On Property Insurance Claim Tips Blog

The Unlicensed Practice of Public Adjusting – A Restoration Contractor Responds

Our blog of August 5, The Unlicesed Practice of Public Adjusting – The Claims Keep Rolling In  continues to receive comments from many viewpoints and we appreciate the feedback and dialogue in hopes of responsibly addressing the issue. In an attempt to give fair and balanced coverage to the issue, we publish below a comment from Mr. Ron Reese of First General Property Restoration who operates out of Idaho.  

I thank Mr. Reese for the time he put into the reply.

From Mr. Ron Reese:  

I happened across the blog piece written by Dick Tutwiler posted on Facebook by Peter Crosa today.  I responded to Mr.Tutwiler with a slightly caustic email suggesting the piece was “pretty self- serving….”.  To Mr. Tutwiler’s credit he responded almost immediately and offered me the opportunity to respond and have my response posted on his blogsite.  I appreciate the opportunity.

I should start by saying I’m not from Florida and in fact as near as I know we don’t have a single public adjuster registered in our state.  I guess I do generically qualify as a part of the “explosion of quasi-adjusters in the de facto public adjusting business or put another way, folks without a license or regulatory oversight”… “a.k.a., water extracting or restoration companies and contractors who are preying on both consumers and insurance companies by inflating water losses and, get this, hijacking the insured policyholder’s property policy via something know as an “assignment of benefit form.”

Ouch!

I did suggest to Mr. Tutwiler that he had written the blog “with a broad, broad (and slanted) stroke.” 

Early on in my career as a restorer, I was once told that a public adjuster would do incredibly unpleasant things to a snake if someone would just hold it.  While I am sure there are some in the profession that would do just that, I think such stereotyping of an entire class of individuals (whether PA’s or Restoration Contractors) is probably unfair at best.  Now that we have set those ugly stereotypes aside, I’d like to look at some of the reasons an assignment of benefit is the friend of many property owners and contractors.

First of all, an assignment of the proceeds of a claim is nothing more than the assignment of a debt from one party to another.  The property owner is the creditor and the insurer is the debtor.  The debt is the dollar value of the claim and the homeowner assigns that value in exchange for services provided. The assignment does nothing inherently to inflate the cost of a claim.  The risk of issuing the policy is not affected by an assignment of a claim (or more correctly, a choice in action), because the terms of the policy are already established, the event has occurred and all that is changes is the party having a right to the funds from the already established claim of the already defined risk . 

I can imagine that the assignment is a hotly debated issue in Florida, as elsewhere. An unscrupulous insurer would probably rather deal with a naïve property owner when it comes to accurately identifying and restoring property damage than either a more knowledgeable restorer (or even a Public Adjuster). Some, again unscrupulous, insurers negotiate every detail of a property claim with the restorer, until there is a dispute and then claim there is “no contract” between the insurer and contractor.  It is a game played every day.

I am a little confused by the logic that “one national carrier would not re-enter the Florida market unless the issue was reformed,” but the “insurance folks” send out a “preferred contractor” who, apparently with the most devious of intentions makes the property owner sign a “work authorization” containing an assignment that says the money that is paid for work done on the claim should be directed to the contractor performing the work.  Imagine the horror. But I am still confused. How did money talk in stopping this “reform”?  Are the insurers and the contractors in cahoots or at odds over this dastardly practice? 

It’s true, “the contractor will tell you they need to get paid”.  While I don’t know that you “can’t trust anyone,” as a contractor with three plus decades in the business I do know you can’t trust everyone.  The scenario that precedes the signing of a work authorization (and an assignment) often goes something like this:

It’s 10pm on a Friday night.  Someone whom I’ve never met calls, frantic that there is a flood in their home.  We dispatch a crew that we are paying a premium for being on-call in a truck that we have invested tens of thousands of dollars in full of equipment that we likewise invested substantial money in to begin work on what may be a very upscale property where we have no knowledge whether the owner is underwater on their mortgage, behind on their car payments or up to their necks in credit card debt because we can’t very well run a credit report before we go.  We are going to incur sometimes substantial expense, pay our crews and hope that the homeowner’s insurance policy will stand for the reasonable costs (most often dictated by a pricing database owned by a organization with less than an arm length’s distance from the insurer that we have little ability to influence).  We could just hope that if the policy holder decides that they’d rather buy lottery tickets with the proceeds of the check when it comes because the insurer won’t put our name on the check and try to put a lien on the property (that the bank is already in the process of repossessing) and where there are already several creditors in a superior positions or we could require an assignment of the proceeds to provide security for the resources expended in the insured’s behalf.

The idea that the “water loss now becomes whatever the contractor can get away with” is a canard.  Yes if the insurer disagrees “the contractor can sue”, etc. but that is no different than if there is no assignment and if there happens to be an unscrupulous insurer, instead of the unscrupulous contractor. With an assignment, the homeowner is spared the legal hassle of having lien on their house or perhaps an entire condominium association dragged into the battle.  

The quote from Mr. Walton that the blog piece closes with appears to conflate the issue of liens with the issue of assignments. With an assignment, the homeowner should, in fact, be spared from the anguish accompanying recourse if there is a challenge to payment of a billing.

I understand your anger at what you “believe to be unconstitutional legislation regarding the solicitation of business by public adjusters, prohibitions making it uneconomical to assist policyholders who are covered by Citizens Insurance Company, and sundry rules and regulations licensed adjusters are required to follow.”  But don’t blame it on restoration contractors.  Sounds like more of a personal problem to me.

Well said and thank you for your comments Ron. I hope that if you are in Florida we can sit down and chat.

I hope our readers weight in and let us know what they think.

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