Xactimate estimators are professionals who use specialized software to create detailed cost estimates for construction projects. These estimates take into account the cost of materials, labor, and other expenses associated with a project, and are used by contractors to bid on and plan for construction jobs.
In recent years, there has been a growing trend towards remote work in the Restoration estimating field. With advances in technology and communication, it is now possible for estimators to work from anywhere in the world, as long as they have a reliable internet connection and the necessary tools and resources.
The focus of this blog post is to provide tips and tricks for succeeding as a remote Xactimate estimator. We will cover topics such as setting up a productive home office, maintaining strong communication and collaboration, and staying motivated and productive. By following these guidelines, you can build a successful career as a remote Xactimate estimator, no matter where you are located.
Setting up a productive home office
One of the key components of succeeding as a remote Xactimate estimator is having a dedicated workspace at home. This could be a spare room or a designated area within a shared space, such as a living room or kitchen.
To create an ergonomic and organized home office, consider the following tips:
Invest in a comfortable and adjustable chair to prevent back and neck strain
Make sure your desk and computer setup are at the proper height to prevent eye strain and wrist discomfort
Keep your workspace free of clutter and distractions
Consider adding plants or other natural elements to your office to improve air quality and create a calming atmosphere
In addition to physical comfort and organization, there are certain tools and technologies that can help make remote work more efficient. These may include:
A high-quality computer and fast internet connection
A reliable backup system, such as an external hard drive or cloud storage service
Communication and collaboration tools, such as video conferencing software and project management platforms
A virtual private network (VPN) to protect your data and maintain privacy while working online
By setting up a productive home office and investing in the right tools and technologies, you can create a comfortable and efficient work environment that enables you to be more effective as a remote Xactimate estimator.
Maintaining strong communication and collaboration
Effective communication and collaboration are crucial for success as a remote Xactimate estimator. Here are some tips for staying in touch with team members and clients:
Set regular check-ins with your team and clients, whether through phone calls, video conferences, or email updates
Use project management software to keep track of tasks and deadlines, and to share progress updates with your team
Keep an open-door policy by making yourself available for communication during business hours, even if you are working remotely
Use video conferencing software to have face-to-face meetings and discussions, as this can help to build stronger professional relationships and improve communication
To effectively collaborate with your team, consider the following best practices:
Set clear expectations and guidelines for communication and collaboration
Use shared documents and project management software to ensure that everyone has access to the same information and can contribute to projects in real-time
Encourage open and honest communication, and be open to feedback and suggestions from team members
Encourage team members to work together and help each other out, even if they are not in the same physical location
By maintaining strong communication and collaboration, you can ensure that your team is aligned and working towards common goals, which is essential for success as a remote Xactimate estimator.
Staying motivated and productive
Remote work can have its challenges, and one of the biggest challenges is staying motivated and productive. Here are some strategies for setting and achieving goals as a remote Xactimate estimator:
Set clear and specific goals for yourself, and break them down into smaller, achievable tasks
Use a planner or project management software to track your progress and stay on track
Create a schedule for yourself and stick to it as much as possible
Take regular breaks to rest and recharge, and make time for activities that you enjoy
Find ways to stay engaged and motivated, such as joining professional organizations or networking with other estimators in your field
To maintain a healthy work-life balance as a remote Xactimate estimator, consider the following tips:
Set boundaries between work and personal time, and respect those boundaries
Make time for self-care, such as exercise, healthy eating, and relaxation
Take advantage of the flexibility of remote work by scheduling time off and vacations when it is convenient for you
Find ways to stay connected with friends and family, even if you are not physically present with them
By staying motivated and productive, and maintaining a healthy work-life balance, you can build a successful and fulfilling career as a remote Xactimate estimator.
In this blog post, we have covered several key tips and tricks for succeeding as a remote Xactimate estimator. These include setting up a productive home office, maintaining strong communication and collaboration, and staying motivated and productive. By following these guidelines, you can build a successful career as a remote Xactimate estimator, no matter where you are located.
We encourage you to try out these tips and see how they work for you. With the right tools and mindset, you can overcome the challenges of remote work and achieve great success as a remote Xactimate estimator.
As the trend towards remote work continues to grow in the construction industry, we believe that the future is bright for remote Xactimate estimators. With the right skills and approach, you can build a fulfilling and lucrative career in this field, no matter where you are located.
Cooking: Unattended cooking is a leading cause of house fires. It is important to stay in the kitchen when cooking, especially when using the stovetop. Keep flammable materials, such as oven mitts and towels, away from the stove. Make sure to pay attention to what you are cooking, and if you need to step away for any reason, turn off the stove or oven. It is also a good idea to keep a fire extinguisher in the kitchen in case of any accidental fires.
Heating: Improper use of heating equipment, such as wood stoves and space heaters, can also cause house fires. Make sure to follow the manufacturer’s instructions for use and keep flammable materials at a safe distance. If you are using a wood stove, make sure that the chimney is clean and in good repair to prevent a chimney fire. It is also important to turn off space heaters when they are not in use or when you are not in the room with them.
Electrical: Electrical problems, such as faulty wiring or overloaded outlets, can also cause house fires. Make sure to use proper electrical outlets and extension cords, and have your wiring checked regularly by a professional. If you notice any flickering lights or outlets that are hot to the touch, it is important to have them checked out as soon as possible to prevent a potential fire.
Smoking: Smoking is another leading cause of house fires. It is important to properly extinguish cigarettes and to never smoke in bed or while drowsy. It is also a good idea to designate a specific outdoor area for smoking to reduce the risk of a fire inside the home.
Candles: Candles should always be used with caution. Make sure to keep them away from flammable materials and never leave them unattended. If you are using candles, it is a good idea to blow them out before going to bed or leaving the room.
Other Potential Risks
In addition to the common causes of house fires listed above, there are also other potential risks to be aware of. For example, leaving appliances, such as a toaster or iron, on and unattended can be a fire hazard. It is important to turn off and unplug appliances when they are not in use.
Another potential risk is hoarding, which can create cluttered and hazardous living conditions. If you or someone you know struggles with hoarding, it is important to seek help and take steps to declutter and organize the living space to reduce the risk of a fire.
It is also important to be aware of the potential for natural disasters, such as wildfires and lightning strikes, to cause house fires. If you live in an area at risk for these types of disasters, it is a good idea to have a plan in place and to take steps to protect your home. This can include trimming trees and vegetation around the property, installing lightning rods, and having a supply of sand or fire retardant on hand to use in case of a wildfire.
Protecting Your Home and Loved Ones
The average cost per fire incident in the United States is $35,000, according to the NFPA. However, this figure only represents the direct property damages caused by the fire. It does not include indirect costs such as temporary housing, loss of income, or the emotional toll of experiencing a fire. The emotional impact of a house fire can be significant, and it is important to take care of your mental health and seek support if needed.
Tips for Fire Prevention
Install smoke detectors on every level of your home and in each bedroom
Keep a fire extinguisher on hand and make sure everyone in the household knows how to use it
Create and practice an evacuation plan with your family
Stay in the kitchen when cooking, especially when using the stovetop
Follow the manufacturer’s instructions for use when using heating equipment
Have your wiring checked regularly by a professional
Properly extinguish cigarettes and never smoke in bed or while drowsy
Use candles with caution and never leave them unattended
Turn off and unplug appliances when not in use
Seek help and declutter if you or someone you know struggles with hoarding
Take steps to protect your home from natural disasters, such as trimming trees and vegetation and installing lightning rods
By following these tips and being aware of the common causes of house fires, you can help protect your home and loved ones from the dangers of house fires.
In a world where it feels as if everything is out of control, we must step back and consider what it is that we CAN control. While cost controls are a given, most “restoration” contractors have forgotten what a contractor does: sets the price.
Double digit inflation combined with global turmoil have put more upward pressure on pricing than most of us have seen in our lifetimes. Protecting profits must be our #1 priority.
With so much OUT of our control, we must exert control where we CAN. Pricing is our RIGHT and now is the time to exercise it.
Xactimate has never included business profit in any line item
The amount of overhead and profit is left up to YOU TO DECIDE
Adjusters claim that profit is included, but this is FALSE
Job-related overhead should be added as a SEPARATE LINE ITEM
Residental supervision is NOT INCLUDED in any line item
It is ON YOU to make sure the business turns a profit
Getting paid the ethical way, fast and in-full. Where do some contractors fall down and make mistakes?
Why insurance companies don’t like to pay for profit. A little history of what happened in the industry. We (contractors) laid an unethical foundation.
Should OMP be negotiable? Why are you entitled to your OMP? How to stand up for your rights and what you charge. Who is your actual client?
Bulk pricing/invoicing. What is it? Does it work? Should I use it?
Advocating for flat rate pricing. How to make them take you seriously. Documentation gets paid. You need a system, like The 24 Hour Tech.
Being a better sales person. Soft sell vs. hard sell. What’s happening with deductibles? The need to remind property owners. Skin in the game and cash flow issues. Getting property owners on your side. What are they in for? How big will their final invoice be?
The need for a clean contract. Have you read your fine print? Don’t give up your power. Don’t use boiler-plate contracts. You don’t need to feel guilty about charging your worth.
Don’t be a Hyundai. What does that mean? The insurance company wants that. Do you?
TPAs are Necessary? We’re all in business to make money. Here’s an alternate opinion.
Insurance Profit Game. We’re certainly not getting the money. The insured isn’t getting the money. Who’s getting the money?
Making the case that CONTRACTORS are the enemy. We know this is ridiculous, but the insurance company paints this picture.
How much money do you need? You should know how much you have spent on a job. You need to make at least that much. Everything else is profit. What if you don’t know? The insurance company knows…
Having bad intentions from the start. This leads to difficult discussions later on. Be honest from the start. Trust us.
Power Question FREE DOWNLOAD. Put the adjustor in his or her place. Tell your client EXACTLY what they will say. Arm them with the right answers.
TOO MUCH TO COVER! Seriously. There’s a ton of golden nuggets in this one.
Ask your insurance company THESE QUESTIONS to get PAID IN FULL, before things get ugly. Request the answers via email so you have documentation for later (especially if this goes to trial!)
Is my claim covered? This seems like a very simple question. If we lived in a perfect world, it would be. You would hope that the answer is “YES!” and you could get down to business. Unfortunately, the answer is usually “Maybe” and leads to an entirely different set of questions. Basically, you want to determine if the insurance company wants to make you whole, or just cover their butts and continue to make money.
What if my loss exceeds my policy limits? Here’s where the picture starts to become more clear. Is the insurance company going to do right by me? Who knows? It could happen.
Are there exclusions in my policy which apply to this claim? Welcome to the insurance game. Unfortunately, they wrote the play book. If there is a legal way for them to wriggle out of paying you, they will likely take it. Find the possible loop-holes now and save yourself a nasty surprise later.
Will my insurance company pay all the necessary costs I incur to put my home back the way it was? Sometimes, a company will pay only the bare minimum. Your house might have had wall-to-wall, plush carpet. Will the restore include this?
Can I choose the contractor to perform the needed repairs to my home? (If not, why?) Crooked insurance companies have led to the rise of “pet contractors.” These mercenaries will do exactly what the insurance company asks them. They will use substandard, cheap materials. They will cut costs by cutting corners. The only way to protect yourself is to hire your own contractor. This is the option we recommend. If you need a recommendation for a reputable contractor, we suggest a member of the Restoration Rebels group.
Is there anything you can tell me that will help to settle this claim? Every insurance company has a quirk or two. We want to dot the i’s and cross the t’s. It is better to jump through the required hoops and get paid in full. You don’t want your claim hung up on a simple form.
When can I expect the first check (how much will it be?) and when will the remaining checks be issued? Like lottery winnings, sometimes a claim is paid out a little at a time. This can be good to get a contractor to work faster. He or she needs to buy equipment and hire a crew. This is a whole lot easier with a little money to grease the wheels.
What if the total of all of the checks is not enough to complete repairs? This is a trick the insurance company might pull on you. They might send a hefty advance and then not follow through with the remaining payments. Keep a running total of what you have received and what you have left to go.
Are you authorized to settle my claim? (Obtain a name, title, phone number, and email of the person that is authorized). Do you know that old trick a used car salesman uses? “I have to go speak to my manager.” Don’t let this happen to you! Make sure you are getting answers from the manager. Full stop.
Insured
Take your power back! Download a copy of these questions as a PDF.
Ben *** put up a great post this afternoon and it’s getting a lot of response including one from me. His question, “What does it really mean to you or us to be a Restoration Rebel?”
I appreciate Ben for doing that. “Thank you!”
There’s some energy and some discussions here. We really need to have this discussion. We need to repeat this discussion over and over because it’s important. What the Restoration Rebels represent is important but don’t be fooled! Just because you’re a member of this page does NOT mean that you’re a Restoration Rebel.
Membership in this page is FREE. We have a very low bar to membership. You need to be a restorer or an associate of some kind. You need to answer three simple questions. That’s it. That’s the only requirement to being on the page.
The requirement to being a Restoration Rebel is very different. Being a Restoration Rebel means putting a target on your back. It means standing up for things. It means fighting for things you believe in. Sometimes, this is in spite of the fact that it’s probably not in your best interest short term.
It’s for the greater good. I’ve been fired from three different companies because of my affiliation with and my voice in this group. I think that qualifies me as a Restoration Rebel. I’ve given up or been forced to give up my livelihood and start over again and go find another way to make a living because of the things i’ve said in regards to insurance claims in this industry as a whole. You know who else qualifies in my mind as a real Restoration Rebel? Ben.
I’m involved in two files with Ben right now. One as a public adjuster and one as an appraiser. The only reason that both of these claims went sideways is because Ben has a target on his back. The carriers (State Farm and Liberty Safeco) saw his company and his name on the file and it went straight off the rails. They put the brakes on everything and these claims are WAY harder now. It is all because they saw his involvement.
I’m not saying they’re harder because of him. In reality, I’ve gone through his paperwork. I’ve seen his stuff. I’ve seen his estimates. He is MORE than fair on the mitigation side. I would challenge anyone in this group to match his level of documentation.
So why does BEN have a have a target on his back?
I’ll tell you why. It’s because he does the right thing every time. He doesn’t take ****. He doesn’t bend on behalf of the carriers. He takes care of his clients. Some times this is to his own detriment. He doesn’t give in to this idea that we have to negotiate every little thing on every single claim.
Guess what? The founders of this group understand on a deep level that it wasn’t broke to start out with. We didn’t break this thing (the insurance industry). I am tired of us just standing by as things get more and more broken.
There are folks in leadership positions today (in the restoration industry) who were there at the beginning. I was just coming up. They were there every step of the way. They lead organizations and associations at every level of this industry. They didn’t do anything then. They’re still not doing anything. We’ve watched the erosion of influence and power of the
contractor in the restoration world. There’s people that have been
sitting by and letting that happen.
This group is standing up and saying “not on my watch” and “all right, that’s enough.” We are going to take our businesses, our industry, and our clients back. We’re going to treat them well. We’re going to treat our clients like customers.
We’re going to tell their insurers what to pay. We’re going to do it because it’s the right thing to do. We’re not “trying to retire” on every single job. We’re just trying to make a living. We’re trying to make people whole. That’s why we’re here in the first place. You don’t exist in the Restoration Industry unless some part of you enjoys making people whole. Some part of you enjoys being of service.
So that’s what it means to me to be a Restoration Rebel. That’s what I’m going to hold you to. If you’re watching this or you’re on the rebel page as a member. You have to make the hard decisions. Do you make decisions that are probably short-term to your detriment but long-term better for the entire industry? Are you even capable of making that type of decision?
What is up, rebels? Mr. McCabe here. Hey, I want to get together next year. And I’m thinking, Boulder, Colorado because that seems to be our theme for the last two years or three years, whatever it is.
I want to tell you a story though.
I had a phone call today and an appraisal meeting today. Me, the umpire, and the opposing.
This file was sent to appraisal by Safeco in June. Safeco did not like one of our members. He’s a member of OUR group in Camas, Washington. Safeco didn’t like their mitigation bill $15,000.
The gist of it was seven days of stabilization while they’re waiting for asbestos results, and four days of drying. $15,000 worth of demo that was done. Not an unreasonable amount.
So it goes to appraisal. I get called in. I charge the homeowner 2500 bucks or so. Six months later, I’m still dealing with these Yahoos. And today, guess what we decided? We decided that the original $15,000 was reasonable.
Shocker (Yes, that is sarcasm).
The mitigation estimate I came up with (based on the information given to me) was $33,000. But here’s the kicker… neither the umpire NOR the opposing appraiser wanted anything to do with my number. And this is why this industry drives me to drink.
I get SO angry because of the injustice level and the unfairness. Here’s an insured. They don’t know anything except for they’re pretty sure they don’t want to go with the vendor that Safeco recommended. So they go find their own vendor. They find a quality vendor. He knows what he’s doing. A guy that documents the hell out of his shit. A guy that’s in THIS group.
He does a bang up job. Not ONLY does he do the mitigation and not get paid for it. He does the repairs. And they’re beautiful. He hasn’t been paid yet. But here we are SIX MONTHS later in the appraisal process. And all Safeco is going to have to pay is the ORIGINAL invoice of 15 grand. The homeowner is OUT. The restoration guy is OUT. He’s had to wait on this money. You know this is dead money to him at this point. Not only did we decide that $15,000 was the right number. The panel (not me) decided that there was “no additional accommodations to be made for my fees.”
This is what’s wrong with the industry today. The fox is guarding the henhouse. The insurance companies are buying lawyers and buying judges and buying legislators and lobbying and submitting legislation for their own purposes. Who’s doing it for US? Nobody. Yeah, talk to me about the IGA layer. Alright, DM me. Here’s the bottom line. The only way this is going to change is if we come together and we act as one.
Time: 3:59
The MINUTE someone goes across the line and says, “Oh, I had a friend who was an adjuster who asked me to give him a number” we’re all in trouble. Don’t give that number. Don’t be the pet contractor. Don’t give these comp bids. Your contractor, not a consultant. You’re not a building consultant. You’re not an adjuster.
I know you got friends in the industry. They aren’t all bad people. I get that. I understand that. But the bottom line is this: a carrier is NOT here to make people whole. The carrier is here to make money.
Stop giving comp bids. Don’t do it ever again. And here’s the reason I want you to give to the adjusters. So here’s what I want you to tell the next adjuster that calls you. He’ll say, “I got this crazy contractor that’s giving me wild numbers. I need you to come give me a comp bit.” I want you to tell them that you’re NOT an adjuster, and you’re NOT a claims consultant. You’re a contractor.
If the insurance company wants to hire you to do that work, you’re more than happy to come give them a number. Otherwise, shut the fuck up and get out of my face. Contractors that give comp bids are eroding the credibility and power of EVERYONE else in this industry.
So stop doing it. I understand WHY you did it. I want you to STOP RIGHT NOW.
All right. Can we agree on that?
I get so emotionally involved in every claim that I’m in. Because I understand at a deep level that the vast majority of my clients cannot afford to have this loss. The vast majority of my clients would not rebuild. If they didn’t have insurance, they would move away (and that happens from time to time).
We can do better. But we can ONLY do it TOGETHER. We can ONLY do it RIGHT HERE. So let’s start RIGHT HERE in the Restoration Rebels Facebook Page. Let’s start here.
Hey, I came up with a new logo. Alright, new logo for the Rebels. Love it, hate it. I don’t know, whatever. But if you like the rebels and what we stand for, change your Facebook profile, your LinkedIn profile to the logo. Let’s make a statement. Even if it’s for the next three weeks, through December, change back to normal in January. I don’t care. We need to send a signal that we are not blind to what’s happening in this industry EVERY SINGLE DAY. And we’re NOT okay with it. Can you do that? I hope we can.
Hope you’re doing well. Have a great day and go get them.
You did the job. You hired the guys. You put in the sweat and tears. Now the insurance company wants to cut you a deal. Wait a second. A deal for who?
Don’t back down. The insurance companies are all bark. If you stand your ground, they will be forced to pay you in full.
Still don’t know how? Well, first you have to pull on your big boy pants. Don’t think you can? We can certainly do it for you. Our pants are big, indeed.
You can roll over and show your belly. You can take the offered 80%. Before you do that, think of how that will affect all of us. The insurance company gets used to screwing the little guy.
We want you to take the third option. We want you to fight back.
Are you ready?
STEP ONE: Set the tone and proper expectations.
The insurance company doesn’t want to pay you in full. Everybody knows that. To think otherwise is just crazy talk.
Out of the gate, they’ll try to pay you less. Here is an example of the types of emails I exchange with insurance companies all the time.
They are quick to throw the first punch.
“Your case is under review” they say. That’s all fine and good. You can review the case as much as you want, but you still need to pay the invoice.
This is not a negotiation. If they want to negotiate, they can take it to court. We know full-well that we would win a case if it went to trial. Properly documented losses never go to trial.
Xactimate shows in detail all the work that was done, along with what that work is worth.
There’s a term for this. It’s an “open and shut case.”
Your first email back to the insurance company should cover the following points:
You signed a contract with the insured.
They are legally not able to change the contract.
The invoice that was sent is for services rendered and is non-negotiable.
If they don’t pay promptly, there will be late fees.
STEP TWO: Maintain pressure and stay the course
Let me repeat: The insurance company does not want to pay you in full. We all know this. We expect this.
Their next email will list some reason why they can’t pay you in full.
This is a lie. They are likely a billion-dollar company. The way they became a billion-dollar company is by ripping off folks like you and me.
Your next email should remain firm and non-negotiable.
Include the following in email #2:
You don’t care what the given reason is.
You signed a contract with the insured, not the carrier.
This is an invoice and not an estimate.
You cannot change your line item by law.
Making a change to a signed contract is a felony.
You stand behind your quality, and you are fully certified.
Remember: The insurance is playing a game with you. They want you to back down and take their low-ball offer. They have no teeth in their threats.
Under no circumstances should you accept their first offer unless that is an offer of payment in full (hey, it could happen!). Or you can decide you are willing to accept it.
STEP THREE: Count Your Folding Money
We aren’t doing anything illegal. We aren’t doing anything immoral. We’re getting paid for work we already performed.
Usually, after putting up a small fight, the insurance company will pay you in full.
Really, it’s not much of a fight.
If they thought they had a leg to stand on, they would take you to court. Since they know they would lose that battle, there is no legal fight.
Most legal battles are not started by the insurance carrier. Instead, they are started by the insured party. When they realize that they’re on hook to pay the contractor invoice, they sue the insurance company to get full restitution. If the insurance company is smart, they would settle at this point.
Some aren’t so smart. As a contractor, that isn’t your fight.
ABOUT CLAIMS DELEGATES
In 2012, Andy McCabe founded the property claim estimating and claims consultancy called Claims Delegates. Claims Delegates retains an army of dedicated professionals who write Xactimate® estimates for contractors, attorneys and adjusters across the country. They also consult on Large Loss and CAT events. They are currently accepting new client applications. Contact us today!
It’s a common dilemma. You had a flood in your house. The insurance company offers $10,000 to fix it. You can’t find a contractor to do the work for under $40,000. You may feel this is unfair. It certainly is. This is also by design. The insurance company makes more money when it pays you less than what you’re OWED.
Insurance companies use a very complicated program called Xactimate. This is also by design. If it were easy to use, the common property owner could master it. Xactimate software is very expensive. If it were affordable, the average property owner would have a copy.
We’re not talking about Microsoft Word, here.
Is it starting to feel like the deck is stacked against you? The insurance company is trying to get you on the ropes. They want you to feel powerless and hopeless. When you’re in that position, you will accept ANY low-ball offer they give you. Hint: You don’t have to accept the first offer.
Time to get US in your corner!
Like it or not, the insurance company uses Xactimate. That is their “language.” Speaking the same language as the insurance company generally leads to bigger and more successful claims. That’s why you need Xactimate.
Don’t let the insurance company tell YOU how much the damage is worth. Let an advocate fight for you. We’re on YOUR side!
We’re industry veterans. We’ve been doing restoration jobs for decades. We know the REAL cost of fixing a damaged property. Hint: The first offer from the insurance company will ALWAYS be less than what they think your claim is worth.
We need to be on the same page when we go to the mat with the insurance company. They have a “professional” quote that says the damage can be fixed for $X. We have a quote that says the damage can be fixed for $Y. Which quote is going to succeed? Hint: The property owner (YOU) have more power than you think you do!
Andy McCabe is a licensed Public Adjuster. He is insured and bonded. He’s been doing this a long time. Let him go after your carrier! Put me in, coach!
I want you to think about the real cost of training a water tech. Has it really sunk in?
I’ve had years of experience with water damage. I’ve trained a lot of water techs. I’ve had a lot of workers quit. When that happens, I’ve had to retrain more workers. It is heart-breaking when those technicians quit.
I get it. It’s a hard job.
Personally, I’ve been through WRT three times. The first time was for my initial training. The second and third time was to update my IIRC certificate (for ServiceMaster).
Did I learn anything new the second and third time?
No!
I did learn one thing: training is expensive.
All three times, the cost to my employer was the same.
I had to get on an airplane. I had to stay in a hotel. I had to eat. I had to get paid a salary. I had to pay for the course.
Those figures change over time, but let’s give it a rough number… $3,000. And I took it three times. That $9,000.
Employers, this one’s for you: Was it worth it?
Not from my perspective. What if I hadn’t learned anything? What if I quit soon after?
I’m just sayin’.
It happens.
What’s the answer?
I came up with a solution. If I was going to go through new technicians, well… like water… then I was going to create a system.
I want every tech to go through a training that was detailed enough to get the job done, and easy enough to finish in one day.
That was the 24-Hour Tech system. I created it first as a simple spreadsheet. Then I expanded it to a full book of lessons and explanations.
This course is not a replacement for WRT (or some other training course). The science is important. I want people to know the science. That’s not what I’m saying here.
I’m saying that a totally green new hire is NOT a candidate for an exclusive, three-day vacation training.
We’re comparing apples and oranges here. Yes, we want to spend $3000 to train a tech who’s been here for 6 months. Right now, we want to spend $250 to train a tech and get him or her to work. In a day, he or she will be ready to gather the data YOU NEED. That will make YOUR life easier. Now you can write a professional quote and get paid.
Why are you spending so much money training new techs?
I care about making YOU money
I was never one for college. It takes five years for a textbook to get into the hands of students. It takes a student four years to graduate. That means they come to you with information that is at least five years out of date (if not nine!).
I don’t need another piece of paper hanging on my wall. I don’t need a text-book education. I need a real-world education and a willingness to work hard. I want to know what I need to know. I want to feed my family. I want to help YOU feed YOUR family.
I want to get the job done, and done right.
That’s what I had in mind when I created the 24-Hour Tech program.
Get in.
Get your learn on.
Get out.
Start making money.
Lifetime access for just $250
If I forgot part of my WRT course, could I go back and ask the instructor? Not likely!
If I forgot a section of the 24-Hour Tech program, could I review it for free? You better believe it!
You have LIFETIME ACCESS for an UNLIMITED number of techs! It is an absolute steal at $250.
A no-brainer.
I will be going back regularly to update the course. I just finished a major update for 2021. I’m getting ready to release version three of the 24-Hour Tech. When it is done, it will be included in the course.
I can also come to you! Do you want 1-on-1 training for your employees?
It’s possible someone shared this link with you and you have no idea who I am.
My name is Andy McCabe. I have been in the restoration industry for about 20 years now. I’ve been the guy crawling through basements at three in the morning. I’ve been the guy training others to crawl through basements at 3am.
I am a licensed adjuster.
I kind of do all the things.
I founded the company Claims Delegates to empower and educate people in disaster restoration. I am an advocate for the insured. I am a peer for the restoration contractor. I am a friend to all.
The other day I did a Matterport scan of a property and there was a couple rooms that I physically couldn’t get myself into. It’s not because I’m six foot seven and 255lb.
[In order to remain strong and viable into the next version of the restoration industry, contractors must change their mindsets and approach to the market. The RESTORATION2.0 Movement advocates changes to six main areas of contractors’ businesses. FNOL is one of them.]
Why do we put up with third-party administrators? These so-called “programs” were put in place for one reason (officially), but we all know what the real reason is.
The “official” reason is to “ensure a better customer experience.” Sure, so why is it that TPAs interact so little with the actual customers? Fact is, contractors and “vendors” deliver the customer experience, so THEY are the ones being managed.
TPAs enforce their program rules ONTO vendors and service providers. Their SLAs (service level agreements) were not designed to deliver better service. These contracts and rules were designed for a completely different goal: reduction of claims severity.
Someone please explain to me how reducing claims severity translates into a better customer experience. The metrics and surveys which point to a “better experience” through reduced cycle times, were designed with the answer in mind – before the question was asked.
I will admit that the less time customers have to actually interact with TPAs and claims departments, the happier they are. That doesn’t mean that reduced cycle time is the best tool to use in order to create satisfied customers.
No, claims departments and carriers have know the truth for a very long time; the shorter the cycle time, the smaller the claim. Small settlements DO NOT necessarily mean happier customers. But we contractors are still playing along with the charade. Why?
I believe the main reason restoration contractors (and body shops and doctors for that matter) still play around with TPAs, HMOs and the like, is because they either 1) don’t know how to get their own customers or 2) can’t see another way of doing business.
It’s all about F.N.O.L. : First Notice of Loss.
You see, service providers have been spoon-fed customers for so long, they’ve forgotten how things worked BEFORE managed repair programs.
Since the carriers, and then programs receive a large percentage of losses FIRST, they are perceived as the holders of the keys. Once contractors get used to having their jobs just appear every day/week, they get lazy and forget how to feed themselves.
Then, just when the contractor has hired staff and added capacity, the program turns off – or goes away completely. Now what?
The new battlefield of restoration is FNOL. He who gets the call first, gets to call the shots. If you caught the fish, would you continue to let someone else tell you how to gut and cook it?
The RESTORATION2.0 Movement is all about helping contractors become more self-sufficient, in order to survive and thrive into the coming next version of insurance repairs. Make no mistake, the future of our industry will look VERY different from today, and likely unrecognizable to some of the old guard.
When it comes down to it, you as a contractor are paying for every lead that comes in the door, no matter the source. First notice of loss will not come easily. Incumbant networks and carriers are actively fighting every day in order to maintain their positions as the “first call” from insured property owners.
They have been telling us contractors for years that without their “programs”, we would all starve. At the same time, they have built up huge organizations to “administer” the claims process. They get First Notice, then sell it to contractors with a markup. So, in a way, we are paying for the privilege of paying for leads… twice.
Now the smart among us understand that there is always an alternative. If you’re going to pay for leads, shouldn’t you understand the FULL costs of every option? Google Adwords is one of my favorite alternate lead sources.
Let’s break down an example of TPA “program” work versus Google Adwords.
Most “managed repair” program fees start at 5% of gross revenue. (We won’t talk about CodeBlue because their fees start at 20%). That means that for every dollar of sales, you give five cents to the TPA – pre-tax.
If your sales volume is $1mm, that means you are paying the TPA $50,000 a year ($4,166/mo) in exchange for these leads. On the surface, this doesn’t sound unreasonable. After all, a full-time sales person is going to cost AT LEAST that much before commissions and overhead expenses. But the up-front fee is only part of the story.
Managed Repair also means managed PRICING. Program contractors are forced to agree to the carrier-specific pricing schedule. In most cases, this means the off-the-shelf Xactimate pricelist for your region. Those of us who know (and teach Xactimate pricing courses), understand that the “standard” pricing from the monopoly-in-Orem makes zero consideration for contractor overhead or profit.
The prices from Xactimate are inclusive of contractors’ COSTS only. It is a very detailed and thorough pricing and estimating system, but it is up to the user (you, the contractor) to customize it to their specific business needs and goals. Xactimate will not tell you how much overhead your business has, nor what an appropriate profit margin for you is. How could they without price fixing?
Smart, proactive contractors understand this and revise their pricing accordingly. If the regional pricelist has zero profit or business overhead built in, then they must build it in. My clients are increasing their pricing by 20-36% depending on their individual needs. And no, there is no rule or law against this. It’s called being a contractor.
If we take our hypothetical $1mm annual revenue and add the Pricelist Penalty of 15% (a conservative guess of what you could be charging if you weren’t on the program), your revenue should have been $1,150,000. Or, put another way, you only made $850,000 compared to your non-managed peers who made a million. Oops, make that $800,000 after the TPA fee.
But wait, we’re not done. There’s also the Program Penalty to consider; aka “We don’t pay for that” rules and guidelines.
How many things can you name off the top of your head that the non-licensed-adjusters at the TPAs say they “don’t pay for” or are “included in your overhead”? I’ll take a quick stab at it:
Mask and Prep for paint
Emergency Service Calls
Mileage or Travel Time
Equipment monitoring and decontamination
Daily progressive cleanup
Professional services like testing, engineering and estimating
Anything above “standard quality” materials
O&P on “one trade” projects
Any drying beyond three days
And on, and on…
What do you believe these things add up to as a percentage of revenue? Can we agree that it is AT LEAST 5%? That’s another $50,000 drag on your top-line revenue.
Finally, there’s the Admin Tax for performing managed repair work. This is the added staff and time needed to administer the program and adhere to the SLAs (service level agreements) and maintain KPI dashboards. Many of you will recognize the POMS scores from programs like Contractor Connection.
The majority of companies I’ve worked for and consulted with have hired at least one full-time person to their administrative staff in order to remain compliant with the various TPA programs they were on. Often I see a dedicated division of people whose sole responsibility is to maintain the button-pushing and paper-processing involved in operating in the managed repair environment.
Let’s pick a fairly conservative Admin Tax rate of 3%. That adds another $30,000 in burden to your business to remain compliant in the TPA environment.
For those of you playing at home, we’re now at a total operations cost of $280,000 (15% Pricing Penalty + 5% TPA fee + 5% Program Penalty + 3% Admin Tax) for the simple pleasure of servicing the managed repair program. All those “steady claims files” are starting to look a little pricey, aren’t they?
So what’s the alternative? There are many that I cover in my RESTORATION2.0 course, but today we’re talking about Google Adwords.
As you can imagine, if it were easy or cheap then everyone would be doing it. But it IS effective. There are national franchise restorers who spend six-and-seven figures monthly on the Google Adwords platform. That doesn’t mean that YOU have to spend $50,000 a month in order to replace the current TPA lead stream you enjoy.
Let’s use a round number of $5,000/mo for your Adwords budget. I know this is higher than the $4,166/mo TPA fee, but I need some round numbers. Keep in mind that we are trying to replace actual revenue of $720,000 – our revenue after fees and burden in a managed repair environment.
While no two ad campaigns are alike or 100% predictable, we can expect a $5k spend to generate about 35 leads per month. If you close 60% of those leads (and really, who couldn’t?) that is a NET of 21 jobs per month.
The average water claim of $3,500 means you could expect revenues on closed jobs of $73,500 per month for an annual revenue of $882,000. Subtract the $60,000 in advertising and you’re at $822,000. That’s a full $102K MORE than your expected post-TPA revenue of $720k.
And that is all before you land that big $250k rebuild or $65k dry-down.
And that’s really it. No program rules, no referral fees; just you fishing for your own work – then eating what you catch.
What happens when a catastrophe hits your area? Turn off your ad campaign. You won’t be forced to take on more work than you can handle. Rest assured: there will NEVER be enough restoration contractors to handle the crap when it hits the fan.
Need more volume? Turn up your ad spend. Period.
This business doesn’t have to be as complicated as we’ve made it out to be. We can simplify our businesses AND make for profit. It’s just the R2.0 way.
If you would like to learn more, and join the movement yourself, check out one of our upcoming courses:
I went on a little rant tonight. After re-reading what I wrote in an email to a prospective client, I decided this might have some value to ya’ll. So here goes.
We’ve had a major ice storm roll through and there are tens of thousands of homes with water damage. I’ve been contacted by several homeowners who’ve recieved their insurance repair estimates and are getting worried. Here’s one of them.
(Names have been redacted to protect the innocent)
Q
“Hi Andy,
Thanks for the info. I recall per our conversation the $XXX fee but do not recall your hourly rate for negotiations or changes with the insurance. I am sure you are great what you do but I need to know what the total will cost me (even if rough estimate) and what I can expect with your results. I know you can’t realistically answer that without inspecting my house and also knowing stance with insurance company. There is also no recourse in your fee if you do not make any headway with insurance. I hope you can appreciate my questions and concerns….I am always a little reluctant to sign on the dotted line with hourly rates and unknown results and timelines. Feel free to call if easier to explain over the phone.”
A
I can appreciate your reluctance. Most folks don’t understand why they need to pay for help, when it’s their insurance company who should be taking care of them. I get it.
I’ve also been in this industry for 18 years. I know that insurance companies are not in the business of paying claims in full if they don’t have to. Right now you don’t have the right tools to make them pay in full.
Do you expect your roof to perform next winter with some patched-in shingles? Will your roofer guarantee that it won’t leak? In my experience, no roofer will stand behind a patch job.
Were your gutters bent and dinged before this storm? Just because they still hold water doesn’t mean they won’t affect your resale value. New gutters are likely justified and covered by your policy.
I’m a busy guy with plenty to do.
I can only estimate as far as I can see. Right now, I can see how much time it will take me to inspect your property and write up a proper estimate of repairs.
What I can’t see is whether [INSURANCE COMPANY] is going to play nice. So there is no guarantee. I can only tell you that in my experience, this claim is woefully deficient. You can’t know how deficient without an apples-to-apples comparison written in the same estimating program.
You pay for good information.
A Public Adjuster will want 15-25% and total control of your claim (and they don’t take projects under $250k). A restoration contractor will want 35% and total control of the claim.
There is an entire industry of contractors who know the game and how to play it. That’s where I come from. If you want to wait a month, you can probably get one of the local restoration companies to come write an estimate for you. They’ll want the entire project in return.
What I’m offering is a realistic estimate for you to use to go back to [INSURANCE COMPANY] and get what you’re owed. That’s all. It’s a starting point. I give you the ammunition and you’re not tied to anything longer term with me. I should charge more for this service, but unfortunately most folks don’t see the value until AFTER.
I’m too busy to come out and take a look in order to provide a more accurate estimate of my ultimate charges.
There are hundreds of contractors in Bend that need my help right now. Everyone thinks they know how insurance claims work, until they actually have to deal with one. I can only work with folks who feel the need and see the value of my advice.
At the risk of giving away even more free advice, consider this. You are going to hire a General Contractor to perform these repairs. The standard markup in the insurance industry is 20% (10% Overhead + 10% Profit). O&P on your project is $3,008.73. And [INSURANCE COMPANY] left it off because they are hoping you don’t know any better.
There. I just made you 3 Grand. That one is on the house.
If you want to move forward with me, just fill out the link I sent and pay the deposit. If not, I’ll see you on the slopes some time.
I was recently asked to speak at a regional claims conference. Two days later, I was uninvited.
The reason? I’m have an adjuster’s license.
At first I wasn’t really bothered by it. I’m a busy guy. I wasn’t overly excited about paying for a plane ticket, hotel room and other travel expenses involved in attending a conference in another state. I anticipated out of pocket costs exceeding $2,000.
I also have a business to run. I’m incredibly busy writing Xactimate estimates for contractors across the country. Taking two days away from producing sheets was guaranteed to reduce the ROI of speaking at the event into the negative. I’m not an in-demand speaker (yet). Folks don’t pay me to go anywhere.
It’s been a couple weeks now. I should be over it. But I’m not. I’m still bothered. Maybe telling this story will help me let it go.
I wasn’t uninvited to the conference simply because I have an adjuster’s license. The real reason is that I have experience adjusting claims for HOMEOWNERS. That’s right; I’ve done some public adjusting. And because I have been a public adjuster, my opinion (and presence) was not welcome at a claims conference.
It sounds more ridiculous and short-sighted after I type it.
Public Adjusters Not Welcome
That’s about the jist of it. I can’t help but feel a kind of discrimination. No, I’m not a minority. I’m a white male, born in the United States. Yet my opinions and presence is not welcome because of who I am.
To be clear, simply being licensed as a “General Adjuster” in the state of Oregon doesn’t necessarily make me a “Public Adjuster.” There is no differentiation between PAs and IAs in my state. I could just have easily said I was an Independent Adjuster without being dishonest. I’m sure that if I worked for Mclarens or Crawford there wouldn’t have been any problems. (Actually, my employer might have payed for my trip)
Instead, I explained my role(s) in the industry as best I could. I write Xactimate estimates for contractors and homeowners. I charge an hourly fee for my services and my clients are happy to pay it. I also provide large loss consulting for other claims companies and construction consultants. And yes, I’ve tried to adjust losses – mostly unsuccessfully. (if you want to hear those stories, send me an email)
I discussed possible topics for “my” speaking engagement with the nice young lady who was eager to fill the breakout sessions for the upcoming conference. I told her more about what I do every day and we worked out a rough outline for my talk.
I told her how I routinely write estimates which are DOUBLE what the insurance carrier’s initial offers. There aren’t any black hat tactics or secret tricks; just looking at a loss from a different perspective.
That Sounds Great
Why thanks! I think so too. I would think that adjusters and carriers would be interested to learn what the “other side” of the claims process looks and feels like. No one likes to see their reserves blown out of the water.
Who wouldn’t want to better understand the claims process and how it affects their work? Well, it turns out that a couple hundred “claims professionals” don’t care to learn about what I know. Or, more accurately, my anticipated message was deemed too risky to share with an audience of claims adjusters and underwriters.
Pity. I think I would’ve been awesome.
Risk and Innovation
Innovation is risky. That’s the jist of the book The Innovator’s Delima (Clayton Christensen). The larger and more established a company, or industry, the lower it’s tolerance for risk is. The very nature of large structures is risk aversion and a high degree of outcome control.
New ideas, or anything not previously vetted by upper management, are dangerous to the status quo. It is highly likely that presenting a topic which shown some light on systemic problems within the industry would be met with either a high level of resistance or completely ignored. Neither of which is a useful way to expend energy.
That’s the real problem though. We have an entire industry living in a state of willful ignorance. Outside opinions (and public adjusters) are actively avoided and ignored. Meanwhile TPAs, claims “consultants” and lawyers are bilking carriers by promising to lower “claims severity” and reduce claims costs.
The reality is that they’ve all found a way onto the gravy train by vilifying the very folks who do all the heavy lifting: contractors and insureds. Think about it. What incentive does an SIU lawyer have to find that there was no wrong doing? Zero. That would be bad for billable hours.
I have seen firsthand what happens when lawyers and the SIU department get into a case that has a slight chance of fraud. Months and hundreds of thousands of dollars later, we all end up in court. And who wins in court? Lawyers.
How much could be saved by taking a more favorable view of your clients? No SIU salaries, no lawyer fees. Heck, no PAs because the insured actually feels like they are being treated fairly! Wow, that’s a thought.
Personally, I would love to live in a world where my services weren’t needed. I can find something else to fill my time for sure.
Innovation from Outside
Change is coming whether we all want to acknowledge it or not. Keeping a little adjuster like me away from the microphone won’t make a lick of difference.
Companies like Lemonade and Zenefits are already going full steam ahead into the market. Believe me, they’ve got zero romantic notions about keeping claims personnel employed into the future. Or agents, or any of us for that matter.
“Forget Everything You Know About Insurance,” is says on Lemonade’s home page. Yep, that about sums it up. What’s the scariest thing people can tell their government? “We don’t need you.” That’s what their customers are telling their current insurance companies.
And that’s it. I’m glad I finally got that out. I do feel better.
For all ya’ll still reading, thanks for coming along for the ride.
For those who are afraid of outside opinions, good luck. I’ll be over hear riding the wave called “the future.”
The opening statement is your first best opportunity to introduce your client to the claims process. Properly written, an opening statement sets the tone of the rest of the claim.
Why do so many folks overlook the importance of opening statements? I believe it’s because a lot of people don’t understand what an Xactimate estimate really is. They think it’s just another step in the process of doing work as a restoration contractor.
They treat it as a flexible, fuzzy document that somehow gets them the money they need to do the work they really came here to do. This lack of seriousness when it comes to Xactimate estimates is why some of you are not experiencing the success that you could.
Xactimate Equals Revenue
As I’ve mentioned before, the Xactimate estimates you write are EQUAL to your company’s revenue. Think about it; have you ever settled a claim for less than the Xactimate estimate? If the entire revenue of your company is dependent upon the estimates your write, shouldn’t those estimates be taken very seriously?
I teach my clients that the Xactimate estimate is an official claim document. It is used as a legal document in a contract negotiation between two parties: the insurance company and your client. Once your estimate is accepted by your client, the insured, the insurance company must consider it as part of the claim file. Any changes must be made with the utmost seriousness and detailed accountability.
That’s why most adjusters and TPA’s ask you NOT to show your estimate to your client. Until your client accepts it, the carrier can beat you up all they want. It’s just an opinion at that point. They don’t have to take the estimate, or you, seriously yet.
That also happens to be the reason I tell my consulting and coaching clients to send their estimates directly to their client – the homeowner or business owner who has suffered the loss. Once that happens, the adjuster is forced to take a much more serious tack with you in regards to your estimate of damages.
This helps YOU avoid the sticky situation of being an unlicensed adjuster, trying to negotiate the claim on behalf of your client.
Xactimate Estimates are Settlement Tools
Now that you’ve got a deeper appreciation for what the Xactimate estimate is, a settlement tool, let’s give you a tool to super-charge it with a powerful Opening Statement.
The Ultimate Opening Statement I use covers a lot of bases. It allows the project manager/estimator to begin having some helpful conversations with their client. It also addresses some common trouble spots. This allows you to deepen your client relationship and avoid tricky situations which may arise later in the claims process.
I’ll give you a brief overview of the main sections.
The Price is Right
Right up front you’ll notice something that I believe most folks are shy about: the PRICE.
I don’t like to make people search through the estimate to know what the bottom line is. Isn’t that what most people want to know first anyway? Why do we hide it behind forty pages of mumbo-jumbo that the client won’t understand anyway?
Give it to them. Then you can start the conversation about how you’re going to earn it. Keep in mind, this is THEIR claim and THEIR money.
CODE, OPEN items and Scope Changes
The first three sections lay the groundwork for the concept that this estimate will change. It’s important for your client to know that this is a work in progress. There is a long road ahead and they will need your help to navigate it. See what I did there?
Insureds don’t know how to talk to their adjuster about these things. They need the help of a professional.
This also opens the door for you to start doing some fortune telling. What are the “OPEN” items? When will they be added? Will you talk to the adjuster about them? All good questions for you to answer right up front.
Overhead and Profit: The Three Trades Myth
This is a biggie. Carriers are beating the O&P horse to death these days. And if you find yourself on any TPA programs I’m afraid you’re gonna have to lose this section all together. Don’t complain to me, you’re the one that agreed to their “rules.”
Adjusters and carriers have become very adept at throwing up objections to General Contractors getting Overhead and Profit. This section is your answer: we’re charging it, so deal.
In case you didn’t realize it, the property damage repair industry is still the wild west in many regards. There are no federal or state guidelines regarding with a contractor can or cannot charge a markup on their work. The reason insurance companies are so eager to tell you “we don’t pay that” is because it’s an easy 20% to shave if the contractor happens to be uneducated on the process.
The fact is that I, along with hundreds of estimators across the country, have been writing one-trade estimates for contractors for years which include a 10% overhead and 10% profit calculation. All you have to do is stand your ground. And bill your client.
Change Orders and Credits
I used to hate it when clients would start “cherry picking” my estimates. “I’ll do my own cleaning,” and “I can paint that room,” are the most frustrating. What would happen, before I implemented this section into my opening statements, is that clients would take all the high-margin trades out of my estimate in an effort to either save money or get upgrades.
And they always seemed to do it AFTER we’d started the job.
So let’s get all that nonsense out of the way right up front. Your client needs to understand that your time as an estimator has costs involved. They need to realize that the value you bring as a company goes beyond the $1.25 a foot you’ve got for paint. There are certain sunk costs associated with contracting their job.
Talking about this first usually sets the proper understanding.
This section also lays the rules by which you agree to play. There’s nothing wrong with changes, they just need to be in writing.
Owner Responsibilities
The next three sections set the expectations you have for your client to follow.
Matching is a huge issue, and the contractor usually gets stuck in the middle. This is your way out.
When your client says, “This new flooring doesn’t match the existing,” you can remind them of this section. Any problem they have with matching can then be addressed with the adjuster WITHOUT you in the middle.
I do this all the time with drywall texture. Why do adjusters believe that a perfect texture match is possible 100% of the time? The reality is that there are few drywallers that can match a knock-down patch without floating out the entire continuous area.
I always tell the client that we’ll do our best to patch the affected area. If the adjuster is digging in, I say that we can’t guarantee a match, but we’ll try. (This is usually best done in writing, sent to BOTH the adjuster and the client.) When the patch doesn’t come out perfect, I let the client chew on the adjuster, not me.
Warrantee
The warranty section is one that you’ll probably want to talk to your owner about. I believe it’s important to set up front, but different companies have different warranty periods.
That’s it folks. If you want to super-charge your Xactimate estimates, get your hands on this opening statement today.
And if you need some instructions on how to create your own opening statement, I’ve got you covered there as well.
The insurance claims world is a dangerous place for amateurs.
“Beginning in the 1990s…insurance companies reconsidered [their] understanding of the claims process. The insight was simple. An insurance company’s greatest expense is what it pays out in claims. If it pays out less in claims, it keeps more in profits. Therefore, the claims department became a profit center rather than the place that kept the company’s promise(s).” – Jay Feinman Delay Deny Defend2010
I read this book about four years ago, when I was first thinking I could take the insurance industry and flip it on it’s head. Ah, the arrogance of ignorance. A few years on, and I’m a little closer to making a dent in the claims universe. No revolution has happend yet, mind you, but I can see some changes coming.
I picked up a journal from 2013 tonight. I like to re-read my thoughts from time to time, to help keep perspective. I saw some notes I made in February regarding this book and thought it was time to put together a post for them. What follows is my top eight takeaways from reading Jay Feinman’s wonderful book on insurance claims.
We’ve all been taught that we were in “good hands” or that our insurance company was like a “good neighbor”. The commercials and jingles are burned into our heads with millions of dollars of advertising. The reality is that our insurance companies are not our friends or neighbors.
Jay calls the situation a “special kind of business relationship.” Insurance companies should not be viewed as friends. Nor should they be viewed as enemies. You’ve entered into a contract with a large corporation. The takeaway advice is to look out for yourself first, while being cooperative. No need to be abrasive or combative.
Afterall, you want this large corportation to write you some potentially large checks, right?
Pick a Good Company.
I’m not going to share my opinion here regarding the good, bad & uglies out there. You don’t have to wander around the Claims Delegates blog for long to get my thoughts on who the bad actors are. There are a couple web sites that will help you figure things out though:
” Consumers spend hundreds of billions of dollars a year on car, home, and life insurance products whose complexity and individual pricing permit insurer inefficiency and abuse. A large majority of the state insurance departments that regulate these insurers have neither the resources nor the will to do so adequately.”
I think they might have seen folks get taken advantage of once or twice, no? I read in my notes that I found a quote saying, “avoid Allstate at all costs.” I wasn’t able to locate that specific quote just now, but I did find quite a scathing report from ’07. I don’t think things have gotten better over at Allstate over the last nine years. I’ll just leave this link here.
Of course you can use the Google as well as I can, but here’s another “Hall of Shame” list I found.
What you should do is find a good, independent agent who has access to more than one carrier. They have the best opportunity to shop your premium and get the best coverage. Which leads us to…
Buy The Right Policy.
The most important thing to consider when buying ANY insurance is coverage. And when you’re talking about what IS covered in your policy, you also want to check out what things ARE NOT covered in your policy: the EXCLUSIONS. I’ve seen policies which weren’t worth the paper they were written on because of the exclusions which were hidden inside. I spoke with a client last week with a Builder’s Risk policy that excluded damage by fire if the fire was caused by “combustible materials.” Really. A job site with combustible materials? What are the odds?
They suffered a total structural loss and their claim was denied. Because they didn’t understand their policy. (oh, I’m a little ahead of myself)
Understand Your Coverage.
Along with the previous section, I’ll add this advice: READ YOUR POLICY! Just do it. That is all.
Understand the Claims Process.
This is where things get tricky. Mr. Feinman said you’re an “amateur in a field of professionals.” Once you have a claim you’ve entered a “system designed to make the company money.” (refer to the paragraph that started this post).
The claims center has become a profit center for insurance carriers. They take in over $1 Trillion in premiums every year, and they want to keep as much of it as possible. They have a lot of paid professionals on their side. You need to have someone on yours.
Choose your champion. Is it your contractor? Fine, as long as they aren’t the contractor your adjuster brought with them. Just tell them that you need their help. And ask questions. Don’t think that you have to come off as an expert. I’ve seen plenty of highly educated doctors and lawyers screw up their own claims because they thought they were the smartest folks in the room. They can afford to pay for arrogance and pride, most of us cannot.
I could right a book on this section, and probably should. Just not right now.
Be polite, be prompt and above all BE PERSISTENT.
Fully Document Your Claim
This is another section that could use it’s own book, but let’s get the basics down.
Once you have a loss, you need to get incredibly organized and start keeping EVERYTHING. Pictures are king, and don’t throw away anything. Don’t let your contractor throw anything out either. Keep it until you’ve been paid for it.
Don’t overshare. There is a section in the book which talks about how too much information can be harmful to your claim outcome. Be polite and answer questions truthfully when asked. Just don’t volunteer your life story.
Your job is to Prove your Loss. The adjuster is not going to give you the benefit of the doubt. It is up to you to prove, within any reasonable means, your loss.
I’m adding to my list of to-dos, a list of all the things you’ll need to include in your own claim file. DO NOT assume that documents, emails or pictures that you send to your adjuster will be available for later viewing. Heck, don’t assume they’ll even exist. One of the oldest tricks I see is the “I’m afraid I don’t see that in your file ma’am” trick. Billions of dollars of premiums yet they still have a basement full of filing cabinets where everything is cataloged. Please.
You’re apt to have to send the same form to different departments multiple times before things are settled out. You may as well keep everything yourself in an organized fashion.
Meet your Adjuster
This section is a little vaugue for me right now. It’s been a couple years since I read the book and I’ve since given it to someone. So I’m ad-libbing some here.
If you don’t get a good feeling from your adjuster, make the call right away. Find their manager, and their manager’s manager, and get a new adjuster assigned. You’re going to be dealing with this person for a long time. If you don’t get a good vibe or believe they are going to handle your loss adequately, move on and don’t look back.
These days the person that comes to inspect your loss likely won’t even be a company adjuster. If an IA (independent adjuster) comes to inspect, find out who the Desk adjuster is and open direct dialogue with him/her. The IA is just a contractor to the insurance company who’s job is to write as small of an estimate of damages as possible.
Ask for advance payment. The idea is to get them used to writing checks. It doesn’t have to be a huge settlement check either. Tell the adjuster about the clothing you had to replace or the groceries you had to buy. Get them to write you a $1,500 or $5,000 check right away. You shouldn’t have to come out of pocket for anything claim related.
Decide on Your Need for Professional Guidance.
I realize this last one is exactly why you’re reading this blog post right now. You got stuck/confused/frustrated with the progression of your claim and went to the Google for answers. I’m glad you found us, and I hope this is helping.
Professional help is not free. Good help is not cheap. Getting what you pay for certainly applies here.
No, you probably won’t have coverage in your policy to pay an expert to represent you. That’s why a lot of PAs (Public Adjusters) work on a commission or contingency basis. I don’t, but I’m not normal.
If you’re insurance company is being completely unreasonable, it may be time to hire an attorney and let them fight it out. A PA will do the same, except they can only take things so far before having to hire an attorney anyway. The going rate for public adjusting is 15% of the claim settlement.
That just about covers it for now. It looks like I’ve obligated myself to more writing. I’ll get right on it. In the meantime, you can read the rest of the blog here.
Adjusters are not responsible for the final work product.
They never have been.
Here is an excerpt from a recent Clarity.fmcall I had with a client. The adjuster with Mercury insurance underbid his repairs by at least $10,000. Mercury insurance also made him move back into his home despite having no kitchen, and with all his contents and cabinets filling his living room.
Not cool buddy. Not cool at all.
(Client): Any advice on what to expect on a claim like mine would be much appreciated. Thanks again.
Tough to say without pictures. 30-40k maybe
Jul 19 2016 7:45 PM
(Client):
The adjuster normally bids that low? Cognitive dissonance.
Jul 20 2016 8:22 AM
No adjuster is the history of adjusting has ever been responsible for the work that needs to be actually done.
If they don’t have to build it or warranty it three years from now, what frame of reference do they have to actual costs?
The only folks who can honestly give a cost estimate are those that are actually willing to do the work – all of it – for the price they quote.
The problems arise when you have “program” contractors, who are willing to compromise the quality of their work, and their integrity, by fitting a project into an unrealistically low “adjuster” estimate.
“We’ll do it for that,” actually means, “We’ll cut enough corners on YOUR project in order to make the adjuster look good.”
*Andy McCabe*
(END Clarity.fm conversation)
I’ll take this one step further.
There are adjusters who tell me, “I used to be a contractor, I know what it takes to [insert construction task].”
I’ve got a question for those adjusters: if you were such a good contractor, who was able to match brocade ceilings flawlessly and marry new base to old without visual differences, why aren’t you still doing it?
I’ve got your answer: you SUCKED as a contractor and couldn’t make a living at it.
That’s it. Simple reality.
If you were good at hanging and refinishing cabinets, you would still be doing it. If you were able to perform projects profitably and make owners happy with your final product, then you would be making a better living doing THAT than you are right now.
You chose adjusting as your profession because it was a decent paying job with above average benefits. And when it comes to figuring out depreciation and interpreting policy provisions you ARE the expert. When it comes to ordering materials, coordinating subcontractors, performing quality control and ultimately putting people’s lives back together after a major loss, you suck.
“We are creating an industry which is creating jobs that are less and less appealing to the potential employees in the job market.” ~Thomas Underbrink
Last month I had the pleasure of attending the Oregon Casualty Adjusters Association annual symposium. It had been a while since I had attended this event. I’ve been on the consulting side of claims for some time now, and it was great to connect with folks who I hadn’t seen since my time as a Restoration contractor.
It was also very interesting to see and hear how the claims industry has continued to change since my departure. Restoration project managers and front-line claims adjusters operate in a much different environment than the one that existed only ten years ago. “Programs”, TPAs and continued specialization and consolidation have created a far less personal (and appealing) working environment all involved.
The Symposium keynote was given by Thomas Underbrink, the Director of Litigation at Mutual of Enumclaw. I was fascinated to hear things from his point of view, and very much felt like a fly on the wall as former contractor-turned-adjuster. As the contractors and other vendors chatted it up in the exhibit hall, Thomas treated me to an inside view of the claims world that I was unaware of till that point.
“You’ve got to serve somebody.” ~Bob Dylan
The keynote began with this quote. What Bob was telling us is that no matter who you are, you’ve got somebody to answer to. In each of our own lives, we have to recognize who we’re serving, and learn their rules of engagement, in order to succeed.
In my experience on the contracting side of claims, there were always three masters: the insured (Clients), the adjuster (Carriers) and my boss (the Company). This tri-chotomy (yes, I just made up a word) led to a great deal of cognitive dissonance in my own life (as I’ve mentioned in a previous video/rant).
What I was surprised to hear is that contractors aren’t the only ones who struggle with the often unfair rules and systems that they’re forced to work in every day. Adjusters and attorneys, as it turns out, are feeling the same frustrations at how our industry is changing as contractors.
The rise of the “-ations”
Thomas spoke about the increasing use of financial metrics to manage the various litigation and adjusting services. It’s only natural. Big business and management have always looked to measurement metrics and financials to help boost bottom line profits and shave costs.
The problem, as I heard it, was that when you ONLY make decisions according to the “score board”, you miss some of the important things that make great adjusters and attorneys – the human factors. An example he used was the increasing use of IAs to handle claims.
In and of itself, hiring outside adjusters isn’t a bad thing. There are many qualified and experienced adjusters out there. The problems arise when the IA and the hiring carrier have different intentions. Things used to be more straight forward. An independent adjuster was a partner in the claims process.
They were the eyes and ears. They were the trusted party to help the carrier bring the claim to a successful settlement. This isn’t the case any longer.
Increasingly carriers are turning to outside help for one singular reason: reduce claims severity. That’s another word for pay less on claims. For those who “grew up” in this industry, this runs contrary to the old way. This becomes a problem and leads to a clash of cultures. And when cultures clash, the carrier wins.
Thomas talked about the rise of the “-ations.” By these he meant Segmentation, Specialization and Centralization. These are another way to reduce claims expense and increase claims efficiencies.
Segmentation means the splitting of claims to certain groups or departments dependent on the level of complexity of a claim. The thought is that if people can keep doing one kind of claim, every day, they can maintain a higher level of output.
Specialization is similar to segmentation except that claims are assigned according to claim type. Glass only, BI, theft, liability; all these have been sent to special departments or vendors dedicated to each type of claim. Some carriers have even begun to split parts of the same claim between two or more adjusters or departments: the water mitigation portion of homeowners claims are adjusted by a separate adjuster from the structure adjuster.
Centralization refers to the increasing popular strategy of physically moving claims centers to one geographic location. This also coincides with the move to rely more heavily on outside adjusters and “vendor partners” (contractors) to handle the heavy lifting of claims documentation.
All of these things are riding on a culture of reducing costs in order to boost corporate profits.
If you don’t understand this culture, you lose.
IA firms lose contracts, law firms lose clients. The ones who succeed learn how to work the system. The key is to learn what the rules of engagement are, decide that you can accept them, and then play the game.
If the rules are not ones that you can succeed at, it’s time to find a new client/employer.
Someone asked the question, “How can someone [like an inside adjuster] change the current culture?”
You can’t. Tom’s answer fell with a thud. I think some folks thought he’d come with some magical answer, but there isn’t one. The fact is that the only thing that we can affect change on is ourselves. If we can’t succeed in the environment we’re in, the answer isn’t to change the environment.
The answer is to change ENVIRONMENTS. You have to choose who you’re going to serve. “It’s up to you to change your existence in this industry,” Tom said. And he’s right.
We can’t hope to change the company culture to fit our needs.
It works the other way.
We see this happening every day in other areas of the insurance juggernaut. Take health care for example. There are doctors who refuse to “accept” certain insurance programs. There are even doctors who don’t accept any insurance at all.
Why would they do that? Because they don’t have to. They don’t agree with the rules of the game, so they take their ball and go home. And I say “Good for them.” The health insurance world is even more dehumanizing than the property damage world. And the property carriers are trying harder every day to be more like the big “health” companies.
Profit over people.
I see contractors doing the same thing. Making the conscious decision to choose clients over carriers. The biggest “restoration” contractor in Bend, OR where I live is NOT a Servpro or ServiceMaster. Even the Belfor outpost here is tiny.
CODR succeeds where these other “program vendors” don’t because they put their clients, the local people in Central Oregon front and center in their business plans. They understand that programs exist to put carrier profit before contractor profit, and that translates to lower quality work for CODR’s clients – home and business owners.
Remember the “trichodomy” I mentioned? It doesn’t really exist because in that situation someone always loses in order for someone to win. And the contractor is just the lacky delivering the bad news and substandard work product.
Before you get all mad, let’s look at the numbers. If you are part of the Code Blue “network”, what do you give on every single water loss? 30%? 40%? Do you even have a chance to make that up by boosting your invoices? Nope. They write YOUR sheet don’t they?
Let me get this straight: you go out in the middle of the night and perform services for a “client.” Then you report to Code Blue and THEY tell YOU how much your invoice is going to be. Oh yeah, and then they take 40% off and write you a check. And then they pass a PORTION of that savings to their client, the insurance carrier.
Now you’ve got to compete with a business across town who does their own marketing, has established their own name and referral base in the local market, writes their own invoice and gets to keep ALL OF IT? How do you survive Mr. Program Vendor? By handling more volume?
I’m sorry if you’re hearing this for the first time right now, but the only thing you’re doing is losing money on more claims than your competitor.
I know there are many out there, friends of mine included, who believe deeply in the programs. They are viewed as a revenue foundation for growth. And they may be – for now.
If there is any sure thing in this day and age it is this: things are changing faster than any of us can possibly comprehend. The rate of change is only increasing.
The other sure thing? The insurance industry is due for a reckoning. With half a trillion dollars in claims every year, and ZERO true innovation in the last twenty years, the industry is just begging for disruption.
Do you think the taxi companies of the world saw Uber coming? No one saw Uber coming.
Did the founders of AirBnB ask Hilton permission to create their company? The founders didn’t even come from the hospitality industry. They just saw a big problem and solved it.
The main reason the insurance world hasn’t been rocked by a startup tech company is because it is an amazingly complicated machine. Lots of moving parts and lots of invested players – players who are more concerned about the status quo than where the industry is going.
My take away from Thomas’ talk was this: adjusters and attorneys are finally feeling the squeeze that contractors have been feeling for the last ten years. Profits before people.
The days of the 20-year adjuster are over.
Am I the only one noticing this trend? The “old timer” insurance adjusters are now mostly folks who started in this game AFTER I did.
Yes, I realize that I’ve been at this a while. And yes, I am getting older. But what happened to the adjusters who were here before I started? They’re all gone.
Carriers have shown an incredible distaste for adjusters with years of claims experience (and expensive pensions). The focus is now on reducing overall claims expense. That means it’s more important that a claim is settled quickly, than it is to thoroughly examine the loss, coverage and policy for the benefit of the insured.
Remember those days? When the insured was treated like a client?
Now we’ve got a crop of college graduates who are taught one thing – the claims system. The application of policy language and proper loss analysis is all but dead. It doesn’t fit the new metrics. So those who are accustomed to the old metrics and slowly weeded out to early retirement – or worse.
What is going to happen when Google’s AI machine figures out that it is better at applying your “program rules” to Xactimate estimates than you are? Guess what slick, you’re gone too.
Just like Amazon will kill the Postal Service and UPS with their autonomous delivery initiatives, the button pushing you do as a “desk adjuster” will be deemed better suited to a machine sooner than anyone expects. Just ask any taxi driver in San Franscisco, they’ll say the same thing, “Man, that happened quicker than I thought.”
The Times, They Are a Changing
I took a stroll around the exhibit hall after Thomas’ opening statements. The changes were incredible.
“Back in the day” there would be all manner general and restoration contractors in at the booths. I used to jokingly call the Symposium a contractor’s love fest. It used to be wall to wall.
Now guess who’s exhibiting: lawyers. Attorneys, benefits companies and forensic/analytics providers. That and a couple IA’s thrown in for spice. Is that any indication as to the direction the industry is headed? Yes, there were some contractors represented, but their position as drivers of the industry has now shifted.
And the funny part is, the attorneys and IA’s were complaining about the EXACT same things us contractors used to complain about. Program rules, cut rates and layers of bureaucracy. That’s just another day in Restoration to us, but to them, this is all new. Forgive me if I happen to be all out of tears to shed.
We Should Have Seen it Coming
None of us should be caught off guard by these changes. We’ve had an exact mirror image of our future right in front of us for years; the health care industry. What is happening in the P&C space is nothing more than “managed care” for property.
What makes us all the more stupid is that we’ve all be part of HMO’s and PPO’s for years. These companies were not created to enhance “patient care.” They were created for profit. I just got done paying off an ultrasound that my wife had THREE YEARS AGO, because our “provider” at the time deemed the procedure “unneccisary” – despite the fact that our doctor had ordered it.
If this had been a property claim, I would have known what to do – and how to fight. But I had no idea what to do, so I paid $3,000 out of pocket for a procedure that should have been “covered” by my insurance. And now they’re coming for property claims.
I’ve said for the past couple years that Xactimate is nothing more than medical coding for construction. I’ve run my “construction coding” company for nearly four years now. And there are many companies in my space now.
So What’s Next?
I’m no fortune teller, but I don’t have to be. The future is more “managed care” for the property restoration industry. Programs will become less and less profitable, and more restrictive. Carriers will soon literally own their own stable of contractors, and the independent firms (both contracting and adjusting) will have to become creative in order to survive.
Just look at the Sedgwick – Vericlaim – First Choice conglomerate. When has there ever been a completely vertically integrated risk management, claims management and vendor management company? Ever? Please someone correct me if I’m wrong.
Sedgwick isn’t the last. I fully expect someone like Home Depot or State Farm to put together their own property monstrousity. Ever heard of Code Red? How hard would that be to integrate into State Farm’s “Premier Service Program”?
These are all things out of our control as contractors and vendors. Big companies will do what they want. So what do I recommend?
I say double down on your local market. Concentrate on doing the best work you possibly can and choose your clients carefully.
And if you don’t enjoy your work, stop it. Find something better to do with the rest of your life. Life is too short to be frustrated all the time.
Sometimes the Grass IS Greener
I saw an old friend at the Symposium. She was talking with her former claims manager. Both of them had recently left their employer – her to pursue a different business, him to work for a different carrier. Both of them were happier than I’d seen them in over twenty years. Literally.
We all make choices in life about where we work. Some of us compromise more than others. I don’t believe anyone should compromise happiness in exchange for perceived stability and “benefits.” Are you happy in your work? If not, why?
You don’t get bonus points for staying in a crappy situation longer than anyone else. You just get more crap.
Take a look at my resume and you’ll see that I’m living proof of the saying, “If you’re not living a life of your own choosing, you’re living someone else’s.” I’ve been fired, layed off, cut back, overworked and underpaid by more businesses than I like to say. But ever since I made the decision that I was going to be in charge, I’ve been happier.
There are thousands of ways to “make a living”. We get to choose it.
Do you work in a company culture that you can’t succeed at? Time to change companies, because you can’t change the culture.
Of course, most projects fall into the more manageable $15,000 to $35,000 range. Through the use of Scope Notes sheets and sharing of pictures via Google Drive, we put together a complete Xactimate estimate according to your needs and specifications.
And it all comes with your letterhead and estimator’s name attached. In the end, the files are all yours (including any ESX files generated).
It sounds simple, elementary even. What business expects to get paid without billing their client?
Restoration guys, that’s who.
I had a conversation with a client of mine yesterday regarding a couple outstanding mitigation invoices. He asked if I could help him with the insurance adjusters in order to get paid.
One loss was from New Year’s eve! Seeing as it is now mid-way through June, this might be a problem.
Apparently, the adjuster has so far completely ignored my client’s estimate (more on this in a moment) and has written his own “mitigation” items into one bigger estimate for the entire claim. This was a large loss and I think the adjuster was thinking that if he lumped everything together, that his insured would just take this big check and walk away.
At this point, the “mitigation” items in the adjuster’s estimate are $11,000 less than my client’s “estimate.” Ouch. This might be a problem, no?
So I asked him, “How long ago did you bill your client? How long have they been sitting on your bill?”
His answer told me everything I needed to know. He had never billed his client. At this point, six months after services had been rendered, my client was still treating his BILL like it was a negotiable document.
There is no such thing as a mitigation ESTIMATE
When you perform emergency services, you’re providing a needed service. There is no bidding process. There is a need and you’re fulfilling it – usually on a Friday afternoon, right before a big holiday weekend.
As such, there should be very little negotiation when it comes time to collect for those services. Your work authorization should state your fees clearly, and your documentation process should provide ample transparency and audit opportunity.
An emergency services contract is essentially a Time and Material agreement. You agree to provide a set of services according to an agreed upon fee schedule. It’s that simple.
Just because you develop your INVOICE using the Xactimate “estimating” program, does NOT mean that your INVOICE is an ESTIMATE. It’s not. So stop treating it like one.
Costs have been incurred
The problem is that we allow adjusters to widdle our BILLs down because we don’t lock them in with our actual clients. If we don’t invoice our clients, they don’t “incur” the costs of mitigating their loss. And since their insurance policy states that they will be reimbursed for reasonable “costs incurred”, their insurance adjuster is under no obligation repay them (or to pay US).
That means that until our clients have been billed for the services we provided, the adjuster can mess with us as much as he/she wants. We’re allowing a negotiation to occur which should be a transaction.
The longer you go, the harder it gets
What most restoration folks don’t understand is the incredibly complicated machinations that adjusters go through on every claim. It’s actually fairly cumbersome. And adjusters are relentlessly bombarded with new restrictions and guidelines to follow.
One of the things that adjusters must do is set and adjust the reserves. The reserve is an amount of cash, usually a percentage of the total anticipated claim costs, which the insurance company must remove from their general funds (or whatever they call it) and set aside (in “reserve”) to pay the claim.
The reserve number is important because it is one of the ways in which carriers are graded by state and federal regulators. If audits show that a particular carrier is routinely setting aside too little money to pay claims (setting reserves too low), that carrier can receive sanctions. Or worse.
On the other hand, company cash flow can be negatively impacted if reserves are consistently set too high. This pulls real dollars out of the company for the reserve account. This means less money for things like investment and capital expenditures. It also telegraphs to investors the relative health of the company.
Whether it’s too high, or too low, the insurance company is loath to change it once it’s been set. Change is an indication of a problem.
The adjuster is responsible for suggesting a proper reserve amount early on in the claims process, usually within the first couple days. That means that those of us who are able to get clear, defensible estimates to the adjusters quickly, are the ones more likely to get what they want.
With good information about what the total claim will be, backed up by a contractor’s estimate, the adjuster is able to establish a reserve with confidence that he won’t have to adjust it later.
When we start talking about claims that are months old, things get sticky. Past 60 days, the claim has likely already been paid. Often it is closed. If you didn’t get your mitigation invoice in before the adjuster pays it out, you’re likely putting the adjuster in the embarrassing position of having to re-open a claim and adjust the reserves.
The more time that passes before you bill your client, the less likely it is to be paid in full, or on time.
They’re free to ignore you
“But I sent my “estimate” to the adjuster two months ago,” you might be saying. OK. You sent it to him. But you didn’t send it to your client?
What you effectively did was tell him that he was in charge. By sending the mitigation bill to the adjuster, you are asking him for permission. (More on that here) Never ask for permission.
When you send anything to an adjuster without sending to your client, the adjuster is free to ignore you. You are much better off sending invoices and bids to your client – you know, the person on the insurance policy – and requesting that they send it to their adjuster.
It means a lot more coming from them than it does from you.
Don’t fear the sticker shock
I asked my client why they hadn’t sent the mitigation invoice to the client yet.
“They’d freak out,” he responded, “We’re talking about $22,000 here.”
Yes, that’s a lot of money (to most people who don’t fly around in private jets). And what we do is expensive. And dirty. And profoundly unrewarding sometimes. That’s why we charge what we do.
If you’re afraid to bill your client, because you think they’ll freak out, maybe you should take another look at your billing. If you are invoicing according to set procedures and standard industry pricing, what is there to hide from?
Believe me, I understand. I’ve had my share of jaw-dropping moments after hitting “print” and seeing the final totals of mitigation bills. It’s easy to rack up big numbers when you’re renting out dehumidifiers at a $10,000-a-day clip. And that’s “OK”. Your reaction proves that you’re still living among the rest of us common folk.
I remember the largest mitigation invoice I ever created. I didn’t use Xactimate. I had three crews of forty-five working around the clock in a large warehouse for seven days. I had riding extraction machines and temporary facilities set up.
We were basically pushing water around for a week until a temporary roof could be installed to keep the rain and snow from coming in. My bill was $745,000.
I looked at boss at the time with a “are we really going to bill for this” look on my face. He walked through the spreadsheets with me one more time and said, “Yep, send it off.”
We were paid in fourteen days. I was stunned. And the check came from our client. They then turned and started the process with their insurance company. I didn’t talk to an adjuster once.
Properly set expectations
What I learned, after making a little over $100,000 a day for my company, is that the most important step in the mitigation (and claims) process is setting the groundwork. When we educate our clients on the process, and clearly communicate our intentions and provide transparency, they become our allies.
My company had a clear schedule of fees. Our contract was straightforward and simple. “This is what we’re going to charge. And this is when we expect to get paid.” There was no room for back pedaling or horse-trading. My client new on day four that the meter was running at a very high rate.
They, in turn, were able to do their own internal calculations and decide whether to continue with our services or pull the plug. Once I learned that closing this facility would cost the company close to a million dollars a day, I understood their decision to keep us on till the roof was fixed.
And since I had shown a complete open-book policy throughout the claim, they didn’t have to spend weeks auditing my invoice. They knew the total before I even billed them. (It also didn’t hurt that this was a distribution warehouse for one of the largest car manufacturers in the world.)
Start from a position of strength
For all the reasons above and more, you need to promptly bill your client for the services you’ve rendered. This puts you in a position of strength and moral authority.
It’s tough to argue with a detailed mitigation estimate. (and if you want help with that you should check this out). It is what it is. I like to say that Xactimate writes itself. I’m just putting in what I see, or what was actually done.
When you bill promptly, you are simply following through on your promise to your client. You promised to help them with their problem in exchange for a fee. Shying away from that fee, or prematurely negotiating your bill is a sure sign that you believe you’re charging too much.
And if you’re charging too much, why? Stop it.
But if your fee is fair, by all means, please send it to your client as soon as you can.
Adjusters aren’t in a position to determine scope.
Too many times, I’ve seen insureds give away their negotiating leverage by asking their insurance adjuster for permission.
Adjusters aren’t in a position to determine scope. They aren’t in a position to determine cost.
Their job is to determine coverage.
So why do so many folks turn into Oliver and start asking for another bowl of pourage? Because that’s what they’ve been led to believe is the right thing to do.
I don’t buy it.
“Mr. McCabe makes very good points. The policyholder is not in a position where he should be “asking” for money from his insurance company. He should be in a position where he can prove that he has a loss and show what it will cost him to restore himself to his pre-loss condition. His questions for his adjuster, if he has any, should be pertaining to his coverage. Adjusters can give “estimates”, but I have never seen an insurance policy that limits the carrier to pay what is “estimated” to be the actual loss.
~Jim BushartJames H. Bushart, Missouri Public Adjuster
I recently received an email from a new client asking how Claims Delegates “worked”. She asked several really great questions, and I thought I’d answer them for ya’ll.
In reality I’m being lazy, because these are actually very common questions that I receive all the time, so I’m putting them down “on paper” so I can start sharing a link instead of retyping the answers every time. Is that OK with you?
Here we go:
What is your charge and how do you charge?
EX; by job type, job amount, amount of time it takes to write the estimate?
We charge by the hour. We have a fee range from $110 to $165 an hour for everyone from old, established clients (lower fee) to brand new folks (coaching included in services).
After the minimum service fee ($299), our estimate generation fee will not exceed 2% of the value of the estimate.
We can turn most water mitigation jobs in 24hrs. Roof Only replacements take 24-48hrs. Repair estimate return times depend on the complexity/size of the loss.
Absolutely not. No minimum order quantity. (There’s no MAXIMUM either… wink, wink)
It is our hope that you will enjoy the experience of someone else cranking out your Xactimate estimates so much, that you'll soon forget that you ever did it yourself.
That means that we can write estimates and submit them on your behalf to TPAs like Lionsbridge and Nexxus.
Phone and email conversations with carriers and adjusters will be billed at the negotiated hourly rate.
How is your communication with your clients?
We communicate every step of the way. Our projects begin with a phone conversation. It is important to us that we understand your needs and expectations right up front.
After you submit a Project Intake form, you will begin to receive automated emails from the Claims Delegates XM8 System. You will receive email updates at every stage of the process, from “Intake” to “Delivery & Upload” of your estimate.
Once an estimate is delivered, a secondary meeting can be set up in order to work through any needed revisions. Often an email response with changes is sufficient.
We will follow up every week or so after that, to check on the status of any needed Supplements.
Of course, most projects fall into the more manageable $15,000 to $35,000 range. Through the use of Scope Notes sheets and sharing of pictures via Google Drive, we put together a complete Xactimate estimate according to your needs and specifications.
And it all comes with your letterhead and estimator’s name attached. In the end, the files are all yours (including any ESX files generated).
Do YOU have a question? Hit us up on your favorite Social Media channel!
I thought I’d record a short video to share my take on depreciation.
I had several hours of driving to do and decided to at least get some thoughts out there.
Depreciation, in short, is the difference between ACV and RCV of your property – whether that be your house, car or furniture.
RCV is the Replacement Cost Value of something. Phrased differently, RCV is what it would cost to replace an item today.
ACV is the Actual Cash Value, or sometimes referred to as Fair Market Value. It’s a more subjective valuation of what an item is worth on the open market today.
Why should you care? Because when it comes to paying out your property claim, your insurance adjuster will use the ACV value as the basis for their initial (and sometimes only) settlement offer. I see potential errors and problems every day when it comes to property claims and depreciation. I’ll list a couple here.
Flat Rate Depreciation
This is the most common error I see, and also the most dishonest in my opinion. Taking a flat 25% or 35% depreciation on a claim is just lazy adjusting and is completely inaccurate.
The adjuster who uses this technique is essentially saying that everything in the estimate has decreased in value at the same rate over the same amount of time. In the case of property claims, it’s like saying your carpets and countertops have the exact same “useful life”, have experienced the exact same wear and tear, and were installed at the exact same time. It’s just not an accurate portrayal of reality.
The biggest issue I have with Flat Rate depreciation is the fact that it also reduces the labor costs at the same rate. How does labor depreciate in value? It doesn’t. Depreciating labor then becomes another tool for insurance carriers to reduce the “severity” of claims when dealing with uninformed claimants and contractors.
50% or more Depreciation
I shake my head every time I see an adjuster take 50% or more value from an item. And I’ve been there when homeowners get fairly upset and insulted by it. Taking that much depreciation is just hurtful and unfair.
The problem is in the rebuild. When that homeowner goes to hire a contractor to perform repairs, what is the first thing that contractor will need: a deposit. A claim that has been depreciated at this level puts the homeowner in a position of having to come out of pocket to start repairs, even if the claim is fully covered.
What Can We Do?
The first thing you can do is understand your policy and the part that depreciation plays. Most homeowner’s and auto policies have depreciation written in. It is possible to buy an insurance policy that is “RCV”, you’ve just got to know what to ask for.
The second thing is to understand that depreciation is subjective and completely negotiable. If you feel that depreciation has been taken unfairly or incorrectly calculated, push back. Don’t settle for a “that’s just the way it is” answer from your adjuster. Ask them how they calculated depreciation, and come to the table with your own valuations.
The third thing to do is to learn how to RECOVER the depreciated amount taken. This is the area that most carriers hope you just forget about. If you never ask for your depreciation, guess who gets to keep it. It’s not like the insurance company is going to call you up in a couple months and say, “hey, remember that recoverable depreciation? Are you gonna want that back?”
Recover Your Depreciation
The most common way to recover depreciation is you spend the money. For contents, that means going out and replacing that TV or coffee table and providing a receipt for replacement cost. This is not a straightforward or simple process, and your carrier with drag it’s feet the entire way.
For property damage repair, you can usually get an RCV check written if you show that you’ve contracted for AT LEAST the full amount of the settlement. This means you’ve negotiated a repair contract with a contractor and their bid meets or exceeds the full claim settlement amount.
Often I get questions about denied claims. Too often it is too late for me to provide any meaningful assistance. The moral of this Q&A is: Don’t delay in getting professional help. The longer you wait, the worse your chances of a fair settlement.
Q: Jim R.
I’m a mold remediation contractor who is trying to help a homeowner.
They had some storm damage to the house and did not realize the damage until months later. The incident date was May 22nd 2014 and they applied for coverage 11 months later after realizing the situation.
Neighbors had roofs replaced with other repairs but these clients are struggling with State Farm to get the repairs completed.
In addition, they have a condition 2 mold situation that is concealed by carpeting and sheetrock. An air test was completed with structures still in place an did not come up elevated. The problem is that the species count of penicillium/aspergillus is 3 times higher in the affected area vs. an unaffected area.
If mold removal was to take place, without following S520 protocol, the spore count would skyrocket and mold spores would spread throughout.
This is a sensitive situation as one of the homeowners was involved in a very serious auto accident and is mostly bedridden in the affected area. Medications have reduced immunity and an increase in mold sensitivity is a major concern.
So far, State Farm has rejected any mold claim and I’m not completely sure about costs covered, if any, for the roof.
A: Andy McCabe
Hi Jim,
Thanks for reaching out.
Coverage issues are always tough, and State Farm is notorious for denying coverage for mold.
I would recommend putting together a package of anticipated costs, including the roof repairs, and have the homeowner submit it as part of a Proof Of Loss.
This is getting fairly old and it is likely less than $100k, so getting a PA to take the case isn’t very likely. That doesn’t mean you shouldn’t reach out to a local Public Adjuster to ask some questions.
I can help with developing repair scopes, but beyond that I’m afraid I don’t have any magic bullets.
Every loss scope has three main components: plenty of photos, a legible sketch and a detailed room-by-room scope. Today we’re going to talk about room scoping.
First, some history.
I’ve been “writing” insurance scopes for nearly 20 years. For the first few years, “writing” meant running from job taking pictures and creating sketches, then sitting down at the end of the day attempting to spew an estimate out of whatever I managed to cram into my head. It’s safe to say it took me a couple years to learn what it takes to create a complete repair estimate.
You can only get a complete repair estimate, whether you’re using Xactimate or another estimating program, from a complete scope. The most common disagreements in property claims are not about pricing, since we’re all pretty much using the same standard database. Most disagreements are about the loss scope; what should have been included – and what should NOT.
Garbage In, Garbage Out
The phrase “garbage in, garbage out” is apropos in this context. If you don’t have good information at the beginning of the estimate process, including a thorough scope, you’re NOT going to have a proper estimate in the end.
I write Xactimate estimates for contractors across the country. My observation is that scoping is a skill that isn’t being taught well in the Restoration industry. My experience tells me that folks are either naturally inclined to create good scopes, or they have to hire someone who is.
Every contractor, especially non-restoration contractors, has his/her own unique thought process when it comes to scoping and estimate creation. Some take copious notes using a yellow notepad, others draw elaborate diagrams with little tiny notations and measurements. Each has found a way to get the information they need in order to generate that all-important estimate at the end of the day.
The problem is that what works for one person, may not work for another. When it is just one person that is charged with the photos, sketching, scoping AND estimating, there is little need for a system. The person IS the system.
Today’s project manager/estimators are some of the smartest people in the industry. Their skill sets have been honed over the years in order to allow them to work magic on claim after claim. Their notes and tick sheets have been equally honed to meet their own individual needs – and are little use to anyone else.
I once scoped a job with an independent adjuster who had previously been a general contractor. To save time and effort, I ran the tape measure while he wrote the sketch. We talked about the anticipated repairs as we walked the property and he scribbled like mad on his notepad.
At the end, I took photos of his sketch and headed back to my office to write my estimate. To my surprise, I couldn’t read his sketch. It was created in such a way that I had no idea what I was looking at. So I called him for some explanation.
“My wife is the only one who seems to be able to read my sketches,” he explained after a good chuckle. You see, he and his wife were an estimating team. They had worked together for so long that they understood each other’s shortcuts and nomenclature. They had their own system that worked for them.
It worked for them, but not for anyone else.
People Cannot Scale
This example illustrates the problem with relying on people as your systems. Whether it’s estimating or building a car the truth is the same: in order to scale you must use systems. Otherwise we’re all open to the proverbial “hit by a bus” scenario when our key employee or partner is no longer available and the whole operation grinds to a halt.
Jack Dennison mentioned this scenario during our interview on The Claim Clinic. He said he sees a lot of companies stuck at $1.5-$2million in revenue because they rely on a sole operator to do it all: scope, document, negotiate settlements and estimate. These companies will never grow to their potential, Jack says, until they implement systems to reduce the workload and eliminate one-person bottlenecks.
All companies, not just restoration contractors, who want to grow will eventually wind up at the conclusion that systems are the growth engines they need. Once there are systems in place, you and your folks can work the system instead of working yourselves to the bone.
Systems allow you to hire the right person and then train them on the process. The reality at most companies these days is that they’ve hired for the right skillset, not the right person. There are a lot of companies whose success depends on the capacity of one or two project managers and estimators who have a skill set that no one else at the company has. This is a recipe for disaster.
Systems Allow You to Scale
Using a simple, powerful system for scoping will allow you to start plugging in folks who don’t necessarily know everything about estimating, and then relying on the system to gather the right information. Over time, these new people will become adept at working the system and eventually train new hires in the same way.
This also allows for specialization without depending on one person to possess a wide variety of skills. The claims process turns into an assembly line of interchangeable parts, any of which a new person can step into and quickly get up to speed with the basics.
Xactimate Scope Basics
The first thing to understand is that a person doesn’t need to know anything about Xactimate in order to create a complete scope. You don’t need to know any of the THOUSANDS of codes that make up the Xactimate database. You only need to know how to tell a story.
Good Scoping is Good Story Telling
Any decent Xactimate estimator knows that when you say, “Replace the drywall on the North wall,” that the estimate will read something like this:
DRYMASKLF – PF
DRY1/2 – W/4
DRYTEX – W/4
PNTMASKSF – F
PNTSP – W/4 … etc.
Notice that with just a little information, someone who knows what he is doing can create an Xactimate estimate that will fit the bill. Unfortunately, often a good story doesn’t get told. A statement like “fix drywall holes” wouldn’t quite be enough to go on.
So if you can tell a good story, you can probably write a scope with enough description that a professional estimator can take it, along with your pictures and measurements, and create a complete Xactimate estimate without ever stepping foot on site.
Now let’s take it a step further and show you how to systemize your scope taking to reduce your training time and provide a more consistent end product. First, download the Scope Notes form that Claims Delegates uses for their clients: https://gum.co/xm8scope
Good Stories Start With a Good Framework
As you’ll notice, there is not a lot of information on the Scope sheet itself. This was intentional.
My theory is that the more you give someone, the less they think. And thinking is exactly what we want our project managers to be doing. They are our eyes and ears in the field. Each has to be able to think about not only what they can see, but also about the various assemblies and structures that they can’t see.
This is why the worst scope sheets are the ones that attempt to list every possible item that may be needed in a room. I’ve seen “tick sheets” that were multiple pages in length, and with teenie-tiny print just to fit it all in. What’s the point?
The thinking behind these comprehensive lists is that if everything is on there, the folks filling out these things won’t forget anything. The opposite is what happens in reality; things get left out because who can find what they’re looking for in that mess? When you take away the ability to think, you also take away initiative and imagination. Don’t do it.
As a matter of fact, if you have pages and pages of “tick” style scope sheets in your desk or in your truck, stop reading this right now and go throw them in the garbage. Go ahead, I’ll wait….
Now, let’s talk about what our scope takers ACTUALLY need: structure. It is important that when we do things, anything really, we do them the same way every time. Even creative activities have a process and a flow. And the more familiar we are with the process, the more we can achieve “flow.”
We want our folks to be able to get up to speed quickly and maintain a high level of efficiency for as long as possible. We also want to plan for unforeseen circumstances that may interrupt our flow. If we are all using the same system, in the same way, it becomes easier for other people to step into our workflow and pick up where we left off.
It is important that our systems, at every level, are easy to teach and learn, while providing the highest level of quality information throughout our organizations. These structures, or frameworks, become the backbones of our companies’ competitive advantages.
Keep It Simple
Now take a look at the Scope Notes sheet, as well as the example sheets provided. As you read through, you’ll quickly get the picture of what is needed.
The top section is used to keep all the paperwork organized, and to provide the Xactimate writer a way to contact the person who performed the site take-off in case there are questions. The time is used for training and monitoring purposes: if you wrote the Living Room scope starting at 11am, and wrote the Kitchen scope at 11:30, you know that it took a half-hour to write up the Living Room.
This kind of information is incredibly useful for managers and estimators alike. We are able to quickly identify opportunities for growth and training.
The top section also enables a scope to be written by more than one person. Because we’ve never been called to a big emergency water damage while we were knee-deep in a whole-house scope job before. Right?
The rest of the Scope Notes follows a simple pattern:
Room Name and Dimensions
Equipment/Sub Trades
Framing / Structure
Floor scope
Walls scope
Ceiling scope
Filling out each section is as simple as asking the question, “What Sub Trades do I anticipate using in this room to return it to pre-loss condition?”
Or, “What wall repairs will be needed to return this room to pre-loss condition?”
Easy right? We move our minds in the same pattern in each room: outside-in and bottom-up. This happens to be the exact way I teach my students/contractors.
Writing scopes in this way also allows the Xactimate writer to show the same flow pattern inside their estimate. I even advocate using the labels – Subs, Floor, Wall, Ceiling – inside each room of the Xactimate estimate. It telegraphs to the adjuster and homeowner that we’ve thought of everything; because if we follow the flow, we HAVE thought of everything.
The Best Way to Eat An Elephant
The most common questions I get from folks who are new to this system are regarding specific items. Like, “what about cabinets?”
I answer that by asking another question, “Where do you put cabinets?” Floor? Wall? It doesn’t matter really. Just as long as you put them in the same place every time.
Insulation? Is it wall, floor or ceiling BAT?
Baseboards? Well fancy pants, do you attach baseboards to the floor or the wall?
It really doesn’t matter which you prefer. The important thing is that you are going through the mental exercise of thinking about each assembly as individual pieces of the whole. By breaking up the room into parts, you are less likely to get caught up trying to think of everything at once.
What’s the best way to eat an elephant? One bite at a time, Grasshopper.
What would you like to learn next?
I’m writing these articles based upon requests for information from my Claims Delegates clients. Is there something you’d like to read about next?
Send a tweet to @TheClaimDoctor or head over to the Facebook pageand leave me a note.
When was the last time you received a 10,000% return on an investment? Sounds unreal doesn’t it?
Did you know that is exactly what you get when you let Claims Delegates write your Xactimate estimates? Go ahead and do the math: a ONE PERCENT fee means that for every dollar you spend, you get $100 of revenue in return. That’s some serious ROI!
Xactimate Is Revenue
An important concept I touched on in the first part of Mitigation Moneyball is that Xactimate estimates equal Revenue. Think about it; have you ever had a bill that was less than your Xactimate estimate? I hope not. (yes, I understand that there are sometimes discounts given, but that’s a different topic).
That means that your company’s revenue is directly tied to the size of the Xactimate estimates you produce.
With that in mind, you can do two things to improve your revenue numbers:
Increase the size of your Xactimate estimates and
Reduce the costs of developing those estimates.
The good news is that Claims Delegates can help with both!
We’ve been writing estimates in Xactimate for over fifteen years.
We know the inside secrets of squeezing every penny out of the database. We also understand the ins-&-outs of insurance programs and what adjusters are generally willing to pay for – as well as what things will raise red flags.
Would you like to be assured of high margins on every estimate? Better make sure you hire an estimator that understands the system as a whole. HIRE CLAIMS DELEGATES
Lock in your costs before you start
The second thing you can do to improve margins is to LOCK IN YOUR COSTS. Jack Dennison preachesabout buying out jobs and making sure your subs work hard for you. How many subs do you know that work for ONE PERCENT?
When you hire Claims Delegates, you’re locking in your estimating costs at ONE PERCENT of revenue. It’s tough to say “no”, right? We’re able to write estimates at a high rate of efficiency because that’s all we do – write Xactimate estimates.
Our writers aren’t out “marketing” to adjusters, managing the on-site operations of job sites, or hanging out by the water cooler talking about their weekends. Our writers are focused on YOUR estimate. What you get is a thorough Xactimate estimate that costs you a fraction of hiring a full-time employee.
Then why do we feel compelled to let the insurance company settle our claims?
I’ve talked about this a lot before, so I’ll try not to repeat myself here. I just wanted to put something out that was on my mind.
Xactimate is a Settlement Tool
Just like the federal form 1080EZ, an Xactimate estimate is a tool to quantify a loss. That’s it. And it’s a tool that is available to everyone, if you know what you’re doing.
That’s why I created Claims Delegates; to help EVERYONE who wants to take control of their claim. Writing your own “estimate” using Xactimate puts you squarely in the driver’s seat. And isn’t that where you want to be anyway?
Alright ladies and gentlemen, it’s time for some brutal honesty. You take crappy pictures.
There, I said it. And I won’t apologize. The pictures you are taking are driving us nuts.
We’re your estimators and your adjusters. We know what you’re trying to do. You want to make sure that you document everything. I understand, and it’s not actually your fault. You’ve been conditioned to take unnecessary pictures.
Over the years you’ve taken the blame for NOT taking pictures of things that cost your company money. Heck, Farmers won’t even pay for dump runs unless you supply us a picture of the full trash bags. I get it.
It doesn’t make a lot of sense to us either.
But enough is enough. The time has come to reel in the crazy resto-razzi photo shoots and bring some sensibility to the camera madness. The first thing I want to bury wherever they put Hoffa is the pictures of your moisture meter.
When has anyone ever asked you to provide a picture of your moisture reading? Really. I’ll pause to let you think about it… Never. The answer is never. I’ve not once, in my nearly twenty years of restoration, had an adjuster or TPA ask for a picture of a moisture meter. They don’t care how pretty your Tramex is, and neither do I.
If the material is wet, tear it out. Don’t waste time with pictures. If you want to dry the material, take your reading and mark it on your RDC along with your room sketch. That’s it. Leave your camera out of it.
I’m not sure where this habit came from, but I can tell you where I see it most. I see it most from folks that are new to restoration or mitigation. In their sincere desire to be the best and work the hardest, they end up taking pictures of things that don’t have much bearing in the end. If that is you, take this as your opportunity to stop wasting effort on things that don’t matter.
Taking pictures of your moisture meter telegraphs to the adjuster that you might not be the most experienced cat in the sandbox. So stop it. Have I made my point?
Ok then, you may be asking, what should I be taking pictures of? I’m glad you asked. Before I answer, let me back up a scosh.
Everything you do, no matter whether you’re a mitigation technician or a general manager, should be defined in a standard of operations. You should have a system for everything, including scoping losses and taking pictures.
Every loss scope has three main components: the photos (which we’ll cover now), the sketch and the scope (which I’ll cover in later articles). If done properly, and with enough attention to detail, a good estimator can create an Xactimate estimate using only two of the three main components. The reason we have all three is to create some redundancy in our overall scoping system.
I’ve even written full repair estimates using only the mitigation scope and pictures taken after demo. It’s not ideal, but it can be done.
I’ve developed a system called the 24HR TECH, which provides a framework for water damage technicians to learn and then perform their jobs at the highest levels of efficiency and profit. There are five separate sections that call for taking pictures of specific items. I’ll walk you through the Room Notes section now.
First, before you enter a room, you should have the Room Notes sheet in your hand. Some folks are trained to label each room with a piece of painter’s tape. That works well. When I’m working a high-rise loss, I like to take a picture of the unit placard. Either way, take a picture of the room name.
The reason is simple: it marks your camera “roll”. Even though we don’t use film anymore (yes kids, we used to have cameras that didn’t have phones attached), when your pictures are downloaded into the job folder, the room name pictures serves as a neat marker for which room the pictures were taken in. Everything after a room placard or label is part of that room, until we see the next room placard or label.
This also eliminates the need to label each picture in the field. (Please tell me you don’t do that still.)
Second, you take several room overview shots. The panorama function on most cameras – I mean – phones, does a nice job here. Pick a corner and take your pictures from left to right. Be sure to stick to less than 180-degrees if you use a panorama, otherwise things get weird. Then walk to the opposite corner and take another set from left to right.
Third, take pictures of the floor then ceiling. Take as many pictures as necessary to capture the unique properties of the room. Did you catch all the fixtures? Is there base shoe molding? Could I count the number of outlets to double check my scope notes?
Fourth and finally, take pictures of items of interest and pre-existing conditions. If you want to take note of a swollen window casing? First step back and take a picture of the window as it sits in the room, then take a close up picture of the damage. Always keep in mind to frame your shots for the person who will view them; that person will likely NOT be you. You have to telegraph context with your pictures.
That sounds like a lot of pictures, right? Yes, it is. A three room water loss should have at least 50 photos. And that’s completely OK. Be thankful that you don’t have to carry around files full of polaroid pictures./
And guess how many pictures there should be of your moisture meter… Zero, that’s how many. 11/28/16: after many rounds of social media debating, I must redact my last statement. Take pictures of your meter when drying the structure. Just make sure you take an “overall” picture, then a close up. That will help adjusters and PMs get an idea of what they’re looking at.
If you find yourself in a situation with multiple bid/estimates,run away.
No one wins when you sell based on price. A “client” who is getting more than one Xactimate estimate from more than one restoration contractor, is not a client you want.
That same “client” will take your Xactimate estimate apart at the end of the project. I call them the “shoppers.” These folks look at your Xactimate estimate as an a-la-carte shopping list. They start taking out things like Final Cleaning and Painting by saying, “We can handle that,” or “my brother is a contractor.”
These people are not your clients. You will not make the proper margins on any project with them. Don’t get sucked in. You’ve got better things to do with your time (and money).
If you’re discussing color, you’ve already lost the sale.
People don’t want to buy a certain color car. They buy a vehicle that matches their needs. A good salesman is adept at discovering those needs and meeting them.
The same is true with ANY sales, including fire and water damage repairs. A good salesman or project manager will figure out what the clients’ needs are, and find a way to meet them.
I’ve been selling services in the insurance repair industry for close to twenty years. In every [successful] sales situation, the thing I’m selling is me and my company. For more advanced techniques, you should probably check out Ivan Turner’s work at ShowMe Marketing Solutions.
What I’m NOT selling is an estimate.
I refuse to compete on price. When someone asks me what my “price” is for a given project, they’re showing me that they don’t understand the insurance claim process. Right then and there I have to make a judgement call about how much time and effort this project is worth to me and my company.
If the project is promising, and I feel that the client is willing to listen, I will take the time to educate them on the insurance claim process. I will explain to them why they don’t want, and absolutely shouldn’t get, multiple bids. I’ll walk them through the steps of a “successful” claim and tell them what to expect along the way.
An Xactimate estimate is a claim settlement tool; nothing more. The creation of an Xactimate estimate represents your best effort to quantify the severity of the loss. We write repair estimates in Xactimate as a courtesy to the INSURANCE COMPANY, not the home or business owner.
Writing Xactimate estimates takes tremendous time and skill. When you offer to write estimates for free, you are de-valuing your own time and steeply discounting your skill. And it actually makes the client and adjuster value you and your company LESS. Don’t discount yourself.
If you can keep a clear distinction in your own mind between the Xactimate estimate (settlement tool) and the actual REPAIR estimate, you’ll be light-years ahead of your competition. And you’ll get to spend your time on more productive activities.
Good luck out there. And when you’re ready, let Claims Delegates take the data-entry of Xactimate off your plate. How much more could you get done today if you didn’t have to sit in front of a computer typing out estimates? You’ve already don’t the hard part of scoping and walking the job, let Claims Delegates handle the busy work.
We all know that water damage mitigation (emergency services) provide the highest levels of profit margins of all our activities as restoration contractors. That’s why the most successful franchises started as (and most stayed) water damage service providers.
As the industry has matured, little has changed in the ways we perform this portion of our service. Low-wage “techs” respond and deliver services on a 24-hour basis. High-wage “project managers” perform take-offs and write estimates. The most important measure of potential profit is how much equipment can be “rented” for how many days.
Does that sound about right? As long as gross profit margins are maintained north of 60%, what’s the problem?
Part of the problem lies in the “below the line” overhead costs that are seldom accounted for, but which affect ACTUAL profits in a major way. PM salaries & benefits, vehicle maintenance and gas, office staff and all the rest are things that affect your NET in a major way.
The other part is the expectation that 60% GP is a good goal. Why not 70%, or 80%?
I’m going to explain how our current system of metrics is subjective and often flawed.
Let’s Imagine Something Different
Imagine a scenario where a mitigation service provider employs water damage technicians who earn over $100,000 a year, and doesn’t have a single estimator on staff. Imagine a world where an estimator writes millions of dollars worth of Xactimate estimates every year – and doesn’t work for either an insurance company or restoration contractor. He takes home a six-figure income without ever stepping foot on a single job site.
For most folks in the “restoration” industry, these two scenarios probably sound far fetched. Maybe a little crazy. Maybe a little scary. I’m here to tell you that these aren’t just far-fetched possiblilities, they are realities. Today, in the L.A. market, there are national franchise mitigation contractors whos’ water damage techs make six-figure incomes.
These same companies experienced a paradigm shift in their approach to providing emergency services. They changed the way they approached the game, and then they changed the game itself. Their reward is higher profits, lower turnover and the highest quality work they’ve ever performed.
Change is coming to the restoration industry.
It’s happening all around us. It’s happening whether we want it to or not; whether we’re ready or not. Change is the only thing we can ever really rely on. The change I’m talking to you about today will require you to question how you run your business every day. It will challenge your assumptions. It will scare you a little. And it might just revolutionize how you approach your companies when you get home. Today I’m talking about Mitigation Moneyball.
Let’s talk baseball for a minute.
The Royals just won the pennant for the first time in thirty years, right? Right now there’s a lot of sports writers telling us why this Royals team won and where the Mets went wrong. They’re talking about good calls and lucky plays, dominant players and voodoo magic. And yes, there are some things that happened during this series that can only be explained using supernatural forces – as there are every year at the end of October.
And there was something else at work in the Royals’ dugout that played heavily into their post-season success. It’s called sabermetrics, and it all started back in 2001 with the Oakland Athletics and their manager, Billie Beane.
Billy Bean and the 2002 Oakland Athletics
Billy Bean was the General Manager of the Oakland A’s from 1993 to 2013. Coming off a disappointing ’01 season where the team lost in the first round of the playoffs to the Yankees, Beane face the impossible task of rebuilding a team that lost three of its best players to free agency: Jason Giambi (that year’s AL MVP), Johnny Damon & Jason Isringhausen. The team didn’t have the money to recruit replacements of equal talents and those key positions, so they didn’t. Instead, Beane made several unorthodox free agent hires and trades. Billy also fundamentally changed the Athletic’s approach to offense. He found what he considered “undervalued” players from throughout the league and cobbled together a team that would end up besting their 2001 record. The 2002 A’s also had their record 20-game winning streak as well as winning the same number of games as that year’s New York Yankees. The remarkable part is that they did it all with a salary cap of $41 million, one of the lowest in the entire league.
…while the New York Yankees effectively paid $1.4 million per win, the ’02 A’s paid just $260,000 for each win.
Billy changed the standard priorities of recruiting and measuring success.
Ordinarily, offensive stats like stolen bases, RBI and batting average were used to measure a player’s success or chance of success. Naturally players that had the highest numbers demanded the highest salaries. Those players and their salaries were out of reach for Billy’s Athletics.
Instead, Beane started looking at other statistics like on-base percentage and slugging percentage. The key was that the team who got on base more, scored more. And there are many different ways to get on base besides simply hitting home runs. Also, the players with the best on-base percentages were cheaper to acquire than those with the most hits.
Billy Beane, and sabermetrics, transformed the game of baseball as we know it.
They did it using math and statistics, and doing more than their share of ignoring the critics. The Boston Red Sox implemented “moneyball” analysis and finally shed the curse of the Bambino in 2004 when they won the World Series.
Now let’s take a look at our own industry.
In what ways are we playing the same old game by the same old rules? When it comes to water damage mitigation, there are several opportunities that we can all start to take the “moneyball” approach to buying more runs, so we can get more wins.
As Billie discovered, in order to win more games, you have to score more points than your opponents. In order to score more points, you have to develop “a more perfect understanding” of where runs come from. Once your develop a more perfect understanding of where your “runs” come from, you’ll start to play the mitigation game in a completely different way.
“Your goal should NOT be to buy players. Your goal should be to buy wins. In order to buy wins, you need to buy runs.”
“Runs” Equal Revenue: When is revenue generated?
Revenue is income before expenses. Income is the net of what you bill and what you ultimately collect. How nice would it be if there were no difference between those two numbers? How do you determine what your bill is going to be?
In the insurance repair industry, the answer has a great deal to do with the software we use to generate the majority of our billings: Xactimate. Everything we do in restoration is filtered through Xactimate; from EMS bills to restoration estimates. It is the lens through which we view the world. It’s just he nature of our industry that we have to format things the way insurance carriers want it.
And if we ever hope to COLLECT it, we’d better BILL it using Xactimate. This means that ultimately there is a direct correlation between what we put into Xactimate and revenue.
Xactimate Equals Revenue
Any discussion about revenue needs to begin with where our Xactimate estimates come from.
On the surface, we tend to give all the credit to our estimators. You know, those keyboard wizards who sit down at their computers and conjure thousands of dollars of estimates and invoices every day. Are they ones responsible for the hundreds of thousands of dollars of revenue we need to keep our businesses running?
Writing in Xactimate is most definitely NOT a straightforward task. It takes years to become truly profficient at it. And even then, we’re all learning new things every day.
That is a big reason our estimators are among the highes paid people on our staffs. The estimates they write, and their ability to catch and document all the little details have a direct effect on revenue. How many people track the revenue at the point it is generated: in Xactimate?
If Xactimate estimates equal revenue, then the estimator who generates estimates at the highest volume also generates the most revenue. I call it Revenue Per Hour (RPH).
Do you know how much revenue your estimator is generating? We all have a fairly clear picture of revenues on an annual or even monthly basis, but what about hourly? Who tracks these things? I do.
I write Xactimate estimates for a living. Full time. As you can imagine, I’m not the most popular guy with the estimator/Project Manager crowd. The way I make a living is a very real threat to the way they make theirs.
In order to know their RPH you’d first have to find a way to track their time. No small task since their usually on salary, right? Then you’d have to separate the time they spend actually estimating from the time they spend on other activities like email, phone calls and driving. No easy task, I know. There are ways to track estimator’s time without acting like “Big Brother”.
Xactimate has several time-stamped functions that could be used to estimate the amount of time it takes to create an estimate. And for estimates started and finished in one sitting, it would be a fairly straightforward proposition to divide the total estimate by the time it took to generate and arrive at a rough RPH. I could go deeper into this analysis, but I won’t because this is MITIGATION Moneyball. So I’ll give you the short version.
As I mentioned, I write Xactimate estimates full-time for contractors across the country. Figuring my RPH was a simple proposition of dividing my time on a given project by it’s estimate total. Currently my Revenue Per Hour that I generate for my clients is $10,800. I’ve run this tally several times over the past couple years and it always comes out right about $10k.
The magical thing is that when I run my cost vs revenue analysis, it always ends up between 1.5-2%. Meaning Claims Delegates, or more accurately, the money my clients spend with Claims Delegates has an average ROI of over 7,300% (73X).
That means that as long as I maintain an RPH of at least $10k, I provide a 73 times return on my clients’ money. Compare that to a 10-11X return of an in-house estimator who at best can hope to achieve an RPH of $800. Why so low? Because they so often have to spend their time on non-revenue producing tasks. Having a generalist PM/Estimator on staff puts a real dent in your salary cap. The time has come to look for a new recruit.
Cost Per Run – What’s your salary cap?
RPH is an important statistic to know and track, but it’s only half the equation. The other half has to do with what it costs to generate revenues, i.e. salaries and overhead. It’s important to know your Cost Per Win or ROI.
The ’02 Athletics ended the season with an identical record to the New York Yankees. They won the same number of games. Can you guess the difference? Each one of the Yankee’s wins cost the ball club $1.4million. Billy’s A’s bought their wins at a much lower price: $225k. Through a more perfect understanding of where runs come from, the Athletics were able to produce wins and 1/6th the cost of the Yankees.
Let’s see if we can come to a “more perfect understanding” of the mitigation game. There are plenty of opportunities in our organizations to shave our salary caps.
If the goal of our game is more profit, that means that we either need to increase Revenue or cut Costs. Costs (expenses) are our Salary Cap. Our cap can only get so large before we start losing – money that is.
Most of our companies are centered around the project manager & estimator – who also is usually the same person. They are the quaterbacks of our teams. PMs call the plays and score the touchdowns.
Project managers are the face of our companies. They are the liaisons to adjusters and homeowners. Pm’s get to go to all the “marketing” events and golf tournaments. I was a PM. I got real comfortable as a PM and made a great living.
Project managers are also generally the highest paid people on the payroll, second only to owners. Along with a company car and phone, their compensation packages often include expense accounts and production bonuses or commissions. It is not uncommon to have a senior estimator who’s total compensation exceeds $100,000. I’ve worked with PM’s who took home over $200k.
We pay them high salaries and bonuses because our view is that they generate and control the majority of our revenues; but do they really? I believe that because we don’t yet have a “more perfect understanding” of where Revenue comes from, and where our salary caps are limited, we likely have more Johnny Damons on our staff that we’re comfortable admitting. All-Stars that don’t produce the kinds of ROI that they should.
We see their names on every contract and estimate. We talk to them about their monthly “sales” goals, and have grown to associate their success with the successes of our teams.
PMs versus Techs
If the PM is the QB, then the Water Tech is part of the offensive line. Without linesmen, the quarterback wouldn’t stand a chance. The offensive line is in constant battle, pushing forward. They protect the pocket. They block rushers. They create openings and influence direction for the star players to run and pass through.
As such, I believe that our offensive line, our water techs, are the most important part of the team. The unfortunate reality is that the only time we notice the line is when they mess something up. A missed tackle, or an off sides. Otherwise, they’re all but invisible.
Our current view of water techs also means that they are the lowest paid people on our staff. Overworked and underpaid is their reality. This also leads to the incredibly high turnover rate among techs in our industry. It’s amazing how many techs will jump ship for a dollar an hour.
If you want to play Mitigation Moneyball, and win, you’re going to have to reverse your current thinking. Our paradigm is due for a shift. As Kevin Dooley told me once,
“If the majority of your people are on the front line, you have to become a front-line minded company.”
Re-Frame ROI: Turn Costs into Revenue Streams
We can take a page out of the insurance carrier handbook on this one. What started happening in the mid-90’s in claims departments across the country? The paradigm shifted. Instead of seeing claims departments as cost centers, insurance companies started using the claims process to drive profits.
Instead of seeing techs as expenses to be cut and controlled, we should frame them as revenue generators in much the same way we view Xactimate estimators. Instead of “rewarding” PM’s for “sales”, we should properly incentive-ize our techs to generate more revenue.
This post is an excerpt from an email I received from a client. The city they live in experienced a sewer system failure and flooded their finished basement with sewer and storm water.
State Farm denied coverage
Their own insurance company refused to even open a claim for them. This is, unfortunately, standard procedure for most insurance companies. If they see a way to avoid you filing a claim, they will take it. Ordinarily, I recommend insisting that a claim is filed. That way you have a representative in the process against the city or other party who is to be held liable.
I’ve seen many, many cases where the homeowner’s carrier accepts the claim, pays for repairs, and then subrogates against the City’s insurance carrier. Under subrogation, the homeowner’s insurance company (first party) usually recovers 100% of the claim. It is a very common practice, but you’ve got to be insistent with your own insurance company.
ServiceMaster drops the ball
As is unfortunately often the case, ServiceMaster completely dropped the ball. Drying was incomplete, demolition was overly invasive, and contents were ruined by lack of attention to detail (items were packed up wet and then never dried). I see this most often with “program vendors” who are overworked and ill-equipped to handle large CAT related events. I’ll write another post on the pitfalls of hiring emergency service contractors later. The bottom line is that the large, franchised vendors work for insurance companies, not homeowners.
Then they called Claims Delegates
I’ve been in business for almost five years now. I try very hard to spread the word about the services I provide. Unfortunately, most folks don’t know to even look for help with their insurance claims until they are well into the weeds. The best time to hire a claims expert is BEFORE you file a claim.
More often it’s not until things start to go very wrong that people turn to the internet for help. And then they find Claims Delegates. We got involved and things started moving in the right direction. The following is part of a survey response I received from my client.
Feelings Before Hiring Claims Delegates
BEFORE:I felt like every move might be the wrong move. Made me paralyzed to make decisions, but had to regardless so very anxious. Without any knowledge base I was just hoping for a favorable outcome on the incorrect assumption that the insurance company was going to make things right “for” me since this was not my fault but happened to us. I assumed the service we have always been paying for from the insurance company was to fix the situation.
AFTER: I felt like I had someone in my corner who would shoot straight with me about the available moves that could be made, some of which I did not know were even available if requested. You are neutral and knowledgable, which made me feel empowered instead of ignorant.
What information does Claims Delegates provide that you found most helpful?
A walk through of what to expect from the insurance claim process.
An outline of what a “Loss List” looks like and includes.
Document every thing for reference if needed later. Every conversation, date, and visit with everyone involved with the claim.
Don’t trust the mitigation company to take care of everything on their own. I would have supervised and had them take more care of my belongings if I knew they would be as reckless as they were. They eased my fears by just saying “add it to the claim”. I did not understand at that time I would never receive full replacement cost but a depreciated value for the items they were telling me to just “add to the claim”.
Which specific items or information were you the most grateful to recieve?
That I could ask for the air quality test and that you had someone to recommend that would be on the homeowners side and not in the insurance companies pocket.
Terminology to use and someone to interpret the adjusters terminology that made me feel less susceptible to being railroaded.
Where do you feel the insurance claim process is stacked against the homeowner?
That the insurance company is the one to decide fault.
That everyone involved in the claim is more knowledgeable about the process than the one needing the repairs. Makes me feel vulnerable to being taken advantage of.
Breaking Through: Marketing in a Crowded Marketplace
I recently had the pleasure of interviewing Richard Braun of 1800-RESTORE on my podcast: The Claim Clinic. He was kind enough to put together this article for us all to share. I hope you like it!
If you’d like to download the eBook/PDF version, here you go:
At the turn of the 20th century, marketing was much simpler and less crowded. Merchants set up shop, hung out their sign and sold their wares. Limited choices, proximity to population, and word of mouth drove consumer choices. Then came technology.
Before the 1920s, merchants primarily used print to advertise. In the 1920s radio advertising began and merchants obtained a new way to spread the word. In the 1940s television advertising was launched and became popularized in the 1950s. Also systemized in the 1950s was telemarketing. The 1980s gave birth to e-commerce and email marketing. Social media marketing became viral in the 1990s.
Today, decision makers are bombarded with hundreds of marketing and advertising messages per day. Some sources claim that Americans are exposed to over 5,000 ads per day. The point, of course, is that it is more and more difficult to stand out in a very crowded marketplace.
Independent businesses which are not attached to a national brand have even greater difficulty breaking through the marketing noise as the national players have the scope and dollars to create more brand awareness than local independent companies.
Solving this marketing riddle is the number one challenge of any business. Doing so can launch a business from mediocrity to greatness.
Below are five principles of marketing success:
Principle One: Refine your message – Start with a unique selling proposition
Before you begin telling your story, you must have a story to tell. Let’s face it. Most businesses, including yours, have A LOT of competition. You are not the one who provides the product and service that you offer. However, being able to identify and communicate what makes your offering unique is a key to success. As marketing guru Fred Berns states, “Tell them only what you do and they’ll buy only from you!”. Figure out your business’ “only” is the first marketing Principle. Check out Whatsyouronly.com for ideas on how to create your “only”. Then, craft your message around it.
Principle Two: Get the word out – Narrowcast not broadcast
If broadcast media was for the twentieth century, narrowcasting is for the twenty-first century. Audiences of the last century were able to be addressed in large-scale generalities. This is no longer accepted and you will lose your potential customer if you are not speaking specifically and directly to them. As a restoration company, each communication you craft should be directed specifically to your audience. If you are trying to reach claims adjusters, what is it about your business that helps them? If you are trying to reach homeowners who have a burst water heater, why should they call you? If your communication is intended for insurance agents, why do they care what you have to say? Each communication should be custom-tailored to its intended recipient.
Decision makers today want to know that you understand them. This is communicated when you talk specifically in terms of their needs and interests and how you address them. A message of last century might be “We mitigate and repair water, fire, smoke and mold damage.” A message like this would be addressed to all of your audiences. Today is different. Now you need to address homeowners and their interests, “We will fix your water damage and keep you in your home” or adjusters “We are able to mitigate and repair damage more quickly and minimize loss of use expense”. Narrow your message and speak it loudly.
Principle Three: Be found when buyers are looking
Once your message is clear and specific to your audience, make it easy for them to find you. People seek your services every day. Centers of influence are referring business to your competition every day. When a customer is looking, and a center of influence is referring, you need to be front and center.
On the web, make sure a professional webmaster has optimized your website and always keep your content fresh, new, and relevant. Have landing pages and content designed and customized for each type of person who you are trying to reach. Link to your content on social media sites. Write content for other websites and link back to your own website. Recycle content that you create and utilize the content in social media, your website, newsletters, and any printed collateral. Using the same content ensures brand-building consistency and provides a higher return on investment for everything that you do. Use pay per click advertising, when it makes sense, so that the people looking for you, find you, and then consume the message specifically tailored for them by communicating “your ONLY” in terms that matter to them.
With Google pay per click, you get 130 characters to stand out from your competition – 25 in a headline and 35 per row in three rows. With this few words, select your message carefully and target your message specifically to the searchwords. If a person searches “burst water heater” then you want your ad to be specific to the search:
Burst water heaters
We clean up the water and fix
Your water heater fast
You would not want a general wording to pop up:
ABC Restoration
Water, Fire, Smoke, Mold
Damage
Have your ONLY, narrowcast, and be easy to find.
Principle Four: Measure and Refine – Attack marketing scientifically
Once you have identified your only, crafted your messages specifically for your intended recipients and then made yourself easy to find, scientifically measure your results and refine your efforts.
In short, track everything. When a person calls your business, always capture key pieces of information, especially how they heard about you.
Your goal is to calculate your cost per lead and your cost per job as both a dollar amount and a percentage of revenue. By doing so, you can identify what marketing activities to do more of, and what to eliminate.
Keep in mind that this can be more challenging in practice than concept because much of what we do in marketing overlaps. For example, it’s important to recognize that while an insurance agency called because their CSR is looking at the calendar that’s stuck to their monitor, the CSR may have made the referral because of a combination of messages and efforts. Also as an example, you may receive a referral from pay per click; however, the “clicker” may have clicked on your ad not just because of the PPC message but also because they recognize your business from other efforts on your part and therefore, chose your company as a credible source.
Nonetheless, measure and analyze as best you can. Back in the 1990s, I ran a business that used a specific phone number in every yellow pages ad. We were able to track the cost per ad and watch it rise from $8 per call to an unprofitable $55 per call before we shut down tour yellow page advertising. Had we not been measuring our results, we would have wasted thousands of dollars in advertising before we figured it out. I watched as my competitors “hung in there” for several years afterwards while we shifted our marketing dollars elsewhere.
Principle Five: Become Unforgettable
You have a unique message. You are narrowcasting your message to your intended audience. You are being found when buyers are searching. You are scientifically approaching your marketing results.
Now comes the big win. The big win comes when you are the only one your buyer thinks of and they know how to reach you without searching for you. Up until this point, you always run the risk of being hidden in the sea of competitors when customers come looking for you, even if it’s you SPECIFICALLY they’re looking for to begin with. It’s time to become unforgettable and cut through all of the marketing noise.
If your buyers and referral sources reach you primarily through your website, your domain name needs to be ridiculously easy to remember and coincide exactly with your marketing message. A good friend of mine who owned a pest control business had great success by directing his customers to his unforgettable website: 123bugfree.com. It’s simple, it rhymes, and it was incorporated into all of his marketing… including his vehicles and TV ads. It’s magical because it’s unforgettable. Despite the hundreds of messages I am exposed to each day, I cannot forget the website. Kudos to him.
If your buyers and referral sources reach you primarily by phone, your phone number should be ridiculously easy to remember and coincide with your marketing message. Google “pet pharmacy online” you’ll get over 17,000,000 results. Whoa. But how many online pet pharmacies reach $233 MILLION in sales per year? How about 1? 1-800-PETMEDS is the self-proclaimed “America’s Largest Pet Pharmacy”. They didn’t get to be the largest pet pharmacy by selling better drugs. They got that size with more effective marketing and having an unforgettable brand that cuts through all of the marketing noise.
Marketing does not need to be complicated. In fact, simpler is better. Apply these five Principles and you will solve the biggest problem that every business faces – successful marketing in a crowded marketplace. Happy Selling!
Richard Braun is the Marketing Director for 1-800-RESTORE, a growing national network of independent restoration companies. Richard is known for applying his marketing experience to grow several successful companies in the Hampton Roads, Virginia Area. Richard has a BSBA in Marketing from Old Dominion University. To obtain a free marketing ROI worksheet to measure and analyze your own marketing results, go to the 1-800-RESTORE contact page and enter “ROI” in the message field along with your information.
I recently received a question via email from a subscriber that hit on a topic that’s close to my heart. Since I’ve answered this question several times over the past year, in several ways, I thought I’d finally make a blog post about it. Here goes:
If an independent like ours is NOT on any insurance programs, how do we acquire insurance work? That’s been our biggest challenge.
Great question. And legitimate. This is a concern for all of us who have grown accustomed to that steady flow of “guaranteed” revenue we get from insurance programs and direct referral agreements. Let me hit you with some tough love.
You’ve got to take responsibility for your own marketing, promotion and relationship building.
Everything goes in cycles. Right now, we’re seeing the biggest swing toward TPA’s ever. But there will be a backlash, there always is. Carriers will realize that they are sacrificing customer satisfaction and not realizing the gains they were promised.
State Farm PSP is the perfect example. It was the next big thing. Now it’s all but gone. And their customer satisfaction scores are improving because of it.
You’ve got to take a long game approach. Short term gain (revenue) at the expense of profitability is not a good strategy. Nearly every job you do is going to be an insurance claim; that’s just the way it is. That means you’ve got an opportunity to build a relationship every time out.
There is a local company here in Bend, OR that does ZERO “program” work. None. Their business comes from commercial sources and good, local marketing. Insurance programs don’t play a part in their strategic planning.
I look at it this way: with program work, you are “paying” for the leads by accepting MUCH lower profits. Without program work, you still have to PAY for leads, but you’re in control.
Increase your local SEO, invest in your web site, start a blog. I started www.MassiveMedia.biz to create content and partner with www.EverbearingServices.com for SEO and website optimization. If you take a traditional business point of view, you just have to increase your marketing budget.
Look at 911 Restoration. They spend over $60k a MONTH on pay-per-click advertising nationwide. Why? Because it pays for itself 100X. Simple advertising and Local SEO. They are not dependent on another company for their revenues.
Remember when folks used to pay thousands of dollars for YellowPage advertising? What happened when the internet and Search came around? People stopped paying for YellowPages. Then the SMART folks kept their ad budgets at the same level and shifted their spending to Google Ads and SEO.
If you had a YellowPage budget before, what happened to it?
Where is that money going to come from? Let’s take a look at the numbers.
If you did $500k in “program” mitigation work in a given year, you’d likely be happy with a 20% Gross Profit of $100,000. Them’s the facts folks. High-profit mitigation is a thing of the past people, especially when there are multi-tiered TPAs involved.
If you did $500k in non-program work, you could expect a dramatic increase in profitability into the 35% range. That means additional $75k in pure profit because our costs remain the same. That’s an additional $6,250 a month straight to the bottom line.
How much of that would you be willing to spend on marketing? How much do you spend currently on other things like a full-time “marketing” rep? With a strategically applied budget of only $1,500 a month your company could be DOMINATING your local search market. For $2,500 a month you could start selling your leads to other restoration companies because you’re just too busy to take every call.
“What if I can’t reach $500k in revenue without the programs?” Well, with the help of higher margins, you only need $285k in revenues to get the same $100k in gross profits. How does that sound?
Who’s making the money that should be yours? The TPA. Insurance programs promise cost savings to carriers. They achieve those savings by taking money out of your pocket. Did you know that of the 15% equipment rental discount that Code Blue takes, only 5% of it gets passed on to the carrier?
That’s right. Code Blue bills the carrier for the full equipment rate minus 5%, then rakes another 10% for themselves before paying you. You’re literally paying for the privilege of doing the same work for less profit.
The bottom line is that in order to succeed in today’s markets we have to be willing to let go of yesterday’s ideas. You don’t need the programs as much as they tell you that you do. And with the new “Uber” economy, the consumer technology will do an end-run on the establishment before their big ships can hit the rudder.
Break free of the old style and “conventional” wisdom, and start controlling your own destiny. How about it?
Have you ever wished you could just re-assign your Xactimate estimates to someone else to write for you?
You know, like the way the big TPA firms do? If only there was a way that, when an assignment hits your “Inbox” via XactAnalysis, you could simply re-assign it to someone else.
Then, once they were done creating the Xactimate estimate, it would magically re-appear in your “Inbox”. Then all you’d have to do is hit “Complete” and the assignment and completed estimate would be automatically sent to XactAnalysis for the vultures… I mean “adjusters” to pick at.
Well, now you can do just that.
Now this just might not be a new development. This very well could have existed since the old days of XM8 23.0 (oh, the good ‘ol days). If it did exist, no one out there bothered to tell me. (Thanks for nothing guys). So I just discovered this and it’s blowing my mind. I thought it only right to share.
I’ve been writing Xactimate estimates for contractors for over fifteen years. Along the way I’ve never received any formal training. I’ve been writing estimates independently for the past three years and there’s always been some estimates I just couldn’t write for folks: program jobs.
You see, when USAA (Crawford) or State Farm (PSP) send out their assignments, they come in the form of Xactimate estimates downloaded via XactAnalysis. These program assignments come pre-filled with all the profile and policy mumbo-jumbo that each carrier likes to use. When you try to perform a “standard” data transfer operation (ESX email and import/export), this mumbo-jumbo has a tendency to get messed up – especially if the recipient doesn’t have the proper profile installed.
This means that the only way a guy like me could help these “program” contractors write estimates was to sit in their office or use their laptops with the properly installed Xactimate and profiles. It was such a pain that most (that I know of) gave up on it.
Now things are different.
Using my Xactnet address (CLAIMS.PORTLAND.OR) and the process I’m about to lay out below, I am now able to manipulate Xactimate estimates and send them back to my clients for upload without the carrier or TPA being any wiser. Sound cool? Let’s take a look…
Do this on the computer which already has the assignment/estimate downloaded. If you haven’t downloaded it yet, hit “Connect”, select the intended assignment, and click “Accept”.
Now look up at the top right side of the Control Panel and click on “Data Transfer.”
2) Transfer Type
Select “Transfer Type – XactAnalysis” and “Action – Send data via XactAnalysis.”
3) Type Recipient’s Xactnet Address
Each instance or install of Xactimate should have its own Xactnet address. If you don’t know what yours is, look at the top bar of your Xactimate screen. Also, at the top left you can click on “Xactimate” , “Help”, then “About Xactimate..” and it will be right there below your Serial Number.
IMPORTANT: Whoever you are sending this assignment to needs to have the proper profile installed prior to receiving the assignment from you. If not, they’ll still get it, but it won’t transfer back to you the way you want it.
If you want me to explain how to get new profiles installed, you’ll have to send a Tweet to @TheClaimDoctor. If I get a tweet, I’ll go ahead and write another post explaining how I do it.
Now click “Select Item(s)” to choose which estimate/assignment to send.
4) Choose Which Assignment to Send
Once again, it is important that the person you are sending the estimate to has the correct Profile installed. Also, you can only send estimates that are marked “A/In Progress” or “In Progress.”
Be sure to select “Show All” in the top right.
Select the project you would like to send then click, you guessed it, “Send.” If you would like to send multiple projects at once, simply hold the CTRL key while clicking on the projects. Xactimate, in their infinite wisdom, made this a multiple-page form. You may have to rearrange the order by date or name to get the projects you want in the list at the same time.
You should see a “Transfer Results” window with a “Succeeded” message in the Status box. Close this window.
5) “Connect” to Send
The last step on your end of things is to click on “Connect.” This will send any assignements in your Outbox to their recipients.
Congratulations! You just sent your first assignement via XactAnalysis! XactAnalysis calls this a “re-routed” assignment.
Now it’s up to the recipient, your estimator, to do the next steps.
6) Estimator Receives Xactimate Assignment
The recipient, the person who’s Xactnet address you typed into Step 3, now only has to click their own “Connect” button. Your assignment will be downloaded into their Inbox. Like any other normal assignment, they simply select it and click “Accept” to bring it into their Xactimate.
7) Mark Estimate Complete and Exit
This process should be familiar to most. In order to upload completed estimates, you first have to change its status to “A/Completed”. The only difference is that now, instead of the estimate being sent to the adjuster or carrier, it is sent back to YOU or the Xactnet address that “re-routed” it in the first place.
Click to Exit the estimate once the Estimate Status is “Completed.”
8) Connect to Send Back
When you “Complete” an estimate which has been assigned, either from the carrier or re-routed from a contractor, that estimate is moved to the Outbox. If you want to double check before sending, simply select the “Outbox” and the “Assignments/Projects” folder.
The assignment in question should already be marked to “Send”. Now they just have to “Connect” to return the completed estimate.
Now it’s back to you for final preparations.
9) Connect to Accept
After your estimator has Completed and sent the estimate, you should receive it shortly.
Have them email or text you that it has been uploaded. Then you will know to open the Xactimate Control Panel and click “Connect.” You should see the assignment come through as a “Corrected Estimate.” Select it and click “Accept” like you would any other assignments.
Congratulations!
You just sent an Xactimate assignment like a Pro! Now all you have to do is review it, make sure it fits your company guidelines and expectations, and “complete” it.
This time, the assignment will be sent to Xactanalysis for the adjuster or TPA. When they request changes, and you’d like your estimator to make them, simply repeat the process. Returned assignments will usually be marked with a “1” or “2” depending on how many times it has been returned.
“Sure, sure. I have insurance. You’re totally covered.”
I was young and naive. My eager landlord was young and naive.
Hear this: You are not covered.
I moved into a condo in Northwest Portland, Oregon. It was a step above the apartment I was living in before. The last thing I imagined as a building fire, but that’s getting ahead of myself. I liked that this place was in the middle of the action. I liked that I was walking-distance away from anything I could want or need.
That would have been perfect. I would have walked away from that rental with good memories.
One night as I was preparing dinner, I noticed smoke coming in from the hallway door. When I opened the door, the smoke was thick. A quick look down the hall confirmed that one of the storage units was engulfed in flames. As much as you trust yourself not to destroy a place, how much do you trust your crazy neighbors?
The fire department arrived. Windows were smashed in. The fire was quickly extinguished.
I was out of a place to live.
My landlord did, indeed, have home insurance. That covers everything up to the walls. Everything inside the walls (that meant me and my belongings), was not covered.
The building repair took months. The crazy neighbor who started this whole mess was insured. He got all of his stuff back, pre-fire. Me? Luckily, my landlord let me stay at his house for a while. After that, my brother let him stay at his house for awhile. I worked for a restoration company, who let me restore some of my stuff.
Renter’s insurance is not that expensive! Get some! If you have homeowner’s insurance, ask your agent what happens during a catastrophe!
If I wasn’t so young and naive, I would have had some renter’s insurance. That would have saved me a ton of hassles. Don’t be like me.
There’s a lot of good things about being a part of insurance “programs”, but I don’t want to talk about them.
I want to talk about the bad side.
Insurance “programs” or “preferred provider” networks are agreements that insurance carriers make with service providers in exchange for certain “considerations”. These considerations are all designed for one purpose: to save the insurance company money.
If you don’t believe me, allow me to explain. First, let’s look at the arrangement. From a service provider’s point of view, the program is a lead generation tool. In exchange for the things I’m about to explain, they receive a steady stream of jobs (or so it is sold).
That doesn’t sound so bad at the outset. But let’s play it out.
Seapro Restoration signs up to be a preferred provider for Farther’s Insurance. (Names have been changed to protect…whatever). Soon, Farther’s is sending Seapro a steady stream of qualified “leads”.
Things are good and Seapro decides that now is a great time to invest in some new equipment or hire more staff.
Then a storm hits. Farther’s gets flooded with claims in the region. In turn, Seapro’s phones start ringing off the hook. They’re not only getting calls to handle program work, but also calls from regular customers in their market.
The Program rules dictate that priority must be given to Farther’s claims first, so it is. Seapro puts everyone else on a wait list and then proceeds to work all-hands for the next 20 days straight. At the end of the CAT, everyone is tired, but they managed to service most of their key accounts.
Everyone takes a deep breath, and a well deserved vacation. (Yeah right) Everything returns to normal and the program work keeps flowing like clockwork. Then something changes.
A manager somewhere back East decides that Farther’s Premier Operator Service isn’t generating the anticipated cost savings they planned for. The program ends without notice the next month.
Seapro is in a pickle now. “No problem,” they say, “we weren’t doing too bad before the P.O.S. was created. We still have market share.” But they don’t.
While they were kept busy with program work, their competitors were making real connections and marketing efforts in the market. And now the phones at Seapro simply don’t ring like they used to.
Business lags, and layoffs ensue. People tighten their belts, and managers start a frantic search for another program to replace the lost Farther’s work. And maybe they find one.
All programs are different, but as long as the phone rings it’s OK… right? So Seapro signs up for County Mutual’s Cleanup, Respond And Perform program.
This new program comes with some requirements that Seapro wasn’t used to. Service providers in the C.R.A.P. program are required to respond to every assigned loss in their prescribed zip codes within one hour. They are also required to upload a completed estimate within the first 24hours, regardless of coverage or work to be performed.
Seapro operates out of a rural county in Montana. Their assigned territory is a hundred miles across. The requirements of the C.R.A.P. program now require a project manager or estimator to respond to every loss, instead of a technician. Pictures must be taken, a scope written and conversations with customers.
Seapro’s only PM (because lay offs already forced them to drop their secondestimator) finds himself driving over a hundred miles a day just to keep up. Their ratio of sold jobs begins to suffer because they no longer have the option of qualifying actual jobs from dead ends. Their job profitability begins to drop because jobs at the edge of their service area require four hours of labor just to get to and back (two techs at one hour each way).
Then County Mutual starts really putting the screws in. At contract renewal time County Mutual sends out the memo:”Beginning next month, all Cleanup, Respond and Perform program vendors will be required to use a new pricelist.”
Do you think the pricelist is higher or lower than the standard zip code pricelist?
Now Seapro is working harder than ever for the privilege of reducing their daily equipment rental rates by 10%. And then the next CAT hits. And then the summer slow-down.
I believe you’re seeing the pattern by now.
The reality is that insurance program work is increasingly less profitable and more labor intensive for the vendors. Deals are cut and checks are written at the highest levels nationally, which have to be cashed at the local level. And the number of changes and additional requirements added annually is dizzying.
Carriers are saving on claims expenses by making their vendor programs do the jobs formerly reserved for adjusters and inspectors. TPAs are promising huge claims savings and accomplishing them by slashing price lists. They’re also using arbitrary “drying standards” to further reduce mitigation invoices like never before.
Every day the line between contractor and adjusting company is blurred further, until one day we don’t be able to tell one from the other.
The reality of programs is that they only benefit the carrier, at the expense of the contractor AND insured. No homeowner cares whether you put O&P on a cleaning item (oh the shame), or charged to replace a HEPA filter (what’s a HEPA?). The TPA companies do.
How does turning off Base Service Charges affect whether a basement gets dried out properly? It doesn’t. Why is the carrier not concerned about the customer experience?
They are.
You only need to realize who the real customer is: the insurance company.
That’s how they see it. Vendor programs are there to service THEM. Insureds exist only to pay THEM. The entire system is created AND controlled by the same people: insurance companies.
That’s how a great deal of franchise operators see it as well. When you’re on a program long enough, you start to operate differently than a customer-centric company. It doesn’t take long before your relationship with your carrier and adjusters takes on a more important role than your relationship with your customers.
I’ve been told more than once by several people,
We have two customers; the adjuster and the homeowner.
That statement never jived with me. That’s not how I operate.
What happens when there is a dispute? Or when one side asks you to do something that is not in the best interest of the other? Who gets the tie vote? In the “program” world, the tie always goes to the carrier. There are more umpires than players.
Program vendors (in general) only care about the end-user experience as far as the program review is concerned. A passing score is all that’s needed. They’re playing not to lose.
So who is the real customer? Your own answer to the question will tell you how much program work you do. If you answer honestly, are you OK with it?
There are thousands of quality, honest restoration contractors on both sides. There always will be. My beef is not with any of them. This is a warning.
A warning to those who have yet to experience the ups and downs of the restoration industry that the rest of us know and love. To those who are thinking about starting a disaster recovery company or are a new hire.
Think about where you want your work to come from, and who you want your customer to be.
Disaster recovery is an incredibly dynamic and rewarding industry. We get to come to the rescue every day, and for the most part our true clients are thankful and grateful for our assistance. And until recently, there were systems and programs in place that ensured that if you knew what you were doing, you could make a great living.
The game is changing. The rules are changing. We must be increasingly discerning about which games we choose to play.
Choosing the “program” game may not be worth the price of admission.
Andrew McCabe is an Xactimate estimator and licensed adjuster based in Portland, Oregon.
His companies, Claims Delegates and Contractor’s Claim Service, were created to help educate and serve both restoration contractors and insureds navigate the increasingly complicate claims landscape.
Did you know that you’ve already got the tools to do so? You’re probably already doing these things. But you’re not getting paid for it if you’re not properly documenting your losses.
A properly trained and equipped Water Technician should be creating at least $1,000 per hour of revenue for his or her company.
Do you know what your hourly revenue is currently?
For better or worse, we all have to use Xactimate for water damage estimates (aren’t they actually bills?). If we have to use it, then why not find every line item available to help our bottom line?
It’s plain and simple—master your Xactimate and make more money.
Here are five simple things that your crews are likely already doing. These are things, that if written down properly, can generate real profits for you. For our example, we’re going to imagine a carpeted room with wet carpet measuring 10 x 10 (100 ft2 of Floor Area).
Floor masking is adhesive-backed plastic. It comes in rolls and is applied using a handled applicator. I recommend using it on all entry and traffic areas that the crew will walk through during the course of their work. Just make sure it gets removed once the drying is done.
Painter’s plastic is cheap to buy and fast to install. You can get it in standard 9×12 sheets so you don’t even have to waste time cutting. And at 29 cents a foot, each sheet is 31 bucks in your pocket! Protecting is one of the most profitable things you can do on a mitigation job. I recommend the Frank’s Red Hot method: put it on everything!
Water Extraction – Xactimate Code: WTR-EXT
You charge: $0.53ft2 Time to Install: 3min
Revenue/Hr: $1,060
Water extraction is one of our most requested services, as well as one of the most profitable, if you do it efficiently. Truck-mounted equipment is much faster than portables. The key to proper documentation is getting the entire area extracted into your notes.
Water Extraction Weighted – Xactimate Code: WTR-EXTW
You charge: $0.92 ft2 Time to Install: 4min
Revenue/HR: $1,380
If you don’t own a Water Claw, go buy one right now. A lot of people say that they take too long and aren’t worth the hassle. A lot of people are allergic to money. If used properly, weighted extraction takes a little longer than a regular wand. And the price per foot is nearly DOUBLE! At almost a DOLLAR per foot extracted, your ROI could be less than a day.
Using germicide spray isn’t as profitable as extraction, but it is something that a lot of mitigation contractors forget. Using Anti-Microbrial sends the signal to your client that you care about them and their environment. It’s also a nice CYA method that you can charge for.
We all know that Xactimate is a required part of what we do. As long as that’s the case, why not use every advantage we can?
It’s the inevitable question that I’ve had asked many times over the years. And it’s understandable. I work in a small niche ($210billion) of the construction world called “Restoration.” That means I help people who have suffered water and fire damage to their homes and businesses.
“There’s people who specialize in that?”
Yes, there are contractors who do nothing but restoration work. These contractors are actually my clients. I help them handle the insurance claim processing and writing damage estimates in Xactimate.
“Exact what?”
Xactimate. It’s the estimating program used by 90% of the insurance repair industry to quantify property damage and claim settlements. It’s also where I see people’s eyes start to roll back in their heads. So let me try to simplify the concept.
Insurance claims and the property damage industry is largely controlled by, you guessed it, insurance companies.
We call them “carriers” to be more precise, but you probably don’t care about that. What is important to note is that the carriers have put into place myriad layers of control systems for the sole purpose of… wait for it… saving money.
One of these controls is the standardized, and tacitly mandatory, use of the Xactimate estimating platform. While contractors are not required to use the program, those that want to get paid DO.
One great analogy is the health care industry.
If there was ever an industry dominated by insurance companies, it’s health care. In order to get paid by your HMO, PPO or whatever, your doctor has to first put everything he does “for you” into a matrix of “codes”. There’s an entire field of study called Medical Coding, and entire industries specialized in delivering “coding” services.
Every pill and procedure your doctor prescribes has a corresponding CODE in the insurance company database, and a corresponding price. Without coders, or software that codes, doctors would not get paid by insurance companies. The same is true of restoration contractors.
Xactimate is essentially a construction coding piece of software. It gives carriers and their adjusters the ability to quickly create damage estimates which are uniform in pricing and format across the nation. Half-inch drywall (DRY1/2) and two coats of paint (PNTP2) is the same in New York as it is in L.A.. The pricing database contains thousands of items from paving stones to grain silos. (yes, really)
Contractors who are on the various “preferred vendor” programs are required to use Xactimate to generate their estimates. And since most adjusters won’t deal with an estimate written in another format, even non-program contractors use it as well. Show me a doctor who doesn’t use a coding & billing program.
For restoration contractors, it’s more important to know how to write a detailed (complete) Xactimate estimate than it is to know how to build a house.
I know, someone out there is yelling at their computer screen right now, but that’s just the way I see it. It’s easy to contract out construction. It’s harder to get paid enough, or on time.
“Why should I care?”
Most likely you shouldn’t care. Only 10% of homeowners will experience a disaster of some kind every year. But if you’re one of those who do, it is important to understand the basic building blocks of insurance claims.
If you’ve had a pipe break, or decided that deep frying a frozen turkey in the kitchen was a good idea, you need to know that the amount of your claim settlement will be determined by an Xactimate estimate. [I’ll pause here a moment to let you imagine what happens when twenty pounds of frozen bird gets dropped into five gallons of boiling oil. Yes, that happens. Every… year]
Who writes the estimate and for whom they write it is very important. Is the adjuster writing it? Is the contractor writing it? Do you have a comfort level with either, trusting that they have your best interests first? Would you like to have a little more control over the process?
I’m talking about insurance adjusters of course. And the way that it seems that every claim is being paid out of their own personal bank account.
It wasn’t always like this, but longer I’m in the industry, the worse things seem to get. I used to think that an adjusters’ main motivator was to close claims as fast as possible and move to the next. My thinking has changed. This is due in no small part to the fact that I’m now a licensed adjuster, playing in a game that I’ve ever only watched from the stands.
As a contractor, let’s face it, you take what you can get. In the insurance “restoration” world it is commonly accepted that 1) profit margins are usually higher and 2) in exchange for item “1” you expect to “take one for the team” on occasion. And by “take one”, I mean you do work at cost because an adjuster says so. The unspoken rule used to be that you would be able to make up for your loss on the next one.
As a “program” contractor, you’re expected (by insurance adjusters with whom you have a “working relationship”) to do small jobs for little or nothing, in the hopes that a big job will come along with fatter margins.
This game used to work. And it is still played out today, every day, across the nation, with every carrier and “program” contractor. I say this “used to” work, because I’ve come to realize that the people who are paying for us to play this “game”, are also the ones taking it in the shorts; the homeowners and business owners who faithfully pay their premiums every month.
Last year I began advocating for consumers and non-program contractors on insurance claims. I was promptly confronted by a stone wall of opposition and hostility, coming from the same people who I had previously considered colleagues and partners. All of a sudden I was an outsider and a threat. The “working relationships” that I thought I had developed over my years as a restoration contractor and insurance damage estimator had evaporated overnight.
Where did I lose my integrity?
Two years ago I wrote a large restoration and rebuild estimate for a bowling alley that had suffered a severe fire loss. My estimate totaled over $400k.
I submitted my estimate to the owner and carrier. The owner’s rep, part of a large property management company, about came unglued. They had no idea the steps required and costs involved in a major fire. They asked the adjuster, a large loss “general” with years of experience, if this was normal. Do you know what he said?
“Yes, it seems to be in line with industry standard practices.”
And that was it. No grilling of me. No second guessing. No second opinion. At no point was I questioned about my qualifications or intentions. I was also not asked how I was being compensated, which was the same as most project managers: salary plus commission.
I also wrote a demolition estimate to accompany the repairs using Xactimate, which allows a certain square footage charge for demolition.
That estimate was over $150k, and was paid within a week.
In the end, after supplements and CODE items, my repair scope exceeded $600k. The claim was settled based on my estimating work and my employer moved forward with repairs. Pretty smooth, right?
Fast forward to present. I recently wrote a repair scope for a hotel which suffered a significant water loss. My estimate totaled $215,000, and received a far less cordial reception than the with the bowling alley.
The adjuster, along with their “expert”, proceeded to willfully discredit my entire work product. They questioned everything, including my motivations, compensation and integrity. Every line item was scrutinized with impunity and in the end they rejected the entire estimate.
Instead of working with their insured (and her chosen expert) on the stated loss estimate, the adjuster insisted that their estimate ($175k) was the starting point of any negotiations, and it was up to me to “prove” where they were wrong. This is exactly the opposite of how I’ve operated for years.
I wrote an emergency repair invoice for the hotel, which totaled $60k. Once again I used Xactimate and documented the work performed, by room, down to the square foot. I was quickly informed that “this is a commercial loss” and “that’s not how it’s done.” Instead, the contractor who performed the work had to submit a T&M invoice with all kinds of backup. Then the negotiations began (and are still going on).
The rest of the story
And here’s the kicker: both losses involve the SAME ADJUSTER.
So what changed? Both were commercial losses involving the same adjuster. All estimates were written in Xactimate with the same pricing database. Both situations proceeded along normal lines right up until the point it was discovered that I am a licensed adjuster.
If one thought about it logically, wouldn’t being licensed actually make me MORE qualified to handle losses? Instead of representing a restoration contractor (who stands to benefit from the claim), I represent an insured who… (wait for it), stands to benefit from the claim.
Why does that one change have to result in the entire claims process becoming an adversarial game of cloak & dagger?
What’s your motivation?
It has been a sobering experience being treated like a liar and thief. People with whom I thought I had good relationships with are now telling my clients that I’m “not doing them any favors” with my involvement in their claim.
So that brings us to the original question: what is the adjuster’s primary motivation?
Money?
I think we all know better than that. Besides the few adjusters who are “on the take” (and on their way to prison), most adjusters make what most would consider a modest salary. It’s the benefits and (relatively) stable employment that keeps people around. And adjusters generally don’t make any kind of commission off what they “save” their employers. Can you imagine a world in which they did? OUCH!
Do adjusters seek prestige or status? I’m not sure that adjusting is sufficiently glamorous for those who need their egos stroked.
Control?
Do some people become adjusters for the same reason others become cops; to bring the heat and throw their weight around? Maybe. There are a lot of control freaks out there. Some are just looking for a reason to write a ticket or pull their weapon, others take every opportunity to deny a claim or reduce payments. Because they can.
I’ve wasted many [un-billable] hours arguing with adjusters over small line items. You know, those $100 items that you feel you’re entitled to bill for but the adjuster says, “we don’t pay for that”? After the second phone call, or fifth email, it becomes apparent that this particular insurance adjuster has taken some kind of moral stance against your evil billing practices.
In the end, the one with the checkbook (power) wins.
And we live to fight another day.
Yes, needing control and power may explain the actions of some, but I don’t believe it is broadly applicable.
How about DIS-incentive?
I’ve slowing come to the realization that the majority of adjusters I deal with aren’t trying to do their jobs better; they are doing their jobs in such a way that they get to KEEP their jobs.
Money, power and prestige all take a backseat to the one thing that we all worry about: job security.
The current reality of the average insurance adjuster is based on rules, guidelines and quotas. Browse the LinkedIn articles of groups like Claims Management or Insurance Claims Professionals and it won’t take long to find discussions bemoaning the current state of affairs in the claims profession.
Adjusters are given increasingly less autonomy with more rules and oversight. Education is at an all-time low. Consolidation of claims offices is at an all-time high. The average age & experience level of field adjusters is falling dramatically and experienced “generals” are disappearing from the workforce – and not being replaced.
The entire claims process is becoming automated and delegated to “programs” and TPAs at an alarming rate. Carriers are handing the entire claims process over to outside companies whose sole purpose is to control claims costs.
Claims adjusters have told me that their bonus and pay increases were DIRECTLY tied to ratios like how many times they referred the “preferred” vendor. Others said that they didn’t receive certain perks or benefits because their “re-inspections” showed too much “leakage”.
Can you imagine if, at any time, your closed files were pulled open and audited for “mistakes”? There are actual positions at every major carrier whose sole job is to re-inspect closed claims and find leakage. How would that affect your approach to your current files?
The goal of the property damage adjuster is no longer to “fairly and adequately” settle claims.
It is to process a claim file in such a way that it will pass an audit. Is that right?
The claims process is more about control than indemnification. Contractors’ jobs are more about proper documentation than physical repairs. Getting proper coverage and being made whole has never been harder for homeowners.
How about a solution?
I was hoping as I wrote this article that an answer would present itself. It hasn’t.
Do you have a solution? That’s not a rhetorical question my friends, I’m all ears.
My current recommendation to my contracting clients is that they don’t play the game. I have people ask me weekly about how they can get on “programs”. They all see the preferred provider programs as gravy trains, but in reality the fat has been trimmed and the tracks go in circles. You can’t run a business by losing money on every claim and trying to make it up on volume.
As soon as you step on their court, you have to play by their rules. So I say take your ball and go home. Find clients on your own. Do good work for fair prices.
When adjusters start in with their “we don’t pay for” routine, simply hang up the phone and refer your client to your contract and schedule of fees. And their state’s Consumer Affairs Department. You’re not an adjuster, you’re a contractor. Stick to what you’re good at.
These last couple weeks, I’ve noticed a subtle theme in some of the people I’m speaking with. It has been bothering me enough, and putting these people in bad enough positions, that I’ve decided to write about it in the hopes that others will learn a better way.
What I noticed is that some potential clients have decided that they know best, and that they are smarter than everyone else who have experienced an insurance loss. This very same theme is why Home Depot is a multi-billion dollar company and TurboTax is a household name: there are a lot of things that you can truly do yourself and potentially save money.
But there is a difference between using a CPA vs taxes-in-a-box.
This phenomenon is not new. There have always been those who look for a cheaper way to do things, or shortcuts to their goals. My dad would complain all the time about people who would call his shop for advice.
Dad ran an electrical shop for twenty years. There wouldn’t be a week that would go by without someone calling to pick his brain. There is some of this that is expected. In order to know whether your services are needed, you have to ask questions and educate your potential client on the process of what it is that you do. If someone describes their problem, and you have a solution, then a deal can be struck they can hire you to help solve their problem.
The problem that my dad complained about, and the trend I’ve seen lately, are those people who would call him in the hopes that he could help them solve their problem without actually hiring him. I overheard several of these conversations over the years, and they generally went something like this:
“Hi there, I’m SoAndSo. I’m running some wire to my new stove.” (Red Flag #1: Non-electrician running wiring)
“Hi Mr. SoAndSo,” my dad would say, “What can I do for you?”
“Well I’ve got a GE DoubleDecker WhopperDo and I’m trying to decide whether to use a twenty amp or a thirty-amp breaker.” (Red Flag #2: asking for electrical advice. #3: any decently mechanical person knows the correct answer.) (Just so you know, the correct answer is NEITHER. You should use two thirties with a two-pole setup)
At this point, my dad would have a choice; offer to send an electrician to fix their issue, or spend the next thirty minutes playing Electrical Helpdesk.
And he usually did the latter. It was so hard for him NOT to answer the question, “What would you do…?” And he is just the world’s most helpful person, so he couldn’t help it.
Mr. SoAndSo would hang up the phone to go wire his house himself, and dad would hang up the phone and give his patented “grumble-sigh-aaaarrrgghhhh” (usually reserved for when I forgot to take out the trash). My dad knew that he’d just spent a half-hour helping someone NOT hire him.
He also had visions of some poor soul lying unconscious on his kitchen floor as his house burns down around him.
Electricity doesn’t mess around, and does not suffer fools gladly.
This “free estimate” culture pervades our society. Ask any sole proprietor in any service business and I’m sure they’ll have stories of a serial non-customer who calls for free consultation on a regular basis. The number of reasons this is a bad idea for all involved is too great to address in one sitting, so I’ll focus on the would-be client/pseudo-expert. I’ll even number them for simplicity.
1) If it were easy (and safe) enough for laymen to do, there wouldn’t be specialty trades.
We have electricians, plumbers, CPAs and doctors because their trades are sufficiently complicated to be regulated and licensed by cities, states and the Fed. Yes, there are simple things that we can all do for ourselves. Beyond the simple things, we are all better off leaving it to the real professionals.
2) Advice given freely doesn’t equal a specifically tailored solution.
When someone asks me a “general” question about insurance claims or Xactimate estimates, I give an equally general answer. My advice does not speak to the person’s individual situation, policy language or claim circumstances.
And, as I’ve learned from my dad’s experience, if someone does ask me to speak about their specific circumstance, I (usually) ask them to sign a service contract. Which leads to…
3) Action taken on free advice, which ends poorly, provides the recipient with ZERO recourse on the one who gave the advice.
Liability policies, Errors & Ommissions policies, malpractice and contractor bonds are all things that exist to protect clients from mistakes that people make. That is why some trades like lawyers have strict policies against providing ANY consultation or specific advice without compensation or retainer.
4) The world is full of smarter, more experienced people
This brings me to the heart of the matter. If you believe that you are smarter than me, why are you asking me for advice and information? If you believe that you can do my job better than me, if only you can get a couple “pointers”, then why are you doing something else for a living?
What really gets me is those people who think they can outsmart industries and companies that have been around for HUNDREDS of years.
Do you really think that the IRS hasn’t already figured out the “trick” you’re about to try? What makes you think that your insurance company doesn’t know that people are constantly looking for a way to take advantage of their property claim?
The reality is that most trades have more potential pitfalls than jackpots. Professionals make their livings by knowing the rules and playing by them day after day. Getting rich quick just doesn’t happen (very often).
For every story about finding the tax loophole or insurance claim trick that landed someone thousands of dollars, there are hundreds of people that found out the hard way that messing around with trillion-dollar industries is a bad idea.
I make my living the hard way: going to work every day and fighting for my clients. The fact that there are so few companies like mine out there is a testament to how difficult my industry is. Truth is, the insurance claims industry is downright hostile to new players with new ideas about how things can be done.
I continue to do my work because I believe that I DO have a better way, and I want to change my industry. Yet my approach is measured, in a “better mousetrap” kind of way, NOT in a “card up my sleeve” way.
So, to all of you out there who fight the good fight every day in their chosen profession, who put the best of themselves into everything they do because it’s the right thing to do, I say, “Carry on men (and women)!”
We are the light (or something like that).
For those of you with a problem that needs solving, find a quality professional to help you out. Ask people you trust for referrals, and take the advice of friends.
And to everyone looking for a shortcut via free advice, be warned. You WILL get what you pay for.
It’s that time of year again here in the Northwest. The weather is turning and the wipers need replacing. And, with the last storm system that blew through, a lot more than the leaves are falling.
As I was driving into work I saw several large branches strewn on the roads and in the ditches. That reminded me that Fall is officially Tree vs House Season.
I’ve handled many hundred insurance claims involving a tree falling from one yard and damaging (sometimes smashing) someone else’s home. Almost without fail, I hear the same things from the victims. There is a lot of misunderstanding out there when it comes to “OPP” (Other People’s Property) and home insurance, so I thought I write this little public service message for you.
Things to know when a tree hits your house:
– You can’t insure OPP. And your neighbor can’t insure your house. That means that the only insurance that could cover damages to your house from a fallen tree, no matter where said tree came from, is YOURs.
– Tree removal has limits. Most insurance policies contain maximum coverage amounts for tree removal, usually $500. Depending on the size of the tree, you could spend $500 very quickly. Make sure that whomever you get to remove the tree is aware of the limit.
Shift coverage when possible. This means that you likely have coverage under your policy for things like board-up and tarping. If the same company that removes the tree also places a tarp for weather protection, have them separate their bill for both activities.
When in doubt, leave the tree in the yard. Remove the tree from the house to prevent further damage, but leave the rest in the yard instead of racking up removal charges. You can always come up with a solution down the road.
– Don’t rush to repair or settle. The likelihood of hidden damages is high when trees and roofs are involved. I’ve seen well-built houses stand up to some big trees with little visible damage from the exterior. That does NOT mean that other things, like earthquake tie-downs and foundations, escaped unscathed.
Retain an insurance restoration specialist. Preferably someone who understands structural damages and has the ability to refer a high quality structural engineer
– Call for your free consultation. Claims Delegates is always here to answer the tough questions. Should I turn in a claim? Who should I call first? Who should I trust? Trust the Badge. 888.745.7568
Ron Garcia of The Garcia Group asked for references today at our BNI Meeting. The website is called Thumbtack. So I went there, gave him a glowing review, then signed up.
Part of signing up Claims Delegates involves putting a link on my website. Hence this post.
If everybody followed the rules, nothing would ever change. ~Richard Branson
Fighting upstream is hard. Being different is hard. Making real change is hard.
The last couple weeks have shown me just how hard it is to be different.
I had a potential client accept a settlement offer from their insurance company that was $75,000 LESS than the estimate I provided. Why would anyone do that, you ask? Because fighting is hard, that’s why.
Filing an insurance claim is an intimidating process, and it has been designed to be. The insurance claim process is only as helpful to policy holders as it needs to be to avoid massive complaints.
Once the claim department became a profit center, the needs of individual people became secondary. Anyone who has filed a claim knows that the first thing companies to is try to talk you OUT of filing a claim. The second thing is they try to write a check immediately to settle the claim.
Insurance companies understand that you are more likely to take less money right now, than to wait and get more money after a period of potential conflict; even when they know you’re owed more than what they’re offering.
Change is Happening
Claims Delegates is leading the charge for change in the insurance repair industry – and meeting plenty of opposition along the way.
Several adjusters have told me that they don’t have to “deal with me”. Some have accused me of breaking the law (adjusting without a license), which I’m not. In every instance, the only thing I’m guilty of is telling the policyholder the truth of the situation: that THEY ARE IN CONTROL.
The reason I face such fierce opposition is because they fear the change I represent. My approach and business model is nothing short of a 180 degree shift in “business as usual.” Carriers and program contractors alike do not want to lose control of the claims process. But they are, slowly but surely. And that scares them.
The most dangerous thing to the establishment is the idea that they are not in control. Once the idea of policyholder control spreads, the claims landscape will be changed forever. For the good of EVERYONE.
Change is Good
My vision of the insurance claims process is one that is truly customer driven. The ideal claim is one where the insured is equipped with the knowledge and advice necessary to make the big decisions the easy ones.
My definition of a “preferred vendor” is the contractor that the OWNER prefers, not the insurance carrier’s vendor who has agreed to give a discount to the insurance company. What about YOUR discount?
Why should restoration contractors enjoy profit margins that exceed 30% when the work is actually performed by subcontractors making far less? Who is paying for all this anyway?
Are You Ready for some Change?
Do you want a different claims experience? Do you want to know that your best interests are being considered and looked after?
If so, strap on your helmet, put an “R” in CHANGE, and get ready to take CHARGE. Stake YOUR claim, and Trust the Badge – Claims Delegates.
How to make the SMART move when choosing a contractor.
Choosing a contractor is tough, real tough. Most people don’t know where to start, so they do a quick Google search and get lots of bids.
Let me tell you, that process is a sure fire way to fail.
When someone asks for a bid, what they’re really saying is “price is my biggest concern.” What they end up getting is a bunch of numbers from contractors who don’t value their own time enough, and spend more time bidding work than doing work. Do you know what else you get when you choose the lowest-bid contractor? Nothing.
Don’t get me wrong; it IS important to understand how much a project will cost before signing anything. What I mean is that there is a difference between budgeting a job and shopping a job.
I stopped giving free estimates a while ago. (I won’t tell you when because, frankly, I’m ashamed it took me so long to “get it”). For years I couldn’t figure out why I was losing job after job, even after I thought I’d put on a great sales presentation and given a solid bid.
What I came to realize is that, for the most part, I’d lost these jobs before I’d even stepped onto the client’s property. And that by giving a “free estimate”, I’d actually de-valued myself and my company because I’d given no value to my prospective client.
Now, this article is about choosing a contractor, not being a contractor, so let’s get back on track.
In order not to fail as a consumer of contracting services, you need to start asking different questions. That begins by understanding that while price is a factor in any purchase, it is seldom the most important.
Question 1: What is my pain?
What is the problem that you’re asking a contractor to solve for you? Be specific and go deep (stay with me here). If you tell me your house needs painting, is it because you don’t like the color? Or is it because the existing paint is falling off and the rain is eating your siding? Both may require painting, but the later may mean that there are additional items to be addressed before a coat of paint in applied.
Question 2: Which contractor has the best plan to make my pain go away?
You begin to answer this question during your phone/email/Facebook/whatever interview with prospective contractors. Instead of wasting everyone’s time by asking for another “estimate”, start to ask how they would solve your particular problem.
Use this time to educate yourself on all the possible ways to fix it. Take the opportunity to learn something new.
You’ll quickly discover that the contractors who truly care about quality and customer service are the ones who take the time to explore the options with you.
There are always more ways than one to skin the proverbial cat. Every contractor has their own particular approach. So find the flavor your like, and then make your decision.
Elevated Pain
I’ll end this article with a story, and the reason I decided to write about this particular subject today.
I was recently hired to manage a painting project for a condo association. I was brought in mid-stream, after there were several bids on the table.
My task was to choose the “right” contractor for the job, and then supervise the project to completion.
This particular condo is unique in that it the majority of the building hangs off a cliff overlooking downtown Portland. The only portion of the building at “ground level” is the entrances to the units and parking spaces.
The rest of this two story structure is anywhere from thirty to FIFTY feet off the ground. This poses a particular problem when performing any kind of exterior repairs, including painting from a ladder.
The bids were all over the map. The highest was $26,000, which included $13,000 of scaffolding.
The lowest was $5,600 with scaffolding “BY OTHERS.” Naturally I started with the two in the middle (who were still $9,000 apart).
Two phone calls later I’d found my winner. This particular painter had looked at the project and seen the same thing that I’d seen: we had an access problem, not a painting problem. He had taken it upon himself to search out another contractor who specializes in scaffolding, and had received a bid from them which he included in his proposal.
Simply: he felt my pain.
Instead of finding scaffolding and setting it up himself, like the other painters were proposing, he freely admitted that he was not a scaffold expert and found someone who was. He solved my problem, instead of just giving me a painting bid.
My Resource
Now I’ve got TWO more contractors to put in my Rolodex, err, phone that I can use and refer to future clients. That painter showed me his willingness to provide value, and won my business going forward.
And the kicker is that he could have bid $4,000 higher and I’d have made the same choice.
After reading The Long Tail and Killing Sacred Cows, and after sitting down with Beth from Four Winds Coaching yesterday, a core truth stood out to me.
As with all great books, ideas and coaches, they speak about the profound and basic truths. As a society, we have a tendency to ignore the simple in favor of the more dramatic. This is partly because we all secretly love drama, but mostly because we are afraid to embrace the simplest truths. Accepting something as true, you see, means we have to stop ignoring it and start living it. We have to own it.
That kind of responsibility scares us.
We spend more time trying to improve poor performance, than we do trying to exploit those areas that we truly excel at. Let’s use a report card example. If your child brought home a report card with an A, two B’s and a D, what would you spend the next ten minutes talking about? (Hint: D). Why? Because D’s are “bad” or below “average” (whatever average is). And how much time would you spend talking about the “A”?
So instead taking the opportunity to praise and lift up, most of us would tend to focus on the negative and talk about “how are we going to help you get that D to a B?” And most of us don’t realize that by trying to “help” our child, what we’re actually doing to sending the message that they aren’t “good enough.” (Hint: WRONG MESSAGE)
We missed the opportunity to find out what really makes our child tick and where their true talents lie.
In Killing Sacred Cows, Gunderson describes the “Consumer Condition” vs. the “Producer Paradigm”. He argues that our personal success, as well as our success as a species, is largely determined by which paradigm we ascribe to. It influences how we see and interact in the world.
If you are coming from a place of scarcity, win-lose, fear and dependence, the problems and situations you face in the day-to-day will become tests of your ability to take a piece of someone else’s pie. But if you change to a mindset of abundance, win-win, faith and inter-dependence, those same “problems” start to become “opportunities” to create more pie.
And who doesn’t want more pie?
Chris Anderson’s The Long Tail explores the world we live in where “blockbuster hits” aren’t where the “big bucks” are. While it was full of great stuff (and I highly recommend you read it), the one quote that stands out is actually a quote of a quote;
“There are no masses; there are only ways of seeing people as masses.” Raymond Williams 1958.
While we all try to compartmentalize our coworkers, friends and even strangers into neat groups of faceless generalizations, the reality is that no two people are alike. To put it another way, there is no forest; there are only a bunch of trees. The approach I use with you should be specialized and different than the approach I use with someone else.
When we use one-size-fits-all solutions to our problems and relationships, we end up doing more harm than good (despite our intentions).
I had coffee with Beth Kuchenreuther of Four Winds Coaching this week. Despite the fact that she is an amazing listener with a talent for getting people (me) to tell their story, she was actually able to get a couple words in edgewise. And those words stuck.
Beth said that most managers spend an inordinate amount of time managing the problems; the weakest links in their organizations. The explained that the energy we (managers) spend “improving” poorly performing employees is wasted. Much like us trying to improve our child’s “D” to a “B”. We’re missing the opportunity.
“We coach to the strengths of the individual”
Her words hit so hard, I swear the barista looked up from behind the counter. It was simple, profound and oh-so-hard to admit. Once I picked my heart up off the floor, I wrote it down:
So how much time do you spend finding the flaws? What kind of energy do you put into fixing broken systems (or people)? I don’t know off hand who said it first, but whatever we seek, we will find. It’s simple and true.
Can you change that?
How about seeking the good? In others AND ourselves. What about building up the strengths we find in others? What would that look like?
Now before you break out the sunscreen, may I suggest you verify a different kind of coverage?
This month’s video illustrates how complacency in coverage can really burn.
A tenant lets a water leak go unreported and only notifies the landlord AFTER the kitchen cabinets are damaged beyond repair. The heat gets turned up even higher once the adjuster explains the lack of coverage.
“Insurance companies rely upon the ignorance of their own policyholders. An uninformed policyholder will rarely argue with an adjuster, because they don’t know what they don’t know.” –Russell Longcore Insurance Claim Secrets Revealed! 2006
You’re an informed consumer aren’t you? You shop for high-priced items when they’re on sale. You’re a member of a wholesale warehouse. When you need home repairs you utilize a reputable referral service or get recommendations from people you trust. You even know that hiring a CPA makes sense at tax time, because they are good at taxes and you’re not. So why wouldn’t you take a similar approach when it comes to a fire or water disaster event?
The reality is that most people have little knowledge of either their own insurance policies or the claim process. And why would they? Only one in ten of us will have a major insurance claim event in our lifetimes. The rest will never need to know anything about their insurance company beyond where to send the premium checks.
I’m writing this article for those who aren’t as lucky. For you who HAVE recently experienced an “insurable” event, I have a question for you: would you let the IRS do your taxes? (stay with me here).
Arguably the IRS is infinitely qualified to file your tax return. After all they wrote the rules and they write the checks. Why not? The answer is that they aren’t working for you or your best interests.
“Beginning in the 1990s… insurance companies reconsidered [their] understanding of the claims process. The insight was simple. An insurance company’s greatest expense is what it pays out in claims. If it pays out less in claims, it keeps more in profits. Therefore, the claims department became a profit center rather than the place that kept the company’s promise(s).” – Jay Feinman Delay Deny Defend 2010
Letting your insurance company adjust your claim and write your repair estimate is exactly like asking the IRS to file your tax return. The industry is counting on the ignorance and complacency of its’ very own customers in order to return profits for their shareholders. There is good news though: you have the power to change it. Let me give you a few “secrets” that will enable you to take control of your insurance claim.
You can choose your Contractor
Most people ask their insurance company who they should get to fix their home. They don’t know what you know. These so-called “preferred” vendors play the game for their repeat customer – the INSURANCE company.
Choose you own preferred vendor. Who is most qualified to replace your laminate floors after they’ve been damaged by water from a broken pipe? How about the guy that installed them the first time? A kitchen fire destroyed the cabinets that you had installed in your remodel a few years ago? Why not call the contractor that you already know and trust to replace them?
Maybe you have one company that takes care of all your home repair needs, from landscaping to painting. They would be perfect to help you in your time of need.
Insurance repairs don’t require three bids
You don’t have to get multiple bids to get the best price. You’ve already chosen your preferred contractor, now they need to tell you what their price is.
Their estimate does need to adhere to certain guidelines (like being written in Xactimate or other industry software), because your adjuster needs to be able to read it. But that’s why you have Claims Delegates to make sure things are documented well.
“Restoration” contractors enjoy far higher margins
Imagine if you could make 30% more than you’re making right now just by learning a new language. Would you? That is what “restoration” contractors have already figured out. If they learn how to estimate using Xactimate, they can enjoy 30% higher gross profits than most contractors.
Now, when you choose your insurance company’s “preferred” vendor, where do you think that extra 30% is going? Do you think you’re getting 30% higher quality? Don’t you think you should?
By choosing your own contractor, and hiring your own insurance expert, you can enjoy the benefits yourself. Isn’t that only fair?
You are in Control of your Claim
Above all, you are in control. You have entered into a contract with a company to cover you in the event of a loss. Now that you’ve had a loss it is up to you to enforce your rights under that contract. Homeowners who take control of their own claim routinely enjoy claim settlements 40% higher than those who take what the adjuster gives them.
You are an informed consumer. You enjoy being empowered and believe in education. You know who your advocate is.
It has come to my attention that most people don’t understand just what it is that I do for a living. I’ll admit that the term “independent estimator” is fairly ambiguous. It’s not like I’m a plumber or mechanic. So here is a brief video explaining my role as insurance liaison, property damage claim expert and all-round referee.
I’d like to share a little about what exactly it is that I do and where you can go for more information.
I help contractors do insurance work so that:
They get paid quickly
They make 35% gross profit on every job (at least)
They increase their service offerings (i.e. their past customers become future customers and referral resources)
The insurance repair industry is changing, and is ripe for a big change. There is typically a huge technical and cultural learning curve for new players. I am the only service provider in Portland that specializes in helping non-restoration GC’s perform insurance repairs.
With my help, any quality contractor can avoid the learning curve and break into this exclusive market. My dream is to have a world where the homeowner (insured) truly has a choice in selecting their contractor.
I know you do high quality work. That’s exactly the kind of work that most people want done when disaster strikes. I’m here to make sure you get paid on par with your quality level.
I’m enclosing a sample Xactimate estimate. As you’ll see, they aren’t exactly self-explanatory. This particular estimate was the final product of several rounds of negotiation and revision. The insurance company initially wrote their estimate at $53k. My first estimate was $94k.
With my help, we finally settled at $83,947 ($31,000 higher than the insurance company offered). And the contractor still has the ability to supplement for permits and other “open” items. I think I earned my 3%, don’t you?
My services also include an email campaign designed to get the word out to your existing client base about your new “restoration” services. I’ve got a plug & play template and an email marketing service ready to spread the word. Also, I can show you how to get on LinkedIn and Facebook. You really need to be there if you aren’t already.
Insurance adjusters are not the bad guys (or girls). I’d like to take this opportunity to make the point that insurance adjusters have jobs to do just like you and me. There are several critical steps in an insurance claim and the adjuster plays a key role in each one.
[An] adjuster… was “repeatedly and severely criticized for using discretion and judgment in evaluating and adjusting claims.” – Jay Feinman Delay Deny Defend 2010
“Beginning in the 1990s… insurance companies reconsidered [their] understanding of the claims process. The insight was simple. An insurance company’s greatest expense is what it pays out in claims. If it pays out less in claims, it keeps more in profits. Therefore, the claims department became a profit center rather than the place that kept the company’s promise(s).” – Jay Feinman Delay Deny Defend 2010
I’ve spent the last fifteen years working in the disaster restoration industry. If you had a flood, fire, or any other disaster covered by your insurance, I’m the guy that put your world back together. I care, and I want you to feel as if your disaster never happened.
My grandfather was an insurance agent. My uncle is an insurance agent. In the old world of insurance, the policy holder was the most important. In this world, if a client pays his or her insurance, that person is covered—completely covered. If there is a disaster, everything is taken care of.
But that is no longer the case. The industry I have known is completely changed. My clients are no longer “in good hands.” They are no longer treated “like good neighbors.” The policy holders and contractors I work with are treated with suspicion and contempt. My work to service claims is falling under the accusatory gaze of adjusters. These men and women are under constant pressure from their bosses to conform to a system that favors corporate profits over policyholders.
When the game changes, we have to innovate in order to survive and thrive. Claims Delegates exists to help you thrive in the new world of insurance claims.
Gone are the days when a homeowner can submit their contractor’s repair estimate and get paid promptly. Today’s repair estimates must be submitted using specific software, in a specific format, within specific parameters. Skip this process and your estimate is considered “Non-standard,” and these repair estimates are either completely ignored or payment is severely delayed. Worse, if the payment is made right away, it usually means that your estimate is far below what the insurance company thinks it may owe: you left money on the table.
Yes, the game has changed. I can show you how to play it right. “Restoration” contractors still enjoy some of the highest profit margins in the construction industry. Fire and water damage repairs continue to be extremely lucrative and rewarding. You just have to know how to play.
“Insurance companies rely upon the ignorance of their own policyholders. An uninformed policyholder will rarely argue with an adjuster, because they don’t know what they don’t know.” – Russell Longcore Insurance Claim Secrets Revealed! 2006
Homeowners that understand their rights and are willing to educate themselves will continue to enjoy settlements that far exceed those of the uneducated masses. It is not uncommon for a homeowner to receive several times what the insurance company originally offered. You just need the proper tools.
Claims Delegates helps you navigate the changing insurance landscape. I will show you the way through a minefield of restrictions, objections and “deny first, pay later” systems set up to keep insurance carriers from paying their fair share.
Yes you can. However, you should be aware that there are some extra steps required, and you will want a contractor who is experienced in dealing with insurance companies. An insurance claim can be a great excuse to finally do that remodel project you’ve wanted to get done. A lot of the costs for the remodel like demolition, new drywall, painting and floor coverings might be fortuitously covered by your insurance settlement making that big project much more affordable.
When your home is damaged by a covered event, your insurance company owes you the money to repair your home to pre-loss condition. If you have a mortgage, your mortgage company will take steps to make sure their interest in the property is protected. The check you receive from your insurance company will have your mortgage company listed as a payee and they will hold the money in escrow until repairs are completed and inspected. Your insurance policy is a contract that requires your insurance company to pay you for damages, and your mortgage is a contract that requires you to make payments and maintain your property. Nowhere are you obliged to use your insurance money to make your home exactly the way it was before your loss.
Step 1 is to complete all required emergency services – this generally includes drying of wet materials, demolition of nonsalvageble building materials, removing contents from affected areas, cleaning of smoke or contaminated water residue, and any other service required to stabilize your home’s environment, prevent further damage, and identify 100% of the damage. These activities are covered under your policy and will not affect the payment you receive for repairs.
Step 2 is to have your insurance adjuster inspect the loss and write an estimate for repairs. It is a good idea to have your contractor present during the inspection since insurance adjusters usually do not have a construction background.
Step three – review the insurance company’s estimate for accuracy and completeness with your contractor. Things that are often inadvertently left out or undervalued by insurance adjusters are
Code issues that most policies have coverage for – for example, you may need new wiring for the affected area of your home.
Wall surfaces – plaster is worth much more than drywall, or if you have paneling over drywall you are owed for both
High end items like expensive granite flooring, real or exotic wood trim, wool carpet, custom built cabinetry, special HVAC systems, etc
Extra work needed to perform some repairs due to difficult access, lack of availability, or existing conditions in your home
Some prices in the estimating software estimating software may not be sufficient for certain items. Get documentation for those items in the form of subcontractor bids, photos, costs, etc.
This step is very important. If you are simply repairing damage, and extra work is required it is easy to supplement your claim, but if you are making changes, the insurance company may deny your supplement because it would not have been needed if you weren’t making the change.
Step four – With your contractor make a list of the adjustments you need to your estimate. Call your insurance adjuster and explain your adjustments one at a time. An experienced contractor will be able to help you with this process. Your goal is to come to a settlement for your claim that includes the full scope of repairs your insurance company owes you.
Once you have agreed on your settlement, you can now proceed with work on your home. Your contractor will prepare an estimate for what you want done and you can use your insurance settlement to offset your remodeling expenses.
A standard home insurance policy provides you with six different types of coverage. Each type of coverage has different policy limits and is designed to cover you for different things. Your deductible only applies once for a covered event, no matter how many of the below coverages are used.
Coverage A – Coverage for your dwelling. This covers damage to your home in the event of a covered loss.
Coverage B – This is coverage for other buildings on your property, like a shed, barn, or garage. Normally the limit on this coverage is 10% of your dwelling coverage.
Coverage C – Coverage for personal property. This covers all of your belongings in your home, although there are important exclusions or caps on things like jewelry, guns, furs, and cash. Coverage for vehicles is normally excluded as well.
Coverage D – Coverage for loss of use, also known as additional living expenses, or ALE. This coverage pays hotel and restaurant bills if you cannot use your home because of a covered loss.
Coverage E – Personal Liability Coverage. This is coverage protects you if someone is hurt on your property.
Coverage F – Medical Payments. This covers medical payments for invited guests that are injured on your property and do not wish to sue.
In addition, most policies include extra coverage for debris removal, trees, shrubs and plants, and Law and ordinance also known as code update. There are usually a few other goodies available as well.
Too many homeowners don’t file a claim because they are afraid of their deductible. They may not have the money, and are afraid “paying your deductible” means money out of their pocket. That is not true.
Your insurance company will subtract your deductible from the total of your claim, so there are lots of ways to get your damage repaired, without spending a dime of your own money. These are legal and ethical, and in no way involve any kind of fraud.
Do some of the work yourself –There are lots of activities that need to be completed to bring your home to preloss condition. Cleaning, demolition and painting are generally pretty easy to do yourself. Discuss the job with your contractor and find one or two items you are comfortable doing yourself in exchange for credit on your bill.
You can choose less expensive replacement materials – For example if you have real wood flooring, you can replace with carpet or laminate, and keep the difference. Once your claim is documented, your settlement will be based on what was there before your loss, it is perfectly acceptable to make changes during the repair. Some people even use a loss as an opportunity to remodel.
Don’t replace all of your contents –We accumulate a lot of stuff in our homes that aren’t as useful as they once were – clothing, shoes, books, old video game systems, etc. If they are damaged you are entitled to be compensated for them. Take the money and don’t replace what you don’t need.
Act as your own general contractor –Insurance claims consist of several distinct parts. Emergency services and mitigation generally need to be done quickly to prevent further damage. Hire a restoration contractor to do those activities. Repairs are not so time sensitive, contract those yourself. Your insurance company will generally pay your claim based on standardized pricing, and if you can get the work done for less, you keep the difference.
The decision to file a homeowner’s insurance claim should be taken seriously. Insurance companies track and share your claims history using the Comprehensive Loss Underwriting Exchange, or CLUE. A history of frequent claims can cause an insurance company to cancel your policy or raise your rates. Just an inquiry to your insurance company’s claims department can trigger an entry on your CLUE report, even if you don’t file a claim.
So how do you know if you should file a claim or not?
Add up your damage. Don’t underestimate either. Believe it or not, most people underestimate the cost to repair property damage. Here’s why –
Water damage is often hidden, it usually comes from inside walls, behind refrigerators, under dishwashers, behind washing machines, etc. It is hidden. By the time that puddle from your icemaker line makes it to the front of the refrigerator it has gone behind your cabinets, under walls, into your crawl space, and under your kitchen floor. First glance looks like a puddle, but a serious inspection will often show that you have moisture 20 feet or more from the source of the leak. That moisture will cause mold and rot, swelling and deterioration, and all kinds of problems if it isn’t treated quickly. There is a reason that the average water claim is $8000.00.
Water needs to be dried before repairs can be made. Prompt and thorough drying prevents problems later, minimizes health risks(more info), and costs a lot of money – even if you do it yourself. Before any repairs are even started plan on at least $1000 to dry your structure.
You can usually see fire damage, but smoke goes everywhere and gets on everything. Your nose gets desensitized to smoke odor very quickly, so you won’t smell smoke in the rest of your house until the worst of the damage is cleaned. You won’t notice the smoke smell on your clothes, but other people will. Cleaning smoke from your home and belongings is incredibly labor intensive, and becomes very expensive very quickly.
People don’t factor in all of the costs, or they don’t initially realize the amount of work a repair will require. A two foot by two foot section of damaged flooring usually means the whole floor needs to be replaced, which means all the furniture in the room needs to be moved and stored, and all the floor trim needs to be removed, put back, and painted, and if the floor is continuous to other rooms the same is true for those rooms too.
It’s easy to forget about labor – something like 75% of the cost of your home is labor, and some common activities are far higher. You can paint a room for fifty dollars worth of paint, but its $500 to get the pain on the walls.
People undervalue their contents – they often think in terms of garage sale prices, but the reality is you have replacement cost coverage for those items. Even a bag of old clothes headed for good will is worth a bunch of cash if they are damaged in an insurance claim.
So to decide whether or not to file an insurance claim –
Estimate the cost of your damage, drying, cleaning, personal property, materials, labor, etc., if the damage is more than your deductible, consider filing a claim. If you’re not sure, call us for advice.
Sometimes I am amazed by the amount of money that gets left on the table during an insurance claim. Today I ran some quick calculations on a recent claim I helped a client with.
While I won’t reveal anything in particular about the claim or insurance carrier, I can tell you a little about the situation.
When I was hired to look at the claim, there was a settlement offer on the table for roughly $325,000.
After looking over the insurance carrier’s estimate and making some minor suggested revisions, the settlement offer was over $390,000. It was well over a $60,000 add to the final claim.
I didn’t do anything extraordinary either. I was just looking at the loss from a contractor’s perspective; instead of an adjuster’s point of view.
What did this cost the claimant for my services? 1/4 of a percent (less than $1,500). I think he got his money’s worth.
I’ve been estimating insurance losses for some time now. I’ve worked for several companies, with a myriad of business structures.
I feel I know the restoration industry quite well. I know what makes it tick, and how to make a good living.
In recent years I’ve noticed a marked trend away from the “in-house” labor model. It has become too expensive to hire your own carpenters, drywallers and painters.
What has happened is that the industry has leaned more and more on their subcontractors to carry the burden (and risk) of hiring and retaining experienced tradesmen. And why not? You don’t have to pay your framing sub unemployment benefits when you run out of work do you?
This trend has led to the growth of so-called “turnkey” contractors who are able to handle several or all of the trades required to perform restoration work. Increasingly, these contractors are being asked by their existing & past customers to handle insurance losses.
Without knowledge of Xactimate or adjusting guidelines, the turnkey contractors are compelled to refer this work to their “restoration” partners. That is where I come in.
I help the remodel & new construction contractors service the customers they’ve worked so hard to please over the years. If you’ve remodeled Mrs. Jones’ bathroom and she calls for your help after her washing machine explodes, why would you want to pass that project to someone else?
Let me show you how the system works, and you can show Mrs. Jones why she chose to hire you in the first place.