As mentioned in a previous blog, Why ALL Claims Need DryStandard Inspections, the adjuster, contractor, policyholder, file reviewers… every entity involved in the insurance claim settlement are conflicted. They “have skin in the game” and the outcome of the settlement can either cost or benefit those involved.
If an arrangement could ever be ENGINEERED to bring out the worst in people – it would be the insurance claim settlement process.
It is for this reason that DryStandard Inspections with the use of authentic Registered Third Party Evaluators™ (RTPEs) are of particular value to all involved in identifying the unbiased identification of the needs of the restoration project.
To be clear:…
One of the MOST DEBATED subjects after the work is performed on water damage losses is the determination of the “degree of contamination” of the water. (This is called “Category” of water) This critical determination is necessary so as to define what can be restored versus what should be replaced. The industry is quite clear on what is restorable and what is not – as long as everyone agrees on how contaminated the water was. However, consider what frequently happens:
The contractor identifies the source of the water to be from a fresh water supply line… located in the attic… flowed through the ceiling and walls… and made the flooring materials wet. It has been wet for several days before it was discovered. The structure now “smells musty.”
The contractor arrives on the project, and is hired by the Policyholder who intends on initiating an insurance claim.
The contractor – in their “professional opinion” declares the project to be “grossly contaminated water;” – “Category 3.” Their reasons may include: the fact that water flowed through building materials that can contain unknown contaminants, flowed over and through flooring materials where people walk, sat unattended for several days and there are odors present. These may be pretty compelling reasons to declare the project to be Category 3!
As a result, the contractor identifies the scope of work to include the physical removal and replacement of materials that have absorbed this contaminated water. Items like, carpet and pad, absorbed gypsum wallboard, insulation etc. This is all in accord with the industry’s Standard of Care to be followed. (ANSI/IICRC S500 Standard and Reference Guide to Professional Water Damage Restoration). The insurance claims representative does not debate this categorization determination at that time and the contractor proceeds.
Once completed, the contractor submits their invoice for the services performed along with a detailed summary of each of the many services they performed to their customer: the Policyholder. The Policyholder then forwards this invoice to the insurance carrier for reimbursement per the terms of their insurance policy along with their “Proof of Loss” – a document necessary to settle the insurance claim.
The insurance company then has the Adjuster – or Third Party Administrator (TPA) call the contractor (not their customer, the homeowner!) to debate the invoice. They declare the water to have come from a fresh water supply line in the attic – a source that is so clean, many people bath and even drink from it! “This water wasn’t contaminated! – it was CLEAN! All the materials you removed were unnecessary as they could have simply been dried! Please remove all associated charges!” says the debater.
The contractor (and even Policyholder) explains how the water came into contact with contaminants and needed to be removed. The odors suggested serious microbial amplifications within the building and required removal.
The debater digs in their heels and firmly rejects any such allegations – even though they were never on the job. They claim that “the contaminants picked up by the fresh water were – “pre-existing” – and the policy clearly states that it will not cover the costs associated with repairing “pre-existing conditions.” Even if the contractor provides elements of evidence in support of their Categorization effort – it is met by the debater with disbelief and skepticism… because they possess a clear conflict of interest! (They are a materially interested party in the outcome of this determination.) The delays in payment and months – even years – of debate and in some cases legal costs make the entire process simply unbearable for all involved.
The common result is the contractor bows to the pressure to forfeit perfectly justifiable and legitimate service charges for usual, customary and competent services – or – the contractor insists upon what they are owed since their customer is the Policyholder and guaranteed the payment to the contractor. If the customer doesn’t pay – they have the right to lien the property.
In the end, the insurer realizes a dramatically reduced insurance claim payout. Technically, this might be an insurance claim shortfall – as negotiated through strong-arm tactics.
And… it even works the other way! If the contractor declared that same scenario to be a “Category 1” fresh water loss and dries all the materials in place, the debater can argue that everything was contaminated and should have been removed! They demand that the contractor remove their drying charges from the invoice. Again…. an insurance claim shortfall!
When a child encounters a bully, they are encouraged to tell an adult who will assist them in getting the bully under control. When an adult encounters a bully … they bring a bigger bully to get the weaker bully under control.
DryStandard Inspections provide the most authoritative industry experts carrying the strongest evidence and data in support of their independent and qualified determinations. DSi does not possess any reason or possibility of benefit from the determination of Category of water. This makes their determination far more credible than any other entity involved in the process. Additionally – DSi actually conducts tests to establish their determination based upon DATA RATHER THAN OPINION. This is far less likely to be debated by others.
Doesn’t this make much more sense than hypothetical rhetoric?
Is This a Covered Cost in an Insurance Claim?
Naturally – DSi cannot and will not suggest what is covered under the terms of an insurance policy. Licenses are required for that.
Nonetheless, it is not uncommon for experts to be involved in an insurance claim, and their fees can be included within the terms of the policy. For instance, an Independent Adjuster charges the insurance company for their adjusting services. He is an expert, and contracts his services to the insurance carrier. His fees may be covered under something called “Claims Preparation” and does not count against the Policyholder’s policy limits!
Services from engineers, hygienists and specialized experts are also included in some insurance claim settlement processes and frequently covered under similar allowances.
DSi’s services are considered “specialized experts.” DSi’s testing, documentation and reporting services are frequently necessary to establish the facts associated with the structural repair scope of work.
We encourage Policyholders to include a copy of their agreement with DSi along with all documentation and invoice(s) and payment(s) as an expense in repairing their structure on their insurance claim. The invoice should be included on their “Proof of Loss” document so as to formally report this expense for reimbursement and indemnification.
If you are a general contractor – and are tired of being “bullied” by these unreasonable debater tactics, DSi can provide its services as a third party and you can include DSi’s reports and invoice as a subcontracted service. It is not uncommon for the general contractor to include the usual and customary profit and overhead markups on DSi’s charges. If the insurer declares the documentation to be the contractor’s responsibility or that it is part of their “overhead expenses,” simply explain that the documentation is certainly not an overhead expense as they would NOT have had incurred the expense if it were not for entering into agreement with the Policyholder. It’s an expense to the job. The insurer demands the documentation, insufficiently compensates the contractor for the effort required to produce the necessary documentation and then debates it due to the contractor’s obvious conflict of interest – and therefore subcontracts the inspection and documentation services out to a qualified independent “specialized expert” – just like the mold remediation industry does.
It all makes sense.