Commercial Adjuster Shenanigans

We have been working with a customer for 5 months to get his roof approved.
About 6 weeks ago, insurance adjusters bring in a large national contractor to low bid the job.

They provided a 9 line item estimate on a 300 square job (vs our 50+ line item estimate) with the notation that only items specifically listed were included. But every time they were involved in a discussion of scope they said everything was included.

On four separate occasions, we informed the adjuster and the other company that we had a signed contract with the customer. On all four occasions, adjuster told the customer he could back out of the contract and go with their low bid contractor. I called them on the carpet each time, but they kept telling our customer he didn’t have to go with us.

The customer has been rock solid behind us the entire time.

Our bid was 7% higher ($30,000) on a $500,000 claim.

Today the adjuster sent an email to our client stating the other companies bid was an 11% discount, and ours was a 4% discount. “The insurance company has advised that since XXX is willing to do the work and their bid is a qualified bid, they will likely not pay more than the amount presented in the attached bid from XXX. Please with free to discuss the carriers position with [Our Company] and advise if they are willing to perform the repairs based on the cost outlined on the attached estimate from XXX”

Our customer is going with us.
Does our customer have to accept the low bid pricing of a contractor that they were very uncomfortable with?
Is there a credible argument we can make with the carrier to get them to accept our pricing?
or are we just stuck.

We will make money at their price, but the whole thing has left a bad taste in my mouth that the insurance company can attempt to undermine our relationship with the customer with such impunity, and then bully them into accepting the lower bid.

Any advice is welcome.
Thanks,

Our customer is going with us.

“The insurance company has advised that since XXX is willing to do the work and their bid is a qualified bid, they will likely not pay more than the amount presented in the attached bid from XXX. Please with free to discuss the carriers position with [Our Company] and advise if they are willing to perform the repairs based on the cost outlined on the attached estimate from XXX”

Does our customer have to accept the low bid pricing of a contractor that they were very uncomfortable with? No.

They just said they are increasing the deductible for the client. They also just asked if you’d lower your price. Just say no, of course.

BTW, suddenly lowering your price is like saying, “I’m sorry my adjuster, I charge too much and will now lower my price to your figure since mine was all wrong.”

Likely, your bid was on XM8? and the nat co on ins co preferred contractor list…

If you went with XM8 pricing and did not adjust upwards you were too low to begin with. If you had a signed contract with the insured, the job is yours - contract law! The nosey ill-informed adjuster is attempting to force a breach of your contract between the insured and your company. Ask the insurance adjuster and his/her supervisors if their E&O policies are in force and if they cover them for tortious interference.

Hello again!
I thought I’d troll a bit. This thread caught my eye. Couldnt resist responding.
I read the original post closely. I dont see where it says the adjuster, “nosey ill-informed” or otherwise, is requiring the building owner to use the other contractors. The adjuster only got bids from the other contractors and used those bids to establish the amount of loss. Where in the policy does it say that the insurer has to pay more than the reasonable cost to repair simply because the building owner wants to use an overpriced contractor? It doesnt. The policy requires that the insurer pay the reasonable cost to repair. If the insurer has bids from several contractors for the same work for a lesser amount, it appears that the insurer has established the reasonable cost to repair at that lesser amount. That is what it owes to the building owner. If the building owner wants to use an overpriced contractor, that is his prerogative. And he can pay the difference over the reasonable cost to repair.
As to tortious interference and E&O policies, come on. Seriously? Good luck with that one. Do you really think insurance companies buy E&O insurance?
OK. Bring it on…

Just curious…does "reasonable cost to repair " take into consideration difference in quality?

The bottom line here is the choice does soley belong to the customer. Obviously, you have done a good job at presenting and selling since you said they are going with you. I have seen this situation before. No, you can not just reduce your number to “match”, as you will indeed lose credibility in your original numbers and risk losing the contract. You mentioned their “9 line item bid compared to your 50 line item bid”.

Here’s my question: How many of the 41 lines (over theirs) can you remove to show justification in reducing your bid amount?

Doing so accomplishes several things;
1 - You appear to be flexible and willing to do right by both the customer and insurance company (win-win!)
2 - You maintain credibility with your numbers and finally,
3 - You might be able to reduce your own cost, thus saving some your margin.

Just a thought,
Make it a great day!

@Insurer - I would hardly call us an “over-priced contractor”. The adjuster brought in one contractor to provide him a low bid - proof of that is that the original bid was a sparse nine line items. When we would point out that things were not in the bid, he would change his bid, but reduce his prices so that the net claim was the same. The biggest problem I had here is that the adjuster repeatedly suggested to our customer he could break his contract with us.

@ClassAct - the other company added line items each iteration in the process, keeping the net claim the same. We finally insisted on a site meeting with the adjuster to go over line item in our scope - things that the customer was entitled to replace his roof to it’s pre-loss condition. Only then did the other company’s dollar amount come up somewhat.

Yes, we eliminated or reduced items in our bid that did not impact the quality or scope of the work we did.

A learning experience, but I must say I was shocked that an adjuster could so brazenly suggest our customer break a legal contract, not just once, but on repeated occasions.

[quote=“InsurerPerspective”]Hello again!
I thought I’d troll a bit. This thread caught my eye. Couldnt resist responding.
I read the original post closely. I dont see where it says the adjuster, “nosey ill-informed” or otherwise, is requiring the building owner to use the other contractors. The adjuster only got bids from the other contractors and used those bids to establish the amount of loss. Where in the policy does it say that the insurer has to pay more than the reasonable cost to repair simply because the building owner wants to use an overpriced contractor? It doesnt. The policy requires that the insurer pay the reasonable cost to repair. If the insurer has bids from several contractors for the same work for a lesser amount, it appears that the insurer has established the reasonable cost to repair at that lesser amount. That is what it owes to the building owner. If the building owner wants to use an overpriced contractor, that is his prerogative. And he can pay the difference over the reasonable cost to repair.
As to tortious interference and E&O policies, come on. Seriously? Good luck with that one. Do you really think insurance companies buy E&O insurance?
OK. Bring it on…[/quote]

I think you’re on to something. If the insured goes out and solicits another bid from a local, reputable contractor and it is higher than his chosen contractor, does this in turn mean the insurance company should now pay even more than their contractor bid? Do you think for one minute the insurance company will stand behind and warranty the work of their chosen contractor? Do you think they’ll put that guarantee in writing? Since you’re so brilliant in describing their policy, even though you have seen it, can you tell us which page of the insured’s policy states they must accept the dollar amount bid by the insurance company’s chosen contractor? Better than that, can you tell us all which page states they have to accept ANY bids forced upon them by the insurance company?

Any moron could ALWAYS find a couple of companies that will offer low ball bids. That is hardly statistically significant and it most certainly doesn’t establish fair market value. Your argument holds as much water as a leaky roof dude.

[quote=“Authentic_Dad”]…Better than that, can you tell us all which page states they have to accept ANY bids forced upon them by the insurance company?

Any moron could ALWAYS find a couple of companies that will offer low ball bids. That is hardly statistically significant and it most certainly doesn’t establish fair market value. Your argument holds as much water as a leaky roof dude.[/quote]

:lol:

Make it a great day!

[quote=“InsurerPerspective”]Hello again!
I thought I’d troll a bit. This thread caught my eye. Couldnt resist responding.

Perhaps you should have.

I read the original post closely. I dont see where it says the adjuster, “nosey ill-informed” or otherwise, is requiring the building owner to use the other contractors.

You read the original post closely? Perhaps you missed paragraph 3:

I called them on the carpet each time, but they kept telling our customer he didn’t have to go with us.

The adjuster only got bids from the other contractors and used those bids to establish the amount of loss.

What would have happened if the insurance company’s contractor had come back with a bid that was higher than the policyholder’s estimate? Oh, that’s right. You don’t answer questions. You just come in here acting like you are the Albert Einstein of insurance adjusters and then leave with your tail between your legs.

Where in the policy does it say that the insurer has to pay more than the reasonable cost to repair simply because the building owner wants to use an overpriced contractor? It doesnt. The policy requires that the insurer pay the reasonable cost to repair.

Where in ANY insurance policy does it EVER mention the term “reasonable cost?” That term is a figment of your imagination.

Let me offer you some more education, Einstein. You apparently didn’t learn your lesson the last time you visited. I will first offer you language from the loss settlement provision of a homeowners policy:

“When the repair or replacement is actually completed, we will pay the covered additional amount you actually and necessarily spend to repair or replace the damaged part of the property, . . .”

From a commercial policy:

“Pay the cost of repairing or replacing the lost or damaged property.”

It also states:

We will determine the value of lost or damaged property, or the cost of its repair or replacement, in accordance with the applicable terms of the Valuation Condition in this Coverage Form.

Now what does the Valuation Condition state?

Valuation
We will determine the value of Covered Property in the event of loss or damage as follows:
a. At actual cash value as of the time of loss or damage

I find it rather amusing that I can go in and read the actual loss settlement provisions of an insurance policy, provisions which you claim to know so well, and not even find the phrase “reasonable cost” which you claim to exist.

What exactly is “actual cash value?” We know how to arrive at actual cash value. It is replacement cost less depreciation. But what is replacement cost?

Replacement cost is the actual cost of repair or replacement without deduction for depreciation. [Ditch v. Yorktowne Mut. Ins. Co., 343 Pa. Super. 22 (Pa. Super. Ct. 1985)].

Well, here we have a state Superior Court defining replacement cost not as the “reasonable cost” as you would have us believe, but as the actual cost of repair or replacement.

Now we need to take this one step further and see what “actual cost” means.

I will take the definition of “actual cost” straight from Black’s Law Dictionary”

“The actual price paid for goods by a party, in the case of a real bona fulc (sic., meaning bona fide) purchase, and not the market value of the goods.”

As you can see, the law defines replacement cost as the actual price paid. No where, neither in the insurance policies nor the law, is it ever defined as “reasonable cost.”

If the insurer has bids from several contractors for the same work for a lesser amount, it appears that the insurer has established the reasonable cost to repair at that lesser amount.

No, it just means the pimp has several prostitutes who will do whatever it takes to get their next hit of crack. Dating a prostitute may seem appealing, but she sure isn’t marriage material.

That is what it owes to the building owner.

I think I have already thoroughly covered this.

If the building owner wants to use an overpriced contractor, that is his prerogative. And he can pay the difference over the reasonable cost to repair.

Well, dude, I’ve shown you mine, now you show me yours!

As to tortious interference and E&O policies, come on. Seriously? Good luck with that one. Do you really think insurance companies buy E&O insurance?

I’d address this but I would be wasting my time on you. You come in here spouting misinformation about insurance policies and you claim to be an adjuster. There’s no way I could get you to understand tortious interference with contractual relationships.

One last thing. I would have thought that after our last conversation (well, it really wasn’t a conversation, you ran off after I posted and never did answer my questions) you would have come in here a little better prepared.

I might have let this slide this time, however, I am getting tired of you throwing around that term “overpriced contractor.” Fortunately, there are many fine adjusters out there that you don’t even hold a candle too. I deal with them day in and day out and we get things resolved the way they should be. They are true professionals and they know their stuff. Apparently, the saying that the fruit doesn’t fall far from the tree is not entirely correct in all circumstances.

OK. Bring it on…

While you’re here perhaps you might want to revisit this thread and answer the few questions I posed to you before.

http://www.roofing.com/forum/trying-to-kill-supplements-t12473.html

Oh, never mind. Those were rhetorical questions. Just in case you don’t know, a rhetorical question is a question asked for a purpose other than to obtain the information the question asks.

An example of a rhetorical question would be “Why are you so stupid?”
[/quote]

1 Like

dstew, I wish I could click thumbs up 10 x for that post!

[quote=“InsurerPerspective”]As to tortious interference and E&O policies, come on. Seriously? Good luck with that one. Do you really think insurance companies buy E&O insurance?
OK. Bring it on…[/quote]

Not speaking of insurance companies needing to purchase E&O, speaking of insurance adjusting firms and their adjusters. The awareness of and incidence of insurance bad faith continues to grow and when consumers realize what their P&C insurance companies are doing to them, they are, through their attorneys, rightly and properly telling their P&C insurance companies, along with staff adjusters and in house claim reps and IA’s and their firms to, indeed, bring it on.

July 29, 2011
Changes in Catastrophe Adjusting Role Affect Carriers
claimsjournal.com/news/natio … 188808.htm

[quote=“kendge”]*We have been working with a customer for 5 months to get his roof approved.
About 6 weeks ago, insurance adjusters bring in a large national contractor to low bid the job…

Any advice is welcome.*
Thanks,[/quote]

Has this project/claim ever been resolved? I’ve read through the responses and there are several responses that hopefully have been helpful to you.

As public adjusters we deal with similar battles on a vast array of claims nationwide from commercial roof damages, water damage, fire, vandalism, theft, etc.

I can appreciate the adjusters approach in that they simply cannot take every contractors estimate and pay it. They need to reach out to someone that they have been told by their employer is trusted. So, the adjuster reaches out to the insurance company’s expert. And they are trained and instructed to pay what their expert has quoted.

It’s more than likely not a price issue that you’re dealing with but rather a scope issue since you’ve stated that you have 50 line items and the insurance contractor has 9. As public adjusters we have a little more leverage than contractors and can tactically get claims paid what the true value of the claim is so that contractors like yourself can effectively complete the repairs.

One of the first things I do when faced with the situation that you are faced with (carrier bringing out their own expert) - is that I advise the insurance company contractor that they are not going to do the work on the project. Normally they are taken back by this but then become resolved to acting as if they don’t care - while clearly they are offended. But the fact of the matter is… they are not going to do the work and I’m not going to pretend that they are because that puts our client at a huge disadvantage.

Once this is clearly understood I then advise them that since they are not doing the work and agree they are not doing the work that their role in the claims process has become that of an appraiser of sorts. That they need to accurately assess the scope of repairs. That they do not get the opportunity to throw in “freebies” to the insurance company nor can they cut corners, lower pricing, give discounts, or plan to supplement the claim… because they’re not doing the work.

Once this has been established then it comes down to an accurate scope of repair. Cost is a separate and distinct issue that an accurate scope of repair usually shortens the gap of cost differences. If there are cost differences then this needs to be accurately documented through quotes for material costs, shipping, rental equipment, permits, etc. But in most circumstances as it seems in yours it is an accurate scope related issue.

I agree that an insurance company should not have to pay more than what they owe. But, I believe that they should pay every single penny of what they do owe. Going out and getting contractors to give them quotes that are low ball every single time especially from contractors that don’t even do the work is very shady. Any good adjuster with integrity and concern for their policyholder would recognize this practice even with their own experts - and would put an end to it. But they don’t… and that is one of the reasons companies like ours are becoming in greater demand.

Hopefully you have come to resolution on this. If not, reach out to us and I’d be glad to give you additional advice or direction.

What is $30,000 on a $500,000 Claim?

Smile, nod and say OK. Align the basic scope to the 9 items so the Field Adjuster can explain the Desk Adjuster and he/ she can move on… so they think…

Tear into the roof, and then Supplement the missing 41 line items as they come up. Get approval as you go. If they are there, they go back- period. If it is high, steep, missing jacks, difficult access, multiple layers, ect ect ect.

The “negotiations” are different when the job is on process. Who sees through walls?

Get approval at every Supplement not when it is all said and done.

KISS.