Insurers Keeping Contractor's Overhead and Profit Schemes

A common problem roofing and general contractors deal with in Texas (and elsewhere) is that insurers like Allstate, Farmers, Safeco, State Farm, and USAA pretend that the primary contractor who has picked up the telephone and gained a signed client, is not “allowed” to estimate in a fair and reasonable manner in their own hometown/market.

How so?

Well, the above insurers claim that they don’t “pay” or “allow” primary/general/roofing contractor overhead and profit business costs on roofing, carpeting, and fencing trade work in Texas, and elsewhere.

On the other hand, Allstate recently published (April, 2007) on their public web-site an example of their estimating “guide” that shows roofing contractor O&P of 29%.

(However, they do not let the public know this is NOT the inherent primary-general contractor O&P owed as part of the roofing components overall replacement cost values).

From my and many other GC’s experience, since the sub-trade O&P costs sits in the estimates’ O&P line item designated for [us] the investing primary/general contractor’s costs, the public is misled to believe they have been indemnified/paid for “contractor” loss *values * properly.

Since this is an obvious attempt to undermine the livelyhood, reputation and market of a local contractor, what do you all feel can be done to expose those corrupt anti-competitive business practices?

When working with insurers, do you realize that they charged for and owe your clients for primary/general contractor AND sub-contractor overhead and profit values as part of the inherent replacement cost values (RCV)/actual cash value (ACV) bundled into the individual roofing, carpet, fencing, drywall, trim, painting, etc. construction components of a structure?

That’s right. ALL individual construction components that make up your/your neighbors homes and business structures have primary-general/sub-trade business costs, necessarily estimated at an agents desk, accounted for to be paid out honestly and mathematically when a covered “loss” occurs.

Sound primary-general contractor business model + sound roofing contractor business model costs goes into estimating insurance premiums on future replacement costs of a structure as a whole, and inherently the individual components contain the same, including the roofing, carpeting, and fencing components.

Insurers and adjusters who hide those basic economic facts from homeowners, judges and juries are in danger of perjury and defrauding the public, due to the fact they know what they owe, no matter how they try to redefine replacement cost values after they have someones money, and at loss claim value recovery time.

How many contractors would go to jail if it could be shown how they estimated a job correctly, for a fair profit margin, and then, intentionally, short changed their clients (invisibly) by 20-51%+ during the work scope?

That said, what are your experiences?

I find that as a legal, fully insured roofing contractor, I am 40- 60% over priced for the ins. cos. Some of it might be sloppy pricing on my part- maybe not itemizing things correctly.
So on some of these jobs, if I got in line w/ their prices, firmed up my estimating and then added 29% like you suggest, I’d say you are pretty much on target

I advise the HO’s that if they have full replacement cost coverage with a typical O-3 policy, that the amount that they spend out of pocket for the job to be done the Right Way by a local establshed contractor is how much the insurance company will inevitably be liable for irregardless of how much their estimate spelled out.

I fin most in house insurance adjusters completely biased and skewed towards protecting their companies interests rather than that of the insured.

I have some additional website links at my office that may be appropriate for this topic, which I will probably get around to posting by Monday night.


Can i have a customer come here and look at it ed?

No Problem. Its for their benefit.


I haven’t charged for over head or profit on any roofing insurance jobs. Had one adjuster add 10% which was nice. One adjuster said he gets sick of roofers asking for o/h and profit since they are charging $300 a square and subbing at $75-100 plus materials.

You are on a different planet doug. At least your ins. cos. are.
I couldn’t get $300 if the roof was upside down here :twisted:
About $260 w/ all of the accessories on a 2 story 10/12 here. 1 layer rip.
(I still price 'em @ $330+ anyway) :slight_smile:

I need to come back a few times to add the links from my favorites, so be patient.


I must have hit the limit for links.


I think this should provide enough reading material for tonight.

I wish there was something I could do for my customers… I am LUCKY to get approx. $ 130.00 per square for my customers here in the Texas market (we were even getting squeezed badly for hurricane work in Beaumont, Texas 1-1/2 to 2 years ago.

I will review the links when I get a chance & see what I can do re: the current AllState estimate I’m trying to deal with right now.

Thank you for the posting on / of this thread & to Ed for the links.

Thank you for your comments to date.

A bit about my background; I live and work in South East Texas, in the Beaumont area. I lived 36 years in Florida, and 13 years in Texas. I have worked insurance related reconstruction projects since March 1992, when a massive hail storm hit central Florida, in the Orlando area, which affected approximately 200,000 homes, plus businesses.

As you may know insurers, adjusters, attorneys, news reporters, researchers, our clients, etc. visit credible sites so as to find information/support for issues they are interested in.

One thing that can be done for customers that have a wind, hail, rain, etc. caused/covered loss claim on their roofing system is to make a hard copy of this information for their benefit, and/or e-mail them the link to this page so as to lay some groundwork that they do not have to take just your word on if some insurers / “adjusters” are passing out synthetic damage scope, reconstruction scope, and irrationally lowball cost scope summaries to their clients.

Too, so as not to be accused of colluding on construction costs / price fixing here, one expert construction cost source that has been around for over 50 years is NCE (National Construction Estimator).

Their new construction / reconstruction “unit” cost data is respected and used by the insurance industry, and a free 30 day trial is available. They also do not charge like MSB does for their IntegriClaim program, or like Xactimate charges. This is not a “plug” for them, it’s just personal experience I’m passing on.

More later…

ClaimHawk, I am interested to know what your end of the business lies in.

Are you a roofing contractor, an independant adjuster, lawyer specializing in insurance litigation…?

You & I have some interesting parallels; I lived in Fort Lauderdale for 25+ years (as well as Winter Park where my Grandmother lived - think the back / East side of Mead Gardens) & have been in the Austin area for 12+ now. You couldn’t pay me to move back to Florida… I think my brother is nuts to stay.

I should quantify my AllState comments just a bit, though. The roof / house where I’m being priced low was discussed briefly here on this site.

[quote]Bottom line: 27.85 installed squares, current is a 3T hip roof, 2 story, insurance’s offer:

$ 3,558.07. [/quote]

I mentioned labor @ $ 35.00 per square (& you’re probably back to seeing this same $$ in Bore-Mont) however I don’t do the staples / tin tabs / nails purchase(s) which would amout to around 2.50 per square additional. I do my starting pay around 45.00 per square & don’t pay for ridge vent cut in’s or a few other extra’s here 'n there. I try to pay the best in this market however I demand a higher level of quality from them & I sort of think it does show through with the end result product.

I can’t expect AllState to pay over the market price for this higher labor charge, however I should expect them to @ least pay a reasonable figure in general - which I am NOT getting on this roof.

Don’t demean your own qualifications. Just because they have a price sheet that shows the lowest price they are willing to pay for the work does not really mean anything.

As long as you are not price-gouging and you are charging standard contractor rates, the HO should get reimbursed for the actual cost for the “Equal” replacement value from your bid. You need to price it out line item by line item though. They will not pay for upraded materials and code upgrades unless they HO has a policy which calls for that.

ClaimHawk has a lot of interesting comments on his/her posts in the one link I sent to you.


Thanks for the comments-The topic was started so that ones can compare experiences, brain-storm and share what helps to counter anti-contractor/anti-consumer conduct by insurers in Texas, and elsewhere,

RanchHand- You said:
“I can’t expect AllState to pay over the market price for this higher labor charge, however I should expect them to @ least pay a reasonable figure in general - which I am NOT getting on this roof.”*

Ed is right, (and it sounds like you all have met both decent and unscrupulous adjusters). You are a major part of “the market”. You know that.

Insurers that try to redefine what the market is, and what market pricing is by cliche’ comments like “we pay the prevailing rate” verses “we pay the prevailing rate range” are simply trying to bluff and bully hard working and honest businessmen into accepting less than fair.

It has worked in some areas, and ruined the livings of ones affected.

When enough new and existing contractors understand that insurance work should be raising their standard of living, not lowering it, they will tell insurers what is fair and reasonable, not the other way around.

In Florida, general, roofing and etc. contractors know this to be true, and dishonest insurers may not like it, but they collect money/premiums to pay out for sound & profitable business models, and the honest ones do not mind paying out accordingly.

From my 24 years of construction experience, with the last 15 years in general construction/reconstruction work that has, in general, centered around working with insured clients, I have had in-depth conversations & negotiations with many insurers, their upper and middle management, and their staff and independent adjuster associates & vendors.

I firmly believe, as many others do, that some of the industry is corrupt. They have carefully sculptured, using legitimate construction cost data from a given zip code/region, actual anticipated reconstruction costs for structures, (verses less expensive replacement costs), and factored homeowners premiums payments accordingly.

However, when paying daily and catastrophe loss claims though, insurers have been caught using NEW construction data verses the (35-50%+) more expensive REconstruction data, which has produced false loss claim values, and more company profits.

Even roofing contractors can agree that demolition and replacement of a roofing system is much more labor & expertise intensive/expensive than a new system, on a new structure, in a new development.

Teill59 mentioned:

“I find that as a legal, fully insured roofing contractor, I am 40- 60% over priced for the ins. cos. Some of it might be sloppy pricing on my part- maybe not itemizing things correctly.”

Craftsman Publishing National Construction Estimator, with the Insurance Repair & Restoration cost book, (reconstruction program, or hard copy book) contains very similar reconstruction costs that insurers use for their loss claim value estimation adjustment factoring, in various areas of the country.

Teill, You may be right where you need to be in your cost estimating. If you are in “the market”, and you are in the pricing range of others in your area, then Allstate, and other insurers, should recognize & honor your price…everyday.

In fact, it may be that Allstate, State Farm, Safeco, USAA, Farmers management and adjusters have stopped messing with some Texas, Florida and California primary/general contractors, and specialty trade contractors, because they do not want to go to jail.

What can be helpful for all construction business contractors who want to enter insurance work, to make the money they should, for the dangerous and financially risky work it is, is to stick to the procedures and market price that is fair…yours.

Don’t gouge, and NEVER be apologetic for what is fair.

Should the adjuster tell you, or your client, “We can get it done for our price”, they can be very much in danger of;

  1. Hinting at filling the role of a contractor, an illegal thing to do/imply in Texas. You can’t both adjust, and act as a contractor.
  2. Trying to squeeze you out of your own market in an anti-trust, illegal kind of manner.
  3. Trying to influence your client to break contract with you, and/or use another contractor.
  4. Trying to subtly suggest your price is “unfair”, when theirs is low, and fixed.
  5. Trying to price fix / unfairly manipulate and undermine your market.
  6. Anti-competitive and economic suppression of your business.
  7. Deceptive trade practices intended to harm you.
  8. Business discrimination against you.
  9. Unfair economic advantage per their actions.
  10. Slick and veiled disparaging remarks that hurt your reputation, and livelihood.
  11. Unfair/fraudulent claim settlement actions against their clients.
  12. Tortuous interference of a contractual relationship.
  13. Other stuff.

I truly believe that both new and seasoned contractors that honestly, candidly and frankly discuss unfair/fraudulent insurer & adjuster conduct can protect their market, and neighbors, against predatory insurers, and the people who support them.

**Is there anyone here that is having an issue, or had an issue, with an adjuster in Texas, or elsewhere? **

P.S. I grew up in Miami, (Hialeah, Miami Lakes, Key Biscayne), and then moved to central Florida. Spent every other summer in Texas. Moved to Texas in 1994 after working Hurricane Andrew for 2+ years.

Due to weather events close to where “home” has been over the last 15 years, I’ve 12 post-catastrophe business markets under my belt.

Based on my (documented) experiences, certain insurers/adjusters are honorable, and some just work the public psyche through their business protocols, and pretend to be. Texas is a unique state that major insurers have benefited from by misleading and lying to their clients.

Work enough insurance work, and it becomes quite clear who is scamming their clients, and their own “adjusters”, and who isn’t.

The scammers need not mess with Texas contractors.

*Note: I’m splitting my post in multiple because for some reason It’s identifying my original post as spam.

ClaimHawk, I have read & soaked up every keystroke.

I agree with you, & have no qualms about going after AllState for a proper payment on this particular house. The customer is also in agreement with my goals, wants to ensure proper payment to me & has done a cursory review of this thread as I’ve already sent him a link (although without registering, which I doubt he will do or NEEDS to do), what can I do to achieve two goals:

  1. Get the proper pricing / payout from AllState.
  2. Get this roof installed within about 2 weeks from today, Monday (ignore the time & date stamp as they seem to be using ScottishSlater’s time zone).

In a bit of a condensed version, I think this is what you’re saying:

***AllState & other insurers are attempting to limit their exposure / payouts by saying “Well, Mr. Customer, get 3 estimates for your work & we reserve the right to pay based on the lowest dollar value of them.”
***AllState & other insurers are attempting to force DOWN the prices they pay by saying to the customers “Yes, you got a price for X amount per square / yard / foot (depending on the work needed) however in our experience for this area we can find someone who will do the same job for [pick a number] less than that figure / the figure of your preferred contractor.”
***AllState & other insurers are attempting to force DOWN the prices they pay by providing estimates based on new construction rates & these rates (obviously) do not account for demolition & other special areas of attention that are typically required on a repair vs. pricing that would be the norm for new construction.

So, if all that is correct & I my customer in this particular claim is willing to assist me in attempting to get additional funds from AllState, what SPECIFICALLY can I do to get these funds from them now that we have agreed upon a base size (they are using 8% waste on a hip vs. the ‘typical’ of closer to 15%)? Are you saying that all I really need to do is have the customer sign a contract for an installed 15% waste @ 150.00 per square + 15.00 per square 2 story & expect AllState to pay the difference on a supplemental because he signed MY contract?

I also realize that what we need is a fair & equitable proper adjustment by the insurers & not collusion between roofers to ask a minimum set price per unit soas to force insurers (or any customer) to pay better pricing on a whole.

BTW, from '89 - 94 I worked in Hialeah Gardens, W side of the Palmetto about 1/2 way between Okechobee & 103rd.

If you ever have a need for a structural engineer specializing in concrete, drop me a line; my brother did the pour on the Miami Heat bassaball AArena & the Florida Panthers hockey arena… still lives in Coconut Creek. I can’t get him to move out here 'cause he usually dives about 4 times a month minimum.

*Note… Akismet says I’m spam. ?? No URL anywhere in my posting. Is it the limited HTML that I’ve now removed?? Grrrrr!

[quote=“twill59”]You are on a different planet doug. At least your ins. cos. are.
I couldn’t get $300 if the roof was upside down here :twisted:
About $260 w/ all of the accessories on a 2 story 10/12 here. 1 layer rip.
(I still price 'em @ $330+ anyway) :)[/quote]

$300 is on the low side for insurance jobs. On 10/12’s most jobs are more like $400 a square. Take for example the last 9/12 roof I did, 33.73sq off 1 layer 37.10sq on, 30 year laminate. The roof was very cut up with four dormers, a chimney, bay window, five pegeon returns, and two ledges, $14,320 State Farm. The ajusters estimate was $10,400, mine was $14,400. The job took 35 2/3sq.

A job comming up for Met Life, 45sq 9/12 one layer hip roof, $24,200 tearing off 30 year laminates and going to install Landmark Premiums.

A job I did last week, 34sq 7/12 40 year laminate one layer, $13,800, Country Insurance.

The job for Wednesday, 37sq 5/12 one layer tearing off three tab putting down Landmark 30’s free upgrade, $13,700, Western Mutual. The home owner said the insurance was allowing just under $6K for the shingles and I said, “yes, plus all the other stuff”. He said that when the roof was tore off and replaced 14 years ago it cost him $6K!!! The only thing I could tell him was I was going to put down better shingles, install more air vent’s, and install gutter screens. He had an immigrant roofer come by and said he could do the job for $8,500. A million dollar property and no mortgage payment, must be nice!!! Insurnace compnay cut the check for the whole amount with the home owners and myself on the check.

The more the insurance companies work with me the more they pay my prices.

*“Are you saying that all I really need to do is have the customer sign a contract for an installed 15% waste @ 150.00 per square + 15.00 per square 2 story & expect AllState to pay the difference on a
supplemental because he signed MY contract?” *

What has worked for me is proving that I can justify all reconstruction protocols, including the cut waste factor, and that the market pricing range for the quality detail I provide, is fair for our area.

Supplements are rare for my clients projects.

You and I know that one “market” price does not fit all, or else Allstate would not have different quality indemnification policies and appropriate pricing “tiers” available for a given property they insure.

The same goes for individual construction company pricing, and adjusters know this. Get in writing why they feel your established pricing is “unfair”. Ask them to prove by IntegriClaim / NCE Insurance Repair & Renovation Estimator reconstruction data that it is not in the area price range.

Being able to afford the best quality and highest priced construction professionals in an area is what Allstate charged their clients premiums for. They make money by pretending that less than the best in “the market” for their clients is all that they have to pay for.

Wrong. The client was won as fair game, the high quality and the price reflects the local market price range. They need to go sell their story to someone else, or risk unfair trade practice exposure.

Too, their MSB (Marshall Swift & Boeckh) construction data, if not synthetically low to start with, will be the AVERAGE costs of what is fair in Austin / your zip code area.

So, if they are starting with “PURE” average MSB unit cost data, they should be able to go 50% higher, and still be in the price RANGE in Austin, or elsewhere.

However, if they are “tweaking” the MSB data downward 50% from average (replacement/reconstruction) costs in your area, they are not presenting an actuarially fair “average” loss value indemnification picture to their clients, and your pricing is going to seem “unreasonably unfair” by maybe even 100%, or more.

  1. Clients only need 1 fair market estimate.

  2. Honest and seasoned adjusters know this.

  3. Allstate market conduct is exposed everyday.

  4. Trying to price fix is illegal.

  5. The FBI/FTC/DOJ fix price fixers.

ClaimHawk, I’m enjoying your posts & it’s intriguing to me that you have happened along @ a time when I am having my biggest issue to date with any insurer.

2 Years ago when we had a nice 'n tasty hailstorm roll through Central Austin, I did @ least 4 AllState funded projects & didn’t have any problems with proper payment.

It also sounds to me like you have access to the the sorts of figures that Exactimate or IntegriClaim / NCE Insurance Repair & Restoration reconstruction data & what the anticipated price points are.

From the conversation I had last week with the adjuster (independant / contract) his commentary was that he’s merely going by the rates as plugged in by the insurer.

If anyone here happens to have the Home Repair and Remodel 2007 Cost Guide from, I’d be curious to see what they offer for the 78704 zip code. A PM or Email would work great.