at him and said "Sorry, that's not the way it's done."
I called the insured and asked him to get a couple more estimates, which he did and they were pretty much in line with my estimate. It's just a theory, but I'm firmly convinced that overestimating is a standard practice in the roofing industry. |
Edited by - KileAnderson on 03/03/2004 22:22:17 |
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Roof_Dr_Sr
USA
27 Posts |
Posted - 03/04/2004 : 03:53:15
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[:D]You guys are funny... It's like reading the funny papers in the morning. I sit here and read about all the skum bucket roofers like we are just a bunch of trash. Ok I will admit our industry doesn't have the best reputation but neither does yours! There are bad adjusters just like there are bad contractors. I knew 2 adjusters from one of the big three insurance companies who would start drinking everyday with people he hung out with at an auto repair shop. Of course they would refer all their clients to this repair shop and the owner would always buy the 2-3 hour lunch at the local pub. Does that mean all the adjusters are bad? I don't think so, I know plenty that are very concerned about their clients and their well being. The quality roofing contractors have tried our best to get roofers in Texas lisensed in the State of Texas but have had no success in Austin. We even went as far as certifing ourselves by setting certain standards like being in business for over 3 years, having good credit, have knowledge in the business by passing a 5 hour test. etc. Everyone forgets about the yellow pages ad we spend over $50,000 each year just getting to the homeowner to give them a FREE ESTIMATE. As far as picking up guys on the street to do the work...not at our company. Our men are on staff and get paid good wages to do what they do. How about the $30+ we spent this alone on matching withholding taxes? Where does that come in to your equation of profit? The other day I got my son to sub contract a job for me at his cost. It was a tile repair job and his labor cost to me was twice what I figured for the job. Who pays that? The roofing business is just that, it's a business with all types of expenses that are never figured in when trying to figure out what a job cost to do. It's almost impossible for a solid company to figure this out exact. What about this problem... If I put on 50 squares today and it gets hit by a storm tomorrow, why does the insurance company only pay 43 to remove? Go ahead tell me the answer... I have heard it all before but the fact is we still remove 50 squares and the insurance companies saved about $150 per home times hundreds of homes. Now who is the skum bucket? Now who is being honest? What about headwall flashing and counter flashing the insurance doesn't pay to have replaced? To do the job correct it should be replaced each time. I saw figures the other day where a roofing contractor was being the exact same money for a job done in 1981 that we are getting paid today? Is that fair? Maybe that's why all the roofers you know dress the way they do...they can't afford anything else.Roofing is a hard dirty job and yea your right it's done by people who would do something else if they were smart enough to do it in most cases. I love you guys & gals and I respect what you do for a living ... do your best to respect the good contractors in the field and help me run out the dogs! Thanks.. |
Roof Dr.Sr. |
Edited by - Roof_Dr_Sr on 03/04/2004 04:00:59 |
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gloverb
USA
54 Posts |
Posted - 03/04/2004 : 04:50:23
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Kevin,
I don't mind naming names. I pulled these prices right off Xactimate for my area. I have to use these prices for Encompass & MetLife. These prices are for day-to-day, do not reflect pricing for cat work.
RFG 220 3-tab 20 yr inc. felt R&R $100persq
RFG 240 3-tab 25 yr inc. felt R&R $104per sq
SF
RFG 220 3-tab 20 yr inc. felt Remove $20
RFG 220 3-tab " " Replace $75.08
My point was not to debate pricing. You are exactly right. The typical roofing contractor goes down to the local labor pool finds 1 guy that speaks English (he's the supervisor), gets 3 or 4 other guys, & he now has a roofing crew.
My question is "Why is this typical?" Why does roof work have so many of these types of contractors? Because the contractor that tries to do it right & carry all of the insurance, use employees, etc just has a difficult time showing any kind of profit simply because the pricing is 30%+ too low.
I did 1 roof last year. It was tied to a fire restoration job; otherwise, I would not even consider doing it. I lost money on the roof portion. I subbed the labor to an insured roofing contractor. Off/on cost me $50/sq, & when the contractor finished, he said that he wouldn't work for me anymore because I was too cheap.
As long as carriers have the attitude that "We can get it done for $100; so, that's all we are paying", the better contractors will continue to stay away from it.
I know I have painted contractors with a pretty wide brush. There are some real good roofing contractors, but not many.
In reference to Roof DR Sr's response. He is exactly right. In many cases they pay today for roofs what they were getting 20yrs ago. A friend of mine, actually my tile contractor, started out in Florida in 1984 on a roofing crew. He was amazed when I told him some of the roof pricing. He said "That's what we were getting in 1984."
I am an adjuster, but because I am also a contractor I have much empathy for the roofing contractor that is trying to bo it the right way.
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Edited by - gloverb on 03/04/2004 05:01:58 |
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MysteryCat
USA
23 Posts |
Posted - 03/04/2004 : 07:19:44
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originally posted by RoofDr.
What about this problem... If I put on 50 squares today and it gets hit by a storm tomorrow, why does the insurance company only pay 43 to remove? Go ahead tell me the answer... I have heard it all before but the fact is we still remove 50 squares and the insurance companies saved about $150 per home times hundreds of homes. Now who is the skum bucket? Now who is being honest?
C'mon Doc,
We've hashed this over too much (see Lonnies posts) Where did all those scraps you hauled away come from ? The 10-15% waste factor covers all ridge, starter and valley. This is the way it is. When I was a roofing contractor , I LOVED redo's like this because I didn't have to climb and measure it....all required info was already in the file including the material takeoff and the job work order and I knew exactly what the profit was (usually around 33%). If that's not enough, change professions. |
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MysteryCat
USA
23 Posts |
Posted - 03/04/2004 : 07:28:51
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BTW,
Headwall and counterflashing definitely do NOT have to be replaced each time... that is ludicrous. After supervising thousands of reroofs, mostly insurance claims, I can tell you that these can mostly be reused if your roofers are careful. (Imagine that). When it is impossible to save it, then supplementals can be addressed with the adjuster. |
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Tuckernotis
USA
19 Posts |
Posted - 03/04/2004 : 08:32:44
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No one has answered my question: Exactly what does a "bruise" look like?
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KileAnderson
USA
875 Posts |
Posted - 03/04/2004 : 08:37:01
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Glover, those prices you quoted are just part of the roof job, they don't include drip edge, steep, 2 story charges, vents, flashings, base service charges, material sales taxes or any other elements that adjusters include when they write their estimates. When you read the estimate you will see that there are way more than just 2 line items listed under the heading roof. Most of my estimates run anywhere from $105-$175 per square depending on the roof.
Dr. Roof, You said somebody was being paid exactly what they were paid in 81. I've only been doing this job for 5 years and I've seen prices go up in that short amount of time. If that roofer is getting paid the same thing today then he must have overcharged for it 23 years ago. |
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Roof_Dr_Sr
USA
27 Posts |
Posted - 03/04/2004 : 09:08:48
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Kile,
You said you have been doing this for 5 years. I know for sure we have had at least 12 increases in shingles over 5 years. Five years ago we were getting $70 per sq. and now we have finally got insurance payment of $80 (from some ins. co. most are still between $73 & $75) felt has gone thru the roof, metal is super high, etc. I enjoy the roofing business but I would just like to make enough to cover my expenses as well as show some small profit. I'm not interested in changing jobs. Thanks for your reply |
Roof Dr.Sr. |
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Roof_Dr_Sr
USA
27 Posts |
Posted - 03/04/2004 : 09:23:17
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Mystery Cat,
According to the NRA (The National Roofing Association) these flashings should be replaced with each job. Sorry I'm not one to dispute someone like that, I just try to follow some type of guidlines. As far as changing professions, Iam not interested in that as well. I believe it was you that mentioned I was making a 33% profit on each job? Get real ...no way can a real roofing contractor (one who has a business location with office staff, yard staff, really paying real taxes on employees, buying over $50,000 worth of yellow pages advertising each year because everytime we turn around there's another new book we have to be in, material cost always going up on a regular basis, etc.) show that kind of profit in Texas. Texas is the key word out of all that Mystery Cat. When I worked a storm in Kentucky, the insurance companies paid $145 for 3 tab shingles plus $12 for felt, and $1.10 per ft. for drip edge. In Texas for some unknown reason the insurances believe we can do this for $75-$80 per sq and we have to furnish the felt & drip edge. I haven't found a supplier yet that throws in felt & drip edge when I order material. Still waiting for someone to explain the differences because the material cost the same and the cost of living is the same. Anyway thanks for the reply ...... |
Roof Dr.Sr. |
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rbryanhines
22 Posts |
Posted - 03/04/2004 : 10:25:16
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The last few post are way off the topic but I feel the following should be said in response:
I consulted for roof/siding companies for about a 2 years . During this time I was able to see how good companies produce it's jobs. I can tell you this: there is no way they went down to the corner store and picked up day labor to be applicators of roofing/siding. The insurance carriers shouldn't set prices to force roofers to do that. I wouldn't want a day labor to install my roof. I've been on many storms in my years of adjusting and seen vendors let any warm body with a tape measure adjust when there was a shortage of adjusters. I don't want to be judged by the worst in our industry. Let's not judge other industries by thier worst!!! |
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Is granule loss considered hail damage?
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