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Reconstruction Man
124 Posts |
 Posted - 04/03/2004 : 10:02:37
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Kile,
The point will be gotten to in a moment. First, please, answer the following:
You stated yesterday:
"As a rule, O&P is NOT paid on single trades. When premiums are computed historical loss data is used and since [i]most[/] small losses don't include O&P it is not figured in. It's that simple".
So if a single trade contractor breaks out his / her materials, tax, labor, general conditions, contingency, overhead and profit costs, and shows them to you, you have not been recognizing their [critical] OHP business cost factors?
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KileAnderson
USA
875 Posts |
Posted - 04/03/2004 : 10:59:54
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| Conman, what the hell are you talking about? I don't think 90% of the roofers I have dealt with have a clue what their contingency or overhead costs are. They have a truck and a ladder and a cousin and a brother-in-law that help when they can. If they pay $1200 for materials and $1000 for labor and $120 to dispose of their waste then whatever is left is their profit. That's how they do business. |
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bryan newell
USA
45 Posts |
Posted - 04/03/2004 : 11:03:38
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| I have a question while we are on the subject of roofing & contractors.... for the past 3 years I have been continuously told that roofing material prices have "skyrocketed" and that the per SQ price of roofing allowed by the carriers was inadequate..... but in the first week of March, I attended a roofing seminar put on by the largest roofing contractor in Texas, at this seminar were representatives from GAF & Elk, who both illustrated that they are charging the same for their products as they were 3 years ago and that only now have their companies felt a strong need to raise pricing due to the outlandish prices OPEC is forcing on our nation... so who is telling the truth... contractor or manufacturer.... that Reconstruction Man is just one of the multitude of reasons that you will not find supporters for your plight on this site... Every claim needs to be adjusted on its own merit.. as other adjusters have tried to explain, if there is a legitmate need for O&P it can be added.. The pricing guides allow for labor, material, & profit, prior to the addition of O&P. Period. I suggest that if a carriers claim is not profitable enough for you, then don't take the job. As you are aware, there are plenty of others who will do it for that price. Unfortunately, the same goes for our field too... When the carriers get a vendor to agree to a lower fee schedule that the experienced adjuster won't work, the vendor will find someone to send ... have ya'll seen the NCJUA schedule... $120.00 for a no claim, no other expenses other than photos.... |
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KileAnderson
USA
875 Posts |
Posted - 04/03/2004 : 12:08:00
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| I have heard the "skyrocketing price of shingles" story myself. Everytime it is brought up I just head on over to Lowe's and Home Depot and do some independent market research. I've been working the same storm for almost a year now and the price of the shingles on the shelf at those two stores is the same as it was the day I got here. Everytime I hear a roofer tell me that his supplier is charging more I tell them that story and they say, "they buy in large quantities that's why they can sell for that price my supplier charges more because he doesn't buy as much as them." That's when I tell them they should consider switching to Lowe's or HD as their supplier. They have contractor's desks too. They don't like that. But it makes me smile. |
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ALANJ
USA
159 Posts |
Posted - 04/03/2004 : 14:15:49
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Who came up with the rule of no OH&P on a single trade repair? Is this rule written down anywhere or in any manuals? Is there any rule or policy provision that says the insured can not use a General Contractor for a single trade repair? If you had to deny the OH&P portion of a single trade repair, could you make the denial stick?
Food for thought! |
Edited by - ALANJ on 04/03/2004 14:17:07 |
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Czar
USA
66 Posts |
Posted - 04/03/2004 : 14:22:02
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ReCON:
It comes down to this... We as adjusters do not care or even look at what premiums the homeowners pay for insurance. When I go out to a loss, I don't look at the premium and think to myself "well this guy pays I high premium and has been paying for 20 years, so I am going to overpay his claim to make him and his CONtractor happy". Nor do I look at his premium and think " well this guy pays a low premium so I am going to stick it to him". All I look for is, what was the cause, is it a covered loss, what is the damage, and how much is it going to cost to put this guy back the way he was. It is that simple. There is no underlying reason for the way a claim is adjusted. If there are more then 3 legitimate trades and the contractor wants O & P, fine. If he does not ask for it, then I do not offer it. If there are less then 3 trades, I pleasantly tell him NO! It is my understanding that all pricing includes some O & P. Some single trade jobs contractors are going to make more on, and some they will make less on, just like adjusters. All in all it equals out in the end. Like someone stated above, if you don't feel comfortable with the profit you are going to make on a job, it is your option not to take the job. |
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KileAnderson
USA
875 Posts |
Posted - 04/03/2004 : 16:13:40
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Alan, it isn't in writing anywhere it is just SOP. There is no need for a General Contractor on a single trade job. Why should the insurance company pay the insured to pay someone to hire someone else to do the job. If the insured were paying for the repair out of his own pocket he wouldn't do it that way. He'd open up the phone book or ask a neighbor for the name of a good roofer and hire that roofer himself. Why is it that the public seems to have this misconception that insurance companies have bottomless pools of money and they should pay whatever the insured thinks his loss is worth. That's just stupid.
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trader
USA
236 Posts |
Posted - 04/03/2004 : 16:35:45
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| This topic was old 40 years ago. To my knowledge all states require the Insurance Carriers to be "fair". Just get your managers authority and do it. |
Edited by - trader on 04/03/2004 16:37:10 |
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ALANJ
USA
159 Posts |
Posted - 04/03/2004 : 17:18:42
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| Can anyone use policy language to make a denial of the OH&P stick. As we all know the policy is a contract. The contract is the controling document. Thus, we must be able to base a denial in the contract. I don't believe the SOP and "do it" denial will ever hold water. Kile's argument sounds good however, IMHO I don't think it would ever fly in a court. Recon Man may be making his argument backwards. But, I think he has the correct answer when it comes to OH&P. |
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rbryanhines
22 Posts |
Posted - 04/03/2004 : 17:31:12
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Based on a true story:
While on a recent assignment I attended the orientation meeting. This meeting was like most others. During the portion of the meeting that discussed O&P the local reinspector stated "we do not pay O&P unless it is obvious that a GC is needed and many trades involved "
Being that this was not my first storm I raised the question "If an insured has roofing, gutters, and siding damage are we to allow O&P?" The answer was an emphatic no. The reason given was that most insured's contacted a roofer on their own to repair the roof. Then they would contact a siding company for the siding repairs and find out that this company could also repair the gutters. It was then stated that under this situation there was not a need for a GC. Then more questions were asked of which that dialog chased rabbits. I then stated one more time "so, no O&P paid unless exterior and interior trades were extensive and it appeared that a GC was needed. (Please understand that my questions were not my need to debate the importance or need for O&P! I don't care. My concern was I did not want to rewrite estimates later to include O&P!---been there done that!!!)
A few weeks later we received a memo that suggested everyone had misinterpreted the conditions in which O&P would be allowed, the memo stated “ if asked, GC O&P is payable as appropriate to the claim. So when is it appropriate? If there are only one or two unrelated trades such as roofing and fencing, in general, no O&P is payable. Even here, there may be instances where GC O&P would be appropriate.” After the memo we had a meeting where the same reinspector (previously mentioned) stated, “O&P needed to be reflected in every estimate if possible.” He also stated “if the insured is going to incur the cost of a GC, we owe it.” Of course this led to much time wasted in rewriting estimates!
I have been instructed many times by management to include O&P on single trades. Many of these times the reason was due to the insured being an elderly person or a professional. I was told these insured’s would probably need or use the assistance of a GC.
Did the above insured pay an extra premium for this consideration? The answer is found in the stance that state department of Insurance takes on O&P. They contend, “The value of contactor’s overhead and profit has been included in the limit of liability for which the insured has paid a premium.”
My point is that carriers know if the insured decides to hire a GC, no matter what how many trades, they owe O&P. The question is how much will the carrier fight it!
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KileAnderson
USA
875 Posts |
Posted - 04/03/2004 : 17:38:50
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Alan, there would be no denial of O&P. It would simply be a question of valuation of the loss. Denial only goes to refusing to pay a claim because the cause of loss is not covered or the insured did not comply with other aspects of the contract such as mitigating damages or not allowing the carrier to inspect damages.
I suppose that the insured would be entitled to invoke the appraisal clause because the cost of repairs would be in dispute not coverage or scope. I have always heard that what an company owes is what is fair and reasonable. If you have a one or two trade repair and there are 20 other repair companies in town that will do it without O&P there is no other legitimate reason to hire a GC then I don't think it would be owed.
As a hypothetical, let's say that the insured is a recently widowed 90 year old woman who is a shut-in with no real friends or family. I think it would probably be reasonable to pay for a GC for just 2 trades because the insured is not capable of hiring the subs on her own. In that case I would see how it would be necessary. |
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katadj
USA
315 Posts |
Posted - 04/03/2004 : 17:40:56
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There is NO reference to Overhead and Profit anywhere in ANY policy that I am aware of. The credo established by the carriers of 3 trades or more, has been around a very long time.
The conditions of the loss, the capacity of the insured, the location of the loss, all preclude the settlement of the loss. That is the very reason you are suggested to "adjust" the loss.
AN 80 yr old cannot replace the roof, siding, gutters, (unless you are Bernard Baruch) nor can a single mother that works three jobs, nor can a competent CPA that does not know which end of a hammer to hold.
Not trying to be argumentative, but really, who determines when and where OH&P is deserved? Certainly not some examiner in an ivory tower, but rather the people in the trenches (US) that see the loss, speak with the insured, know the actual conditions and call the shots, whatever they may be.
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Reconstruction Man
124 Posts |
Posted - 04/03/2004 : 18:10:45
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Kile,
We are aware of the the so called "local prevailing rate" type contractors "business plan" you described:
But let's keep the dialog a bit more balanced.
You do want our point made right?
The question, restated, is not a tough one. Please just give a yes or no answer.
"If any "single trade" (carpet, roofing, fencing, etc.) contractor breaks out his / her materials, tax, labor, general conditions, contingency, overhead and profit costs, and shows them to you, do you recognize, and allow for, their OHP and etc. business cost factors"?
Do you or don't you?
Bryan,
Call up an ABC Roofing Supply, Home Depot or other supply house. Ask them, not the manufacturers, how much materials have gone up and why. We know of two [above inflation] increases in the last 12-18 months.
Also, homeowner, auto, health, WC, Liability etc. insurance rates going up ALOT affect construction business (and other businesses) prices too.
Look at gas pricing going up. $1.65-$1.85 in South Texas.
Inflation. / Deflation.
Add it all up. Contractors who do not keep up with such economic uncertainty may have to become adjusters.
Kiddin'. We know you guys [obnoxious or not] are also eating some sour grapes from the economy and carriers.
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alanporco
USA
112 Posts |
Posted - 04/03/2004 : 18:22:04
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ReconMan: I am fully aware of where and how claim loss data is used. My point to you is that is does not matter to the adjustment of a claim. An adjuster's only responsibility is to determine if the loss is covered and then pay for the damages following the guides set by the insurance company. If the company says pay O&P, O&P is added to the estimate. If the company says don't pay, it's not paid. As far as O&P goes, payment and/or its inclusion in the estimate is sometimes dictated by the local jurisdiction, the usual and customary practices of the local claims office or the circumstances of the insured. In some cases, the company has declared that O&P will be paid on an incurred basis only; in other cases, the DOI has declared that O&P shall be included in any claim with three or more trades.
ReconMan, you work in a state that doesn't require GCs to be licensed, don't you?
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Reconstruction Man
124 Posts |
Posted - 04/03/2004 : 18:27:40
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Amazing how carrier think tank ideas become "best practices".
Allstate is test driving a 28/48 OHP construction estimating formula in Texas now.
Anyone have details?
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The perils of poor performance: Volume 1
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