If you find yourself in the unfortunate position to have a homeowner’s insurance claim for something like a fire, flood, or other property damage at your home, you’ll need to quickly find an insurance claim contractor. There are a few important things to know about finding and hiring the right insurance claim contractor for this situation, and I will outline some important things you need to consider below.
Here at GreatBuildz, a free service that connects Los Angeles and Southern California homeowners with reliable general contractors, we speak to homeowners every day about hiring an insurance claim contractor to repair their home’s property damage – here are some tips to get you started.
1. Call Your Insurance Agent or Adjuster Before You Call a Contractor
Your first call needs to be to your insurance company. Before doing anything else, you’ll need to speak with their insurance claims representative to confirm that your insurance claim is indeed covered by your insurance policy. You’ll also need to get their instructions on the first thing to do in order to limit the property damage. Ie. they may have you call out an emergency plumber to stop any leaks to prevent further water damage. They will also probably give you instructions on the next steps such as getting an insurance adjuster out to your house to assess the damage.
2. A Restoration Contractor is Different Than a General Contractor
Restoration professionals may be the first on the scene to immediately remove and dispose of any water-damaged materials, such as flooring or drywall, that have become saturated with water. Alternatively, they may deploy air scrubbers to begin purifying the air from smoke damage, etc. Typically, these contractors are quite familiar with working with insurance companies. But, keep in mind that restoration contractors don’t need a contractor’s license to operate in California.
Therefore, although your best option is to contact a restoration contractor to handle the immediate problem, the following stage will be to “rebuild” the damaged areas. Despite the fact that some restoration contractors also offer this service, you’re definitely better off hiring a licensed general contractor, especially if it’s a large project (over $10,000) involving flooring, cabinetry, roofing, etc. The personnel and subcontractors of general contractors who specialize in this sort of construction are more likely to complete this work to a better-quality standard.
3. Make Sure Your Contractor Estimate Matches Up To The Insurance Claim ‘Settlement’ Amount
As you invite a few insurance claim contractors to view the property damage and provide you with detailed cost estimates, you’ll want to forward those to your insurance adjuster. Hopefully, your insurance company will be willing to settle the claim for the amount requested in your contractor’s estimate. However, it’s possible that the insurance company could offer you a lower settlement amount because it feels like the contractor’s bid is too high or the scope of work extends beyond the necessary damages. If that’s the case, you’ll need to discuss options with both the insurance company and your contractor to bridge this gap.
It’s not uncommon for some contractors to bid high on insurance claim projects knowing you as the homeowner don’t care about the cost because it will be the insurance company that will be paying.
Related: How to Get an Accurate Construction Estimate on Your Remodel
4. Do I Need To Use The Insurance Company’s Recommended Contractor?
No – you do not need to use the contractor that your insurance company recommends.
There are over 20,000 licensed general contractors in Los Angeles County alone, and your insurance company might have a few approved they can recommend. This is a reasonable place to start, but keep in mind that your insurance company is not responsible for repairing your property damage; it only needs to pay you for the damage…as per your insurance policy. So, they don’t specialize in selecting the best contractor for your project…their recommended list is just a place you can start your contractor search. Can I use my own contractor on an insurance claim? – Yes!
Because your insurance company has no control over which insurance claim contractor you end up using, it’s important that you do your own research to find the best professional for the job. Finding a contractor that will deliver a quality final product in a reasonable amount of time is fully your responsibility. You should strongly consider seeking other recommendations for quality general contractors from friends, neighbors, and colleagues or by using a personalized recommendation service (like GreatBuildz.com or similar) with a highly vetted contractors network or list.
5. Hire A Licensed, Insured Contractor That Has Experience Doing Insurance Claim Work
An experienced insurance claim contractor is just simply a fully licensed and insured local general contractor who has previously performed projects with an insurance company involved in the payment. Contractors in general are not experts in insurance claims, nor are they qualified in negotiating with your insurance company. However, insurance claim contractors have had enough experience working on these unique property damage jobs to make the process easier for you.
A contractor without this experience will not know how to navigate the insurance claim process, and you will be left to manage any issues that arise due to their lack of knowledge. Never use a contractor who doesn’t have an active state license in good standing and both liability and worker’s compensation insurance.
6. Understand The Insurance Company’s Process For Paying Your Claim or The Contractor Directly
Make sure to discuss with your insurance claim adjuster their process for paying claims once the construction begins to repair your property damage. You’ll need to know how much they intend to pay the contractor as a deposit and how they will be making payments as the project progresses.
You’ll also need to know if the checks will be issued to you, the contractor, or payable to both of you. And all of this information needs to be relayed to the insurance claim contractor, so they know what to expect. If their payment expectations don’t align or they demand a large deposit upfront, they probably aren’t a good fit for your project.
7. Keep Meticulous Records Of All Payments, Invoices, Receipts, Etc.
For better or worse, you are the manager, bookkeeper, and quarterback of this entire insurance claim process. The contractor works directly for you and the insurance is settling the claim directly with you…so you’re always going to be in the middle. If you find that you need help with this entire process, you can always hire a public adjuster. This means that you will have to keep everyone accountable, and therefore you’ll want to keep very good records of all project progress, any paid and outstanding invoices, receipts, material deliveries, etc.
8. Look Out For These Insurance Claim Contractor Red Flags and Do Your Contractor Vetting Before Hiring
There are a few basic and simple steps that are extremely important when vetting a contractor you’re your insurance claim project. As mentioned earlier, they absolutely must have a valid general contractor’s license (B-1 license) without any complaints. They absolutely must be able to show you an insurance certificate with a minimum $1M liability and worker’s compensation policy. Beyond that, it’s also easy enough to look up their reviews online and judge for yourself if they are a trustworthy company. A further valuable step is to call their references or any clients that have used them in the past.
The following red flags should be obvious but worth stating. Don’t use a company that goes door to door looking for work. Don’t use a company that tells you that they will “kick back” to you some of the insurance proceeds if you work with them (insurance fraud). Don’t work with a company that requires you to give them a large deposit upfront. And don’t work with a contractor that’s too pushy and wants you to sign with them immediately.
9. Read The Insurance Claim Contractor’s Agreement Carefully Including The Fine Print
As mentioned before, the role of hiring and managing a contractor is your responsibility. So, it’s also your job to ensure that the agreement you’re signing with the contractor is fair and covers your interests. Do not expect your insurance company to act as your attorney or consultant in this process. Read the contract and fine print carefully and make sure you’re happy with the language about the scope of work, the expected project timeline, the guarantee period, material specs, extra costs, etc. See the following blogs to get further details on what your contractor agreement might include:
- 10 Key Points to a Construction Contract
- What is a Contractor’s Bond and Why Should I Have One?
- Hiring a Contractor for a Property Damage or Home Insurance Claim
10. What To Do If You Run Into Issues With Your Insurance Company Or Contractor
If you run into issues with your property damage claim and need assistance, you can consider hiring a public adjuster (they work for a fee). Alternatively, you can look for guidance at the California Department of Insurance website (https://www.insurance.ca.gov/01-consumers/101-help/). You can file an insurance complaint there if necessary. If your issue is with a bad contractor, you can get info or file a complaint at the Contractor State License Board.
Hopefully, these ten tips for hiring an insurance claim contractor help make a challenging process a little bit smoother. If you need more guidance about finding the right contractor, feel free to reach out to the friendly staff at GreatBuildz.
GreatBuildz is a free service that connects homeowners in Los Angeles County, Orange County and Ventura County with reliable, thoroughly screened general contractors and provides project support from start to finish.
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
