Most homeowners and business people do not understand the complexities of estimating repair costs. Even with a policy in-hand, there is much to be interpreted and many unique factors that can impact each claim.

As the recovery process for Hurricane Irma continues, we’ve received anecdotal evidence from independent adjusters who are telling us they are submitting their estimates and reports only to have the carriers send them back or make in-house changes without their knowledge. Basically they find out the estimate they wrote was chopped up to save the carrier money. This is not happening everywhere, but enough to cause concern.  

Determining repair costs is a complicated and sometimes technical process that is dependent on interpretation of coverage issues but also on how certain things like depreciation and “true” replacement cost are derived. When you’ve been in the business as long as me, you see lots of interesting manipulations of repair estimates. 

A recent white paper by Bracken Engineering (highly regarded by insurance carriers) called Storm Damage Repairs & Requirements in the State of Florida sheds light on factors impacting repair estimates. While somewhat technical, it’s a great guide to understanding how to properly align your claim and avoid any issues down the road, especially if you wind up in a dispute over loss and damages.  

The key "take-away" for me in terms of claim preparation is as follows:

"The repair cost must include all of the expenses associated with returning the structure to the pre-event (pre-damage) condition.  This includes labor, materials, overhead and profit.  These figures must be calculated at a fair market value, even if materials could be acquired at a discount or the owner contemplated performing the work themselves.  In this way, there is no advantage given to someone who can perform the work versus someone else with identical damage that must pay a contractor at market rates.  There are certain costs, however, that are allowed to be exempt from the calculations, including the costs associated with repairing existing health, sanitary or safety code violations identified by the local authority.  Likewise, the costs to produce plans, specifications, surveys, building permit fees and items not considered to be permanently built-in may be excluded from the cost calculations.  On the other hand, costs associated with built-in features such as light fixtures, built-in appliances, heating and air conditioning equipment and demolition costs other than debris removal are to be considered when determining if Substantial Damage has occurred.  It should also be noted what the cost is to repair the damage in order to restore the structure to the conditions prior to the storm.  In other words, one cannot downgrade or reduce the amount of repair in an attempt to bring the value of storm damage repair below a Substantial Damage threshold.  

If you feel you are not getting a fair value for your claim and your independent contractor estimates are confirming a large gap between what the insurance company is offering you and the cost of repair, consider seeking professional help to review and negotiate your claim settlement.  

If you have questions regarding any property insurance related issue caused by Hurricane Irma please call 800-321-4488 or contact a licensed Florida Public Adjuster to submit a question to one of our insurance claim experts.