A policyholder in South Carolina recently wrote us about a fire claim turned nightmare. When notified of a claim, insurance companies will sometimes send out their preferred vendor as a way to provide fast service but also to control costs and prevent the policyholder from hiring their own vendor, since they have contracted reduced rates with these vendors.

In this case the restoration company seems to be controlling the claim, deciding what is and is not covered and how personal property should be repaired. The policyholder informed us that the restoration company cleaned carpets that were on hardwood floors, ruining them, removed contents and brought them back broken, recommended that burned cabinetry be repaired rather than replaced, left furniture outside where it was rained upon and left windows and doors open causing the property to be vandalized. In the meantime, the insurance company never arranged alternative living conditions for this family. Now the restoration company is demanding money for the cleaning, causing a stalemate.

What I have read here does mirror three fairly significant (six figure) homeowner claims our public adjusters have been involved with within the last 12 months. The common thread seems to be that the insurance industry is using their preferred restoration companies as their adjusters to fix or attempt to settle losses. I suspect the reasons may be financial. By sending out a restoration company it may seem cost effective to lower overhead from having to pay adequately trained in-house claim adjusters independent adjusters to go out and render aid and assistance to the policyholder. By rendering aid and assistance, I mean hands on daily contact, to give advice, instruct and help manage the claim for the policyholders benefit. This service should continue to the very end when the home and contents are repaired and/or restored based on the insurance contract and the applicable laws that may affect the adjusting rules and regulations in the state where the loss occurred. In this case it sounds like the ALE claim was also mishandled or not addressed.

In this matter I did note the carrier sent out an adjuster, but it seems the restoration company is calling a lot of the shots. Clearly, when a policyholder has this type of loss they need and should expect the same treatment the adjuster would want if his or her home experienced the same type of loss.  Unfortunately few insurance companies provide personnel to provide this level of service unless you are with a Chubb type carrier and a few others out there who set high standards for customer service.

Now there is nothing wrong with the insurance industry bringing out restoration firms who are experienced and qualified at fire, water, etc, restoration. However, they should not be relied on to run the claim and attempt to settle the matter for an insurance company. They should be looked on as a tool to help the insurer and the insured understand the scope and potential cost of a loss and render emergency mitigation services. Of course these issues can be very subjective and subject to negotiations and discussions for final settlement. The policyholder needs to have a clear understanding of the adjusting process, their coverage and procedures before any work begins. Particularly if by an insurance company restoration contractor. Any benefit of the doubt on scope or price should be resolved in the policyholders favor.

Yes I agree this insured needs an attorney, and I suspect the attorney will file suit against the carrier and the restoration company. In one of our recent cases, the insurance company dragged the matter out for months, then took the insured’s EUO and finally admitted their restoration company screwed up and wrote a big check. They are now going after their preferred restoration contractor. In another claim we handled, the carrier demanded appraisal (after their restoration company took the insured’s oriental rugs) and have had to pay some significant amounts above their first repair estimates. We are told they will be going after the restoration company once the matter is finally settled.

Finally the third one is heading to litigation as the insurance company vice president admitted they did not have adjusters to handle all of their losses! They too sent out their preferred restoration team and an I/A who botched the handing of the claim. Months later, the company sent out a staff adjuster who showed up for about an hour and left the property. That adjuster has now moved on to another company. All of this could have been avoided had the insurance company representatives shown up in a timely manner and render aid and assistance to their policyholder.

The bottom line is that customer service by experienced and trained people will keep you out of trouble and protect your reputation. Penny wise and pound foolish seems to be in the menu of this toxic stew. Let us know what you think.

If you have questions regarding any property insurance related issues, please call 800.321.4488 or contact us to submit a question to one of our public adjuster or loss assessor experts.