What Insurance Companies Won't Tell You
WHAT IS A THIRD-PARTY PROGRAM OR PREFERRED VENDOR?
Program Vendors are in place to protect the financial interests of the insurance company. The insurance company provides high volume work to their vendors, in return their vendors must adhere to specific scope restrictions agreed to by the insurance company’s terms. Adjusters will often encourage Homeowner’s to use their Preferred Vendors as it saves the Insurance Company thousands of dollars at the expense of quality workmanship to their client’s homes. As a preferred vendor, a company must work off the Insurance’s scope limitations which affects quality in workmanship and increases chances of corner cutting so they can regain some of their lost profit margin back. In return, the Insurance company provides their Program Vendor with a consistent heavy flow of work. The Insurance company will recommend their vendors in order of who saves them the most money and gives the least financial resistance. It is important to note that a Program Vendor is working for the best interest of the Insurance company more so than they are for the Homeowner. Even if the Program Vendor has the Homeowner’s best interest at heart, their estimates/scopes are still bound by the Insurance Company’s terms. The Insurance will also try to sell their vendors by longer contractual warranties.
WHY WOULD ANYONE WANT TO BECOME A PREFERRED VENDOR?
High volume work is handed to the Preferred Vendor. The Preferred Vendor saves on marketing / advertising, and in return sacrifices profit margins and workmanship for increased job volume handed to them by the Insurance Company.
What they don’t tell you…
Typically, the Insurance company will not specify that you can legally hire whomever you’d prefer to perform the work. The Insurance company also cannot raise rates or deny a claim because you have chosen to have another company perform the work outside of their “recommendation”. Most often, they will use deceptive language or scare tactics to attempt to slip their “Preferred Vendor/Contractor” to perform an inspection to your home. You do not have to allow their vendor to evaluate the house, nor is it recommended if you’ve already selected a Contractor– refer your adjuster directly to your Contractor. Your adjuster can inspect/ write their own scope of repairs, but you are within legal rights to turn down any suggested program vendor. Also, it is important to note that most adjusters have very little to no experience in the actual work they are trying to negotiate down in cost.
WILL THERE BE OUT-OF-POCKET COSTS IF I CHOOSE TO USE A CONTRACTOR NOT LISTED ON MY INSURANCE COMPANY’S ‘PREFERRED VENDOR’ LIST?
No. You have the right to choose who you want to work with. Once you’ve selected a Contractor, direct your adjuster directly to your Contractor. Some Insurance adjusters will sometimes use scare tactics to try and slip one of their vendors in. They’ll use key phrases such as “out of pocket costs” for damage-related repairs that must happen, “may not be covered”, and “your contractor is too expensive” along with other deceptive policy verbiage to sway you into using one of their Preferred Vendors. Insurance companies are generally looking to save money and cut costs where they can—at your expense. At Robinson Restoration / BCC , we guarantee there will be no out of pocket costs other than your deductible.
WILL SELECTING A CONTRACTOR OUTSIDE OF THE INSURANCE’S ‘PREFERRED VENDOR’ LIST MAKE MY WAIT TIME LONGER?
In short, it may. Negotiations will always take some time with the Insurance company whether you choose a Program Vendor or not. Since Program Vendors are bound by the Insurance Company’s terms and restrictions, they may have a slightly quicker turnaround for approval. If both your chosen Contractor and a Third-Party Vendor submitted an estimate to the Insurance, this may add a little more time to negotiations as your Insurance Company will try to lowball your chosen Contractor using the Program Vendor’s Insurance-appealing estimate. Know that your Insurance is legally bound by the Insurance Fair Conduct Act (IFCA) laws and rules and are required to settle your claim within 45 days after filing in Washington State.
Selecting a Contractor:
Experience in Restoration, quality of work, customer service, time in business, reviews, and use of standardized Insurance Estimating software (Xactimate). Every restoration company that uses Xactimate all use the same standardized market price lists. Interview Contractors first, and don’t focus on multiple bid collection. The contractor you select is your direct advocate to the Insurance Company. Carefully select someone you trust and are comfortable with to move forward with the process and negotiate on your behalf. They’ll handle the estimate, negotiations, and assist you in restoring your home back to normalcy.
INSURANCE FAIR CONDUCT ACT (IFCA) LAWS AND RULES
The statue references below all link to the Washington State Legislature website (leg.wa.gov).
Laws and rules regarding the Insurance Fair Conduct Act (IFCA)
|RCW 48.30.010||Unfair practices in general – Remedies and penalties|
|RCW 48.30.015||Unreasonable denial of a claim for coverage or payment of benefits|
|WAC 284-30-330||Specific unfair claims settlement practices defined|
|WAC 284-30-350||Misrepresentation of policy provisions|
|WAC 284-30-360||Standards for the insurer to acknowledge pertinent communications|
|WAC 284-30-370||Standards for prompt investigation of a claim|
|WAC 284-30-380||Settlement standards applicable to all insurers|
Starting the Repair Process
Now that Mitigation is completed or near completed, it’s time to start the repair process. Opposed to Mitigation who can start immediately, Construction is the opposite. A scope negotiation and approval with the Insurance Company needs to happen before Construction can move forward. Once that happens, scheduling can vary from a couple to more than a few weeks from approval.
Your adjuster, if local, will make a visit to write up their own estimate for repairs. This is not a final estimate. This is to get the process started on the Insurance side and to get an ACV (Actual Cash Value) check issued– this is completely normal. Alternatively, or in follow up to your insurance adjuster’s inspection, they will “recommend or suggest” one or a few of their Third-Party Vendor / Program Vendors before you’ve had a chance to figure out which Contractor you’d like to move forward with for the repairs.