Insurance lowering material cost below Xactimate price list

I’m doing a roof for a customer with Liberty Mutual/Safeco. On the estimate they sent they reduced the material cost on the shingles by $10/per square from the Xactimate price list. Under it there is a note that says “This line item includes a shingle material allowance of $68.81 per square, which reflects current market prices in your area. Market prices were verified by Materials Supply Warehouse, LLC. The MSW Managed Material Program allows you or your contractor of choice to have materials delivered directly to your home for installation. For more information on MSW contact them at: or 888-508-5009”.
I looked them up and they have a TERRIBLE reputation. Obviously I’m going to use my regular supplier with whom I have a trusting relationship.
Has anyone fought this successfully before?
I want Xactimate rates period. I can’t stand the thought of being bullied into anything less by these damn insurance companies. I also really care about my customers. We have a policy of upgrading to architectural shingles at cost. So I take the 3 tab material cost and subtract it from the discounted rate we get from our distributer for architectural shingles and that’s all they are responsible for out-of-pocket. This new practice is going to increase the cost of the upgrade to the point that they may not want to pay and we just can’t stomach putting 3 tabs on.

There’s a good discussion on it -here-

We haven’t dealt with it ourselves but from what I’ve seen, that rate is for shingles only. It does not include felt, nails, starter, hip & ridge, delivery, staging shingles on roof. Bill for all that separately and you’ll make up that $10/sq.

This is what we say on our invoices regarding this situation. They come back and continue to fight it so you have to, too.

The Materials Supply Warehouse, LLC price is for the SHINGLES ONLY and does not include felt, starter, hip and ridge, fasteners, delivery and roof load. As per Xactimate: “Note: Roofing material components are surveyed as a “roof-stocked” price (as opposed to in-store shelf price). Consideration may be needed for situations such as abnormal material delivery/pick-up, delivery outside of normal range, small material quantities, etc. that result in additional costs. The estimator should verify that the material allowance is sufficient for the actual material and associated delivery costs.” Either the Xactimate price is honored (as listed here) or the above items must be added separately, as per at 877-949-2444.

Here is what I have so far on the letter explaining my supplements for the claim:

Law and Ordinance Coverage Supplement Request:

Gwinnett County has adopted the Georgia Minimum Code. Georgia has designated the 2018 International Building Code as the state minimum codes. The following supplements will need to be approved in order to comply with local building codes.

  1. Ventilation- The building has 2,092 sf of attic space as documented by the gwinnett tax assessor property details (see attachment). Based on the IRC ventilation code the roof requires 1,005 inches of net free ventilation area. The current roof has 4 turtle vents which only provides 240 inches of NFVA. Building code requires only one type of exhaust ventilation be used as all roof elements must be compatible. Therefore the most cost effective (per Xactimate rates) way to get the roof to the required 1,005 NFVA is to remove the 4 turtle vents and install a combination ridge/hip vent. 11 ft of ridge vent at 18 inches NFVA per foot will give the roof 198 NFVA and 67.25 feet of hip vent at 12 inches NFVA per foot will provide the remaining 807 NFVA. The hip vent uses the “continuous ridge vent” line item. I have spoken to Xactimates pricing department and there isn’t a separate line item for hip vents as they are treated the same as the ridge vent when estimating.

  2. Flat Roofing - 1.26 sq is at a 1.4/12 slope. Therefore it must be removed from the asphalt shingle line item and instead be estimated for flat roofing, as code requires a slope of 2/12 or greater for asphalt shingles. An additional layer of base sheet is required because the material is being applied to the original OSB not new OSB. The installation instructions have been attached and installation instructions are required to be followed by the locally enforced building code which has also been attached.

  3. Starter Coarse - IRC code requires that the shingle manufacturer’s installation instructions be followed. Owen’s Corning requires starter coarse to eaves and rake. This cannot be accounted for in the waste factor as Xactimate has different material and labor costs for starter vs 3-tab. (instructions attached)

  4. Hip and Ridge Cap - IRC code requires that the shingle manufacturer’s installation instructions be followed. Owen’s Corning requires hip and ridge cap. This cannot be accounted for in the waste factor as Xactimate has different material and labor costs for ridge cap vs 3-tab. (instructions attached)

  5. Painted Boots - The current boots are custom painted. The new pipe jacks will need to be painted accordingly. This is the only item that is not related to law and ordinance coverage.

So I already have starter and ridge cap. The felt is a separate line item in their estimate so that would already be covered. So that leaves fasteners, delivery and roof load. How would I determine those amounts? Also, any feedback on the rest of the letter would be helpful. I had to teach myself how to supplement so its hard to know if I’m using the best arguments. Every time I look back at a supplement from a few months ago I cringe at what I didn’t know then lol.

I went ahead and sent my supplement request because the customer is in a hurry to get it done. This is what the adjuster sent back:

Good morning. I appreciate you submitting the supplement request however it will not be approved. The estimate provided to our insured includes all necessary items needed to replace the roof. Please note the following.

  1. Asphalt Starter Strip - Starter Strip is included in the waste for this roof estimate. The shingle waste allowed for this roof is sufficient to allow the purchase of starter strip which is less expensive than field shingles. No additional allowance has been made for this item other than the shingle waste factor.

  2. Ridge Cap - Ridge Cap is included in the waste for this roof estimate. The shingle waste allowed for this roof is sufficient to allow the purchase of Ridge Cap which is less expensive than field shingles. No additional allowance has been made for this item other than the shingle waste factor.

    Per Xactimate: Note: Ridge-cap shingles are cut from field shingles by the installers. Use of this item should be limited to situations where ridge cap is not already accounted for within a waste factor relative to the field shingles. Roofers will generally include the removal of the ridge cap in the per square removal price of the shingles. This removal activity is intended to be used when the ridge cap is being removed and the adjacent field shingles are not being removed.

  3. We owe for components on the roof. We do not owe additional ventilation of the roof. This is not code for re-roofing of the home.

Please be clear that your supplement request has be denied (noted in case it was not specifically addressed above). The Liberty Mutual estimate is in line for the necessary repairs.

How the hell am I supposed to handle this? She didn’t even address the fact that she wants me to shingle on a 1.4/12 slope roof.

By their wording, it looks like they are denying all the supplements, even though they did not address everything. Know that this is not a final answer and you can fight back. Request a supervisor if you feel the adjuster is incorrect but refuses to change it. Those notes look like they are cut and pasted from a script and they don’t really know what they are talking about, especially saying ridge cap is less expensive than field shingles.

[Here’s] a good thread about ridge and starter.

If you have a copy of your local code book, quote the actual sections for flat roof and ventilation. Because they won’t take the time to look through it. Vents are most definitely components of the roof. I would see what you can find in the code book regarding it.

For delivery and fasteners, there’s a ‘custom bid’ line in Xactimate. Nails are roughly 400 nails/sq (5 nails/shingle). I would say $3/sq. What’s the cost of rooftop delivery from your supplier?

I attached all the code sections, installation instructions, vent calculations, and pictures of the roof.

I talked to the top building inspector for the county and he totally agreed on the code requirements. Permits aren’t required for roofing but I ask if I could ask for one anyways. Hopefully I can get an inspector to reject their scope of work.

The regional supervisor is not a fan of mine unfortunately. Our last LM/Safeco Claim got denied for all of the code upgrades so I told the customer to do an Insurance Commissioner complaint. Well the adjuster found out and told me he was going to black ball our company. I record all my calls with the adjusters so I sent a recording of the threat to the supervisor and their presidential service team and they couldn’t care less. I’ve worked with one of Ga’s state senators, that writes all the insurance legislation, and I’m hoping I can get him involved once the election is over and he has more time. It’s just so hard to get the customers to do the DOI complaints, they think their going to get dropped if they do. I’m going to try to get the senator to write legislation that lets contractors complain directly to the insurance commissioner. Why the hell should I have to play nice with the Insurance company when the law is on my side? I refuse to except less than I’m owed for my work if that means they all black ball me then I’d rather find a new line of work. Its just not something my personality will allow me to accept.

The black balling is just a scare tactic. As long as you are properly licensed, etc, they have no authority in who does the roof. That is between you and the home owner. I guess they could refuse to talk to you and you’ll have to run everything through the HO, but I doubt it. With that response, I think you were going down the right path.

If you really are getting nowhere, the next step would be to have an attorney write up a letter to send to the IC. The threat of legal action is usually enough to get them to negotiate. It might cost around $300. I would bill it back to the IC since they now made it a required part of the job.

A note about recording calls. While Georgia is a one-party consent state, you will often be speaking to adjusters from out of state. If one of those is a two-party state, things can get dicey. Also, even if you can legally record it, it’s often not admissible in court unless both parties consented. Recording calls is probably a good thing to do, but if you ever plan to use it as evidence, you should be letting them know the call is recorded.

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That line item in Xactimate includes all of the same items the regular line item includes which is felt and nails with RFG 300 and just nails with RFG 300S. All they do is go into the components tab in Xactimate and change the material price for the shingles only to come up with the new price for the total square. Just wanted to give you accurate information on how it is done so that you can formulate your own attack plan and not look foolish when you try and bill for nails nd they are correct in their answer when they say that price includes nails. It does include nails you just cannot buy them from the MSW program. So you have to end up making 2 calls to 2 different supply houses, oh and the MSW does not come back out to pick up extra bundles that you would have usually went and returned, so sharpen your calculating pencil.

I have always wondered about the homeowners reluctance when it comes to their insurance company. Why would you be afraid of being dropped by a piece of crap insurance company anyway? Who cares if a horrible company wants to drop you? Then sue them if they drop you for fighting them. It blows my mind how scared homeowners are when it comes to their POS insurance company.

Because its not easy to pick up a new home owners policy
Around here if your property is not in great shape.
They will not only force you to get a new roof,
They will question your plumbing, electrical and more.
It works for newer homes.
Old homes are more difficult to just jump to another policy.

There are way to many insurance companies, and new ones popping up all the time, who are willing to provide coverage. There is no reason to be scared. Again if an insurance company drops you because you fight them on their pitiful claim then you can sue them based on their own contract, policy, and win. Then you will not have to worry about insurance anymore. If you fight them the right way for the wrongs they do the vast majority of times you win, there is no logical reason to be so scared of them.

You are correct. MSW pricing is shingles only. The policy covers direct physical damage, not how much you believe you should be paid for it. Poor example, but if MSW sells shingles at $15 a sq in an area, that’s what will be reflected on the estimate and regular XM8 labor pricing for that area will be used. They wont pay $90 a sq just because you buy your stuff elsewhere.

Good luck with that.

Code upgrade only applies in jurisdictions where the code is actually enforced. If its not enforced by the city/county (ie permits, city inspections-like Florida for example) all the IRC stuff goes out the window.

I’ve read all the case law on this issue and the courts option has been that contractors must follow code regardless of whether its locally enforced. No direct action from local government is required to invoke law and ordinance coverage. My insurance commissioner office is aware of the case law and follows those precidents when investing complaints. If permits are not required for roofing, I’m finding they will allow me to get one anyways. As long as you’re willing to pay the fee then what do they care, right?
Every ordinance adopting the IRC, that I’ve ever read, says the international codes must be enforced "as if written herein ". So its pretty easy to make a case to the inspector that they should make it clear in the report that the IRC codes have to be followed.

No, you haven’t read all the case law on this issue for all jurisdictions. Contractors should follow the code yes. But often don’t unless there is an inspection. On HO3 policies it clearly states that code upgrade only if enforced and incurred. Thusly the carrier wouldn’t be responsible for those upgrades, the policy holder would be.

“Locally enforced” isn’t the same as required for a permit. I’ve found that interpretation of enforcement in every appeals case where an insurer tried to deny L&O coverage because they felt the building codes weren’t being enforced. If its a mandatory code that’s been adopted by the jurisdiction it is automatically viewed as “enforced”. I don’t need to go hunting for opinions by city or county courts because all appellate court opinions are made by state level courts or higher. Once multiple appellant courts come to the same conclusion, its a done deal and lower courts will respect that interpretation of the law rather than risk being overturned. Its adjusters that have the wrong definition of locally enforced. Their interpretation could only be applied if you’re talking about permissive codes but not mandatory codes.The only reason I’m turning to voluntary building permits is that its easier to convince the customer to go that route vs filling a complaint with the insurance commissioner.

It’s black and white in the policy. They literally do have to go hunting for enforcement. The policy doesn’t go into permissive or not. It’s not ambiguous. I would love to know what state and court decisions you are referring to since clearly you are familiar with all appellate decisions across the country. None of that even matters unless the matter is litigated.

State Farm Fire and Casualty Company v. Metropolitan Dade County

Bischel v. Fire Insurance Exchange

These are the two decisions that the state insurance commissioners go by when they investigate these complaints. I volunteer with a lobbying organization (health care related) that attends the National Association of Insurance Commissioners meetings and I’ve asked the investigators from all over about this issue. If its a mandatory code in the jurisdiction then it qualifies as locally enforced period. If that’s the only argument the insurer has for refusing to pay for code upgrades, then they will order the insurer to honor the coverage. The problem is that people so rarely exercise their right to have their claim investigated that most adjusters are never confronted.