|Posted on Sunday, October 15, 2000 - 1:34 pm: |
You bring up a very valid point. I suppose that I should have given a more broad response since we are dealing with "all" states, not just one or two.
It is true that in NJ, not only are the laws and codes very liberal, but in my judgement, downright fraudulent. When an agent can refer a PA to the insured and then collect a commission from the PA, and it be legal, just blows my mind.
Now to your question. I believe that the difference in the contracts of a contractor working on his behalf is quite different than one that is working on the behalf of the carrier "and" the insured. The contractor that is a "preffered contractor" has the authority given by the carrier to act on their insured's behalf and them. It all goes back to what the law says. Here in IL it is illegal for a contractor to state that they "in anyway, represent" an insured unless they have a PA license. They cannot negoiate a claim on behalf of the insured. They can reach an A/P with the adjuster, but they cannot advise the insured on claims handling procedures without a license. Thats why I was reffering to IL only. A "preferred" contractor represents both.
Almost every state is different. All states have their way of doing things. The DOI in every state is different and sees the insured and/or carrier in a different light. MN compared to IL is like night and day. I suppose the difference here is that the Atty Gen's office is very strict when it comes to licensing of contractors and what they can and cannot do. Most all contractors write their own contracts. However, if that contract says anything that implies that they are handling the claim, negoiating the claim with the adjuster, then they are on thin ice. IL, FL and CA all seem to be very simular in this regard. And in MN the contractors can do almost anything and get away with it. However, I think IL by far, is very clear on what a contractors guidelines are.
You are right though, I feel that the "preferred contractor" use by the carriers is in a gray area when it comes to acting as a PA. The only reason this doesn't come up is the carriers are for it and do not object, since they are working for them. This is one reason that I agreed with a forum on "Contractors doing our jobs." It seems that the pie is being divided up more and more. That is why I am against the "preferred contractor" progams, not to mention the "fox in the henhouse" reason, although that is another subject.
I hope that this better explains where I was coming from.
National Catastrophe Director
RAC Adjustments, Inc.
|Posted on Sunday, October 15, 2000 - 2:09 am: |
Among the many insurance repair contractors (especially the ones from Texas & Arkansas) this is a standard form of their contract language. I know from first hand experience during hurricane Hugo. Once my wife & I became insurance adjusters we learned the problem with such contracts and share your exact views in regards to them. My posting was intended to call attention to this type of contract so other adjusters would be aware. Thank you for reinforcing my thoughts on this subject.
On a related subject Jim, would you share your thoughts with us as to how you would compare this form of contract in comparison to contracts used in the approved contractor repair program. On the surface it appears that both methods share many similarities with the one exception that the approved contractor repair program involves a contractor that is representing both the insured and insurer interests at the same time while the independent contractor is just representing the interests of the insured. To paraphrase from Gov. Bush, I will substitute contract for math, isn't the contractual relationships of contractors in any approved contractor repair program paramount to fuzzy contracts. Looking forward to your response, RJ.
|Posted on Saturday, October 14, 2000 - 2:27 am: |
My last Two jobs selling insurance repairs as a salesman for any construction company was back during hurricane Hugo in Charleston, SC.
The first contractor left town owing me over $60,000.00 in commissions. The second contractor left town owing me $24,000.00.
After that my wife & I both attended a school, passed the State of South Carolina adjusters examines and have never worked anything since outside of adjusting on the behalf of insurance companies since.
We are firm believers that it is very unethical to work both sides of the fence and especially at the same time. However, one of the major software providers and CADO sponsors apparently does not believe this as he is currently employing at least one PA to handle losses. I have direct first hand personal knowledge and copies of contracts furnished to me by the PA as an insured's representative that show this PA was working both sides at the same time. What is even stranger is that after the carrier he was handling claims for was informed they keep this guy employed. Well so much for ethics. Because of my beliefs in the keeping of proprietary information confidential I am not at liberty to state the names of the software company, the PA's or carriers name. Oh by the way it is perfectly legal for a PA to work both sides of the fence at the same time in the state in which it occurred. Funny how greed will change a person's values around isn't it.
|Posted on Friday, October 13, 2000 - 8:06 pm: |
RJ, I agree with your intent and some of your reasoning. However, I think the most important point is that not only does the "sales pitch" put you "IN" the PA relationship but if you ever put something like that in writing and it was forwarded to the DOI in IL you, as a contractor could very well lose you contractor license.
We have such a simular case like that right now here in the Chicago area. There are roofing companies that are saying "we represent" the insured and they are in trouble with the State Atty Gen for making that statement alone. We have no love for roofing companies that make such a statement. They may attempt to get an A/P with the adjuster but "negoiate" the claim, they cannot do.
I know that adjusters need to make a living, but I would not have to think twice about using an adjuster that sold roofs at the same time they were adjusting claims for us. It wouldn't happen.
Another town, time or place ok, but not at the same time.
You make a very good point though about the E & O factor.
National Catastrophe Director
RAC Adjustments, Inc
|Posted on Friday, October 13, 2000 - 2:40 pm: |
Is your "E & O" coverage at risk?
This thread is for those of you (IA'S) that are entering into the selling (adjusting) of hail damage repairs on the behalf of various roofing companies. First of all this discussion is not attempting to discourage you from making a living anyway that you see fit. This discussions only intent is to bring an awareness of possible problems that you may (not absolute) encounter regarding your E & O coverage.
First lets address your E & O insurance premium as it relates to how you are rated which in turn will determine the annual cost. Your rate is affected by your exposure, experience level, past claims history, home office location and the percentage of income in relation to type of work performed and for whom.
Since we are taking about selling insurance repairs on behalf of repair contractors for the benefit of the insured I will limit my discussion to this area.
Before coming into the adjusting business I was a general contractor & just prior to becoming an adjuster I sold repairs for various insurance repair contractors so I have a very good working knowledge of the process in making these types of sales.
The sales pitch goes something like this.
Mr. Jones I represent the ABC Construction Company and the reason we have stopped by today is to offer you a free roof inspection. As you know the recent hail storm caused a lot of roof damage in your area and your roof might have sever damage which may require your roof to be repaired or replaced. Should our inspection of your roof reveal that it should be repaired or replaced our company is prepared to present as your contractor your repair claim to your insurance carrier to reach a settlement for the repairs or replacement. This service is free and the only obligation you will have to us is that you agree to have us make all necessary repairs or replacement with your only financial obligation being your deductible. In the event that we can not find any damage or are unable to reach an agreement with your insurance carrier you will not owe us anything for our efforts. On the other hand should we reach a settlement with your carrier and you decide to terminate our contract then as a result of a breach of contract you will owe us ______ percent of the settlement amount.
Now lets say something in this process goes wrong and a law suit is filed. During the course of the law suit a discover is made that you are an adjuster and have E & O coverage. Now chances are that this will prove to be immaterial, however, your E & O carrier will now know that your income is not entirely derived from adjusting. If this differs from your application this could in and of itself be grounds for non-renewal of your E & O coverage. At the very least it may well mean an increase in your E & O insurance premiums.
While your sales pitch is good and legal in most every state the practice is bordering on Public Adjusting. Some E & O carriers may interpret this practice as such and if they do will not renew your E & O coverage.
The posting of this information is not intended to scare or discourage anyone from selling insurance repair work. The sole intent is to bring an awareness to those that are selling insurance repair work part time, to supplement their adjusting income, of the increased exposure they are creating that could place in jeopardy their E & O coverage. After all the lack of E & O coverage could prevent you from going back to adjusting insurance claims.