“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.