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True.  But then again, the FC&S people aren't speaking to simply an audience in one state.  They are basically saying that this is their stand.  They are speaking about it to adjusters receiving a national magazine.   The State Farm managers I had in 2005 referenced case decisions in advising when to allow O&P - yet the ruling was not from Louisiana.  (based on complexity of repair - getting away from a strict "3 trades" rule). 

I'm not so sure that thing is going to be appealed, the Gilderman v. State Farm Insurance case decision goes back to 1994 and the later cases refer back to it.  Who knows... 

Case rulings would strike more fear in the state in which they are based.  Here in California, we are fearless - our Governor is the Terminator. 

To this day I get assignments in my own state that are not consistent in this point - I get work from dozens of carriers.  But most of them do what the FC&S people are recommending. 

Absolutely. One of the challenges of not being staff, is seeing how various carriers approach the same topic.

Yep. A very similar topic had been aired out - this one started as a contractor wanted O&P on a single trade. I think 99% of us agree that a single trade repair does not even fit under the generous guidelines of the articles quoted above.

The damages have to create a somewhat complex repair, that requires some coordination of trades. It is up to the carrier - I have been told to allow O&P when the single trade is done by a General Contractor.  You just have to go with the flow sometimes.

What is wrong with the insured and the adjuster writing the scope and estimate without unit prices and having 3 contractors bid on the job ?

Good Idea Ray.  Perhaps someone will develop a system.

Workflow

1) Property Owner reports claim
2) Property Owners gathers "estimates and opinions" from Contractors as to what needs to be done to "restore" property that includes"

a) Job - Phase List & with Selling Price by Job - Phase
b) Estimated Cost of Materials & Labor by Job - Phase, or Turnkey Bid by insured "sub"
c) A computerized report generated by leading softwares such as: xactimate, powerclaim, simsol, integra - that effectively verify the "reasonable profit" ask for by the contractor

3) Adjuster inspects, documents, "xactomates", and turns in file to Claim Desk 
4) Claim Desk makes the call on what needs to be done based on coverage and gives the green light for Property Owner to choose a contractor or "Do it Yourself"
5) Claim is "closed out" and paid on what is spent, not on what is esitmated...
6) If PO "Does it Himself"...no deductible....

General Contractors, and, GC's Overhead & Proft - An Observation

There are at least 3 different real world general contracting instances that apply to the term Overhead & Profit as it is most commonly applied in the Constuction and Catastrophe Reconstruction Market 

1) The Traditional "General Contractor"  -  This is the "construction manager" operation, where no overhead is applied for supervision whatsover.  The overhead is in the adminstration, finance, and risk.  The traditional 20% for Overhead & Profit is most accurate for this contractor. 

2) The "Residential Catastrophe" or "Fire & Water" General Contractor  -  This is the general contractor that is most accurately related to the  "Cost Database" or Xactimate-Powerclaim-Simsol-Integra, "Overhead & Profit".  Most every "cost datbase" and software provider provides a page or two explaining the "Conventions" used in their pricing.  Most every one explain that it is up to the "experienced estimator" to apply his knowledge to make it work.  Most explain that it is imperative that ...if the database has a line item and price...it needs to be included, and, overhead and profit, minimums, and surcharges, must be applied "IN ADDITION" to the unit prices suggested.     

3) The "Storm Chaser" - "Roofing, Siding, Gutters & Handyman Services", "General Contractor" -  This is the general contractor that causes the Insurance Carrier to feel like they must "MANIPULATE" the items, pricing, and, "CONVENTIONS" suggested by their own chosen software......sshhhh......

The Point

We are all still estimating the "Selling Price".  Seems to me that that is what  "Reserve" is designed to accomplish. 

Car Dealers have an association that publishes a book of dealer costs, and, average selling price.  When was the last time you wanted to know the average sellilng price of a new car...Got Ya...

Everybody wants to know "COST"....then, selling. 

Why don't we deal with "COST", then, the selling price "Is what it Is"..based on what the property owner spends....

Donny Haight
817-793-2444