Managed Repair Tips and Some Personal Observations from My Recent Trip to the Caribbean
First I want to share some atmospheric observations and conditions that are clearly changing in the Caribbean and may play into the El Niño, La Niña narrative. On my trip last week to the Leeward Island of St Maarten I had the opportunity to visit with old clients, friends and observe changes that have occurred since my last trip in 2015.
Parts of the Caribbean including the island of St Maarten/St Martin and South America particularly Venezuela have been experiencing severe drought over the last year. The locals I have talked with all contribute this drought to the El Niño weather conditions. But the good news is that the atmosphere seems to be returning to a more normal condition as the rains are returning and at least in the Leeward Islands the vegetation is starting to return to its lush green color one would expect to see on a tropical island. Unfortunately this drought has not been without its cost as many coconut palms and tropical floral have withered and died. This is a result of no measurable rain for a seven-month period.
The other change of significance is the reduction of Sargasso Seaweed that has been fouling the beaches in unprecedented amounts. While the Sargasso Seaweed has always been present, drifting with the currents, there has not been anything like the recent fouling of beaches with wave after wave of this grass piling up, only to be removed in the morning and replaced by another wave by the end of the day. Normally this river of floating grass is carried by the currents well to the south of the Leeward and Windward Islands. But again, El Niño has been blamed for this change and its attendant economic cost for removal, as well as lost tourism revenue as the word spread of the rotten odor and unsightly beaches.
But now the Sargasso grass seems to have abated. Are these two obvious signs a clear indication of a coming La Niña? Well, all I can report is that change is underway in the Caribbean and the locals seem to think and be thankful that El Niño is on its way out. But remember the passing of El Niño may well hearken the return of the La Niña and with it more hurricanes in the Atlantic basin! Here is an article recently run by Bloomberg News As El-Niño Exits, La-Niña Looms and Promises Her Style of Mayhem that seems to give additional credibility to this year’s storm seasons coming weather changes.
So here we are at the cusp of the 2016 hurricane season (6/1/2016) and if (and this is a big if) we are hit, particularly in Florida, the managed repair programs being proposed by homegrown insurers will in my humble opinion be the news maker once the initial media hype about the storm dies down. So as you the policyholder are paying these insurance companies’ premiums, I think it is appropriate to share a few insider secrets on how to deal with the repair folks who are going to be sent out, assuming they are still around after the wind stops blowing to manage the repairs of your property.
But first I want to share with you that our blog articles on managed repairs are getting a lot of attention. One reader, an attorney wrote “lol you are forgetting that the policyholder signed a contract allowing the insurer to make repairs….” Yes I know, policyholders signed the policy application etc. but do they really know what they signed up for? Or worse, are they aware how or what they agreed to will actually work? Of course not! These new programs being proposed have never been tested in a catastrophic event aftermath.
So let’s level the playing field with some tips that have been proposed and passed out by and to insider groups. If you find yourself the victim of a managed repair scheme, remember the following:
- Require an engineer and sealed building plans for the scope of work required. Make sure the seal is an original or raised seal like a notary uses but the seal for construction is for a licensed engineer or architect.
- Require a written warranty from the insurance company. Be sure it details the length of time the warranty will be in effect for both labor and materials and what is or is not covered by the warranty. If appliances or other items such as air conditioners etc. are being replaced, make sure you have the actual factory warranty and keep it in a safe place.
- Require all building permits and sign-off sheets from the building department be posted on the job site and make inspections to note any red tags or failures. Discuss your concerns with the local building department. If no action is taken, make written notes and send a letter certified mail to the chief building official in charge. Remember your building department may be the best cop on the beat for you; you pay your taxes which are used to pay their salary, so use them.
- Require all sub-contractors as well as the general contractor produce insurance certificates for general liability as well as workman’s compensation. If the managed repair contractor/insurance company balks at this, ask for a hold harmless agreement holding you harmless for any and all claims by third parties or workers on your property. If they refuse, this is the time to get your lawyer involved.
- Require a detailed scope of the work to be performed as well as the quality of materials to be used. If there are building code upgrades required and you do not have this coverage, make sure you know what they are and that the managed repair contractor knows what they are and agrees to bill the insurance company, not you and is expected to pay for the total code upgrade cost since the insurance company elected to make the repairs. Understand anti-concurrent causation clauses in your policy. As an example, if there are two causes of a loss that damage your property, one that is covered and the other that is not, make sure you make your managed repair contractor aware that you expect them to make the full repairs not withstanding any anti-consumer clauses that the carrier slipped in the policy.
- Make sure that you actively and timely inspect the repair process. Take photos and videos and make note of the quality of work and products that are being used.
- If mold is an issue, make sure you are aware of any coverage limitations for mold abatement. Realize that most insurance policies have limited mold coverage and in addition the cost of a testing protocol is now subtracted from the coverage limits.
- Finally there should be no reason the managed repair contractor requires you to sign an agreement with his or her company. Their contract is with your insurance company. Having you sign a contract should be a BIG RED FLAG. My guess is that any contractor will attempt to make you liable for costs your insurance company will not pay because of exclusions and limitations in your policy. So remember, if your insurance company bought it, they own it (elected to repair your property) along with their managed repair company.
These are just a few steps/items you need to make sure to watch for. And remember, the fact issues of your loss will likely be different as will be your coverage. This managed repair program is a slippery slope and do not be surprised if despite the fact you are being told your carrier will take care of the repairs, you will be asked to pay out-of-pocket for items that the little print says is not covered but will need to be fixed in order to get a final certificate of occupancy from your local building officials.
In closing, remember some of the verifiable weather conditions I wrote about? Most experts now seem to be in agreement that La Niña is coming and with it a greater chance of a more active hurricane season. Where there is little agreement, is how the proposed managed repair programs that you are paying for will hold up. It’s still early, so if you don’t understand how the managed repair scheme is suppose to work, now is the time to dig into the details, ask questions, get answers in writing from your agent, broker and the insurance company now.
Let us know what you think?