When disaster strikes and wreaks havoc on your home, your immediate concern is restoring normalcy. Your first lifeline? That call to your insurance company where you try to find out whether or not the property damage is covered and how to start the process of filing an insurance claim to reclaim your home.
Once your claim is underway, you turn to fixing the damage. Be it a flood, a fire, the wind, or any other formidable foe causing damage, the unsung hero in your recovery tale is undoubtedly the insurance claim contractor. So, let’s dive into the essentials – the key insights you need to know to find the right professional to revive your home.
Here at GreatBuildz, a free service that connects homeowners with reliable general contractors in Los Angeles & Southern California, we speak to homeowners every day about hiring a contractor to repair their home insurance damage – here are some tips to get you started.
- Understanding your insurance policy and promptly contacting your insurance company or agent is essential to confirm coverage for property damage.
- In emergencies, restoration contractors address immediate issues, while general contractors, specializing in major projects, handle the subsequent rebuilding phase for a higher quality standard.
- Consider both recommended and independently researched contractors, vetting them based on licensing, insurance, experience with insurance claims, and specific project expertise.
- Familiarize yourself with the insurance company’s payment process, communicate it to your contractor, and collect detailed estimates to ensure fair compensation while comparing scopes of work.
- Organize comprehensive records, including contracts, plans, payment records, and insurance communications, to navigate potential disputes. Avoid common mistakes, such as neglecting policy details and promptly notifying the insurance company after a loss.
How To Begin a Home Insurance Claim Process
When you have property damage that is due to a “covered peril”, the insurance company is expected to cover the cost to repair it, less your deductible. Because it’s likely that you haven’t read the fine print of your insurance policy, you’ll need to start by making a call to your insurance company or insurance agent to confirm your damage will be covered. They can connect you to the right person to handle your claim and guide you through the process.
This representative is usually called a claims adjuster, and they will need to actually come to your home and perform an inspection of the damage. This person will generally be your point of contact during the entire process and interact with you about paying the contractor for the costs of making the repairs.
An adjuster should be assigned to your case as soon as you file a claim. Talk to your adjuster about how quickly you can get the first insurance check to cover any emergency work that was required to limit the property damage. For example, if you had a flood, you may have called an emergency plumber to repair the broken pipe before it caused more water damage. If you have water damage from a roof leak, you need an emergency roofer to tarp the area which is leaking. You may have also called a ‘restoration contractor’ to urgently remove the water and install air scrubber fans to dry the area.
Restoration Contractors vs. General Contractors
In an emergency, the first thing you’re worried about is solving the most pressing issue, whether that’s dealing with smoke, water intrusion, a roof leaking, or any other damage. For this immediate, urgent work, you’ll need to hire a restoration contractor. This type of professional is trained and experienced in performing the mitigation work needed to address the issue and prevent further damage. They are generally available on short notice; they have specialized equipment and the certifications to do such ‘hazardous’ work as removing mold, asbestos, or lead paint.
Restoration contractors might quickly remove and discard any water-soaked areas such as flooring or drywall so that your home doesn’t develop mold. Or they might bring in air-scrubbers to start filtering the air from smoke damage, etc. These contractors are usually very accustomed to working with insurance companies, but make sure the company you choose is willing to deal with your insurance company, supply any necessary documentation, and wait on them for payment.
So, although your best bet is to call a restoration contractor to deal with the immediate emergency, the next step in your process will be to ‘rebuild’ the areas that have been damaged. Although some restoration contractors also offer this service, you’re probably better off finding a quality general contractor to do this work, especially if it’s a major project (over $10,000) that includes flooring, cabinetry, roofing, etc. Because general contractors specialize in this type of construction, their staff and subcontractors are more likely to perform this work to a higher quality standard.
Which Contractors Can Perform My Home Insurance Claim Repairs?
When you start speaking to the adjuster about your home insurance claim, they will probably instruct you to start getting estimates from contractors to repair and restore the damage. Depending on the occurrence, this may include:
- Roof repairs
- Drywall replacement
- Flooring replacement
- Cabinetry replacement
The adjuster may give you a list of contractors that are in their network and they will also usually allow you to find and select your own local experienced contractor for insurance claims.
Getting an estimate from one or more of the insurance company’s contractors is a good idea, but make sure you do your own research on these companies. Don’t rely on the insurance company to know whether a contractor is reputable. Check their reviews online and at the BBB, check their contractor’s license, get a copy of their insurance certificates, and ask to speak to their references. In addition, it is probably a good idea to also get a few estimates from contractors that come referred to you, who are not on the insurance company’s list.
When it comes to general contractors in Los Angeles and Southern California, you should be aware that there are quite a few licensed companies (over 20,000). You’ll need to find the right one for your project because not all of them:
- Are willing to work with insurance claims
- Specialize in the project you need completed
So, when you’re searching for potential contractor candidates, your first inquiries need to be:
- Are you licensed and insured?
- Do you have experience working with insurance claims?
- Are you experienced in my specific project type?
That should be your first level of screening, and you can do further contractor vetting down the road. Also, keep in mind most contractors are not well-versed in dealing directly with insurance companies, so you will still need to be intimately involved in the project along with your insurance adjuster.
That way, you can compare your options and choose the best fit for you. You have the final decision about which contractor you want to use to make the repairs. You don’t always want to choose the lowest-priced contractor, regardless of whether they are approved by the insurance company or not. A poor contractor can make your life miserable even if you aren’t paying his bills.
Collecting Contractor Estimates
Make sure that every contractor you speak with and invite to bid on your repairs is made aware that this will be paid through a home insurance claim. Not all general contractors are willing to perform insurance restoration projects.
Ask each contractor for a detailed estimate of the work necessary to restore your home to its previous condition. It’s even helpful if your adjuster gives you some guidance as to the scope they will approve for the entire project. Once you have all the contractor bids, you’ll want to send a copy of each of these to your insurance adjuster.
Hopefully, your adjuster will approve the amount necessary to cover the costs of your preferred bid, but it’s possible the adjuster’s estimate of the work will be lower. In this case, you’ll need to have a discussion with them about the difference and how you can bridge this gap. You may need to negotiate with your contractor to bring down the price or get other contractor estimates.
Once the adjuster gives you approval of the budget you need to complete the work, have your contractor prepare a complete work agreement and contract with all the terms laid out. Send this to the adjuster to ensure they see no issue with the format and terms. Depending on the insurance company, they may pay the contractor directly or send you a check and have you pay the contractor. Make sure you don’t sign any contracts or pay anything to the contractor until your adjuster lets you know your claim has been approved for the amount you need.
Comparing Contractor Bids
When you start meeting with contractors and receiving bids, there are a few significant things that are worth considering.
Scope of Work
Contractors are well known for each having their own unique bid format, so its likely that no two bids will look the same. As mentioned above, its ideal that you personally (or with the help of the adjuster) create a detailed checklist or scope of work to hand to each contractor when you meet them. This checklist will help guide each contractor when they prepare their bid and make it more likely your various bids will be relatively consistent.
Without this checklist, each contractor will prepare a bid based on their ‘understanding’ of your verbal explanation to them when they met with you. And this will lead to estimates that could be highly varied as different people will ‘hear’ different things.
Ideally, you can give the contractor some guidance about the materials you expect/plan to use in your insurance repair/renovation. The more you can tell them about the exact materials, the more accurate the estimate will be. So, do your best to detail things like the type of flooring (ie. laminate or hardwood, etc), cabinet styles, tile specs, etc. If you need help in selecting materials, contractors can be only somewhat helpful. If you want professional guidance, you may need the assistance of a home designer. This may not be covered in your insurance claim reimbursement.
Once you have multiple bids, it’s wise to spend some time comparing the scope (items included) in each one. Invariably, some bids will be more inclusive than others. Double check that each bid isn’t missing important items that you need completed. Also, double check there aren’t ‘extra’ items that you don’t need. Some contractors might be tempted to add items to the bid, knowing that the costs will be covered by your insurance company rather than you. If you see missing or superfluous items, ask each contractor to correct their bid accordingly.
Discuss with each contractor how they plan to handle ‘change-orders’ or things that arise during construction that weren’t included in their bid. And you might want to ask your insurance adjuster the same thing to determine if these extras will be covered by them or fall on you to pay for. Sometimes, homeowners decide they want to do other projects around the house while taking care of the insurance claim work. Make sure to have the contractor provide you a separate bid for this; do not have them include this in the main bid that you need for your insurance claim.
Once you have a reasonable number of bids (start with three) that are accurate and comparable (apples-to-apples), review their total costs. Ideally, all your bids should be somewhat similar in price, within 10-15% of each other. Of course, each contractor has their own pricing structure, but if you see bids that seem way higher or way lower than the others, that might be a red flag. Bids that are significantly low might mean the contractor is missing something or anticipates using a cheaper material spec. Bids that are way too high might indicate a contractor who is hoping to achieve an exorbitant profit because they expect the insurer to pay ‘whatever it takes’.
If all your bids vary widely, it may be a good idea to get one or two more in hopes that they come in closer to the median cost. In terms of submitting bids to your insurer, you might start by asking them if they need just one bid or multiple bids. If they only expect one bid, you might send them the bid from your favorite contractor. If they expect multiple bids, you would ideally send them three which are somewhat consistent in cost. Its probably not advisable to send them a bid that is significantly lower than the others.
How To Choose The Right Contractor
Regardless of whether you’re considering a contractor from the insurance company list or not, it’s ultra-important for you to select a quality, reputable professional. If you end up hiring the wrong company, you might have to deal with constant delays, poor workmanship, and miscommunications.
If you care to have a successful, stress-free restoration, the most important thing is to hire an honest, reputable contractor. Again – make sure to ask each contractor whether they are willing to work on a project with a home insurance claim…not all contractors are willing to do this.
In all situations, the ideal way to find quality contractors is to ask friends, neighbors, or coworkers for contractor recommendations they’ve used. On social media platforms, you should ONLY trust suggestions from ‘real’ friends. Other people are often untruthful (they’ll suggest their cousin the contractor, etc).
If you can’t get suggestions from friends, family etc, you might consider using a service that performs strict contractor vetting and offers personalized recommendations to home insurance damage contractors (www.GreatBuildz.com or similar). Please don’t select a random contractor from a junk mail flyer or someone from a contractor listing site.
Pro-tip: Keep track of how long it takes each contractor takes to:
- Return your call
- Schedule an at-home meeting
- Provide you an estimate
Certainly, most contractors are busy, so you can’t expect them to drop everything for you, but some level of responsiveness should be expected. If most contractors can provide you a bid within 7-10 days, but it takes another three weeks, that’s not a good sign. They might be too busy with other jobs or just not very responsive. Also, be wary of a contractor who postpones or delays your call or meeting more than once. Of course, emergencies can occur, but someone who can’t keep their promises might indicate a level of disorganization that will be challenging to work with during the project.
How Do Home Insurance Claims Work? How to Get Paid
When you speak with your insurance company’s claims adjuster, make sure to get a clear understanding of their payment process.
When will they make payments? Will those payments get paid based on the contractor’s progress? Will the payments get made out to you or directly to the contractors?
You’ll need to know their process because you’ll have to communicate it to your general contractor. Your contractor needs to be aware of when/how they can expect to get paid, and this process should be detailed in their written construction agreement with you.
If your insurance company plans to pay your contractor directly, they will probably provide you notice of any payments they intend to make and have you agree to each payment. Make sure that you review these requests carefully to ensure the contractor’s progress is commensurate with the payment schedule. It’s never a good idea to pay the contractor for more work than they have performed; it can cause delays because the contractor doesn’t feel any urgency to finish the next stage of the job in order to get his/her payment.
Filing an Insurance Claim Against a Contractor
There is also another situation involving contractors and insurance claims that is worth discussing: what happens when you want to file a claim against a contractor? This situation typically arises from disputes or dissatisfaction with the quality of work, missed deadlines, or other breaches of contract.
Before pursuing a claim against a contractor, it’s crucial to thoroughly review the terms of the contract, documentation, and any communications related to the project. If the contractor’s work falls short of contractual obligations, documenting the deficiencies and attempting to resolve the issues through direct communication is a prudent initial step.
To initiate an insurance claim, homeowners need to contact their insurance company and provide detailed information about the contractor’s shortcomings. Insurers often require evidence of the problems, such as photographs, correspondence, and any expert opinions validating the substandard work. The insurance company will then assess the claim and, if coverage is applicable, may provide compensation for the necessary repairs or remediation.
However, filing an insurance claim against a contractor should be approached cautiously, as it may impact the contractor’s reputation and business. Exhausting alternative dispute resolution methods, such as mediation or arbitration, before resorting to an insurance claim is advisable. Additionally, consulting legal counsel to ensure proper adherence to contractual terms and local regulations is crucial in navigating the complexities of such claims.
How To Keep Good Records During Your Property Damage Claim
It’s a good idea to keep all your home insurance claims records in one safe place so you can keep track of all communications, paperwork, agreements, and payments. It’s not uncommon for miscommunications or questions to arise between you, the contractor, material suppliers, the insurance company, etc. Keeping good records will help you reconcile or recall details from the past.
Important documents to keep safe include:
- contractor agreement
- building plans
- payment records or canceled checks
- material receipts, bills & invoices
- insurance company communications
- payment schedules
- work scope
- insurance certificates, etc.
In general, your insurance company has the final say with regard to the amount they will pay to settle your claim. In many cases, this works out just fine as they cover the costs of emergency remediation work, the cost to rebuild, and even may reimburse you for living expenses if you have to move out of your home.
However, in some cases the insurance company’s offer to settle the claim is lower than the homeowner feels is necessary to restore the damage. For example, maybe the insurance company is only willing to pay $5,000 for new cabinets, but their contractor bid this portion of the project at $8,000 because you want to use a high-quality product.
If you feel like your insurance company is offering too little money for your claim, you can certainly try negotiating or working with your claims adjuster to explain your perspective. Alternatively, some people choose to hire a “Public Adjuster” to help them negotiate with their insurance company. You would have to pay a Public Adjuster their fee for helping ‘consult’ on your claim, but they are generally well-versed in how to deal with insurance companies and explain why you need a higher settlement amount. Please ask any Public Adjuster about their fee upfront as they may charge you a percentage of the entire claim, which could be come costly.
Home Insurance Claim Mistakes to Avoid
- A common mistake is failing to read the home insurance policy thoroughly. Understanding the coverage and exclusions is crucial, as misunderstandings may lead to disappointment and delays during the claims process.
- Not having the right coverage can be detrimental. It’s essential to have a thoughtful conversation with an insurance agent to ensure you have adequate coverage for your possessions and property.
- Homeowners should avoid filing numerous claims for minor incidents, as doing so can increase costs and potentially lead to higher insurance rates in the future. Check the deductible on your policy. If the cost to repair a (minor) water leak, for example, is below your deductible, it probably makes little sense to file an insurance claim.
- Avoid waiting too long to notify the insurance company after a loss occurs. Timely notification allows for prompt assessment and faster resolution of the claim.
- Documenting the damage and keeping a thorough inventory of personal property are essential steps to avoid potential claim disputes and ensure fair compensation.
GreatBuildz is a free service that connects homeowners with reliable, thoroughly screened general contractors and provides project support from start to finish in Southern California, including Ventura County, Los Angeles County, and Orange County.
Call now (818.317.3567) to chat with a real person about your property damage or insurance claim project or visit our website for more information: www.greatbuildz.com