Your insurance company, being licensed by Texas Dept. of Insurance and having secured many certifications by major insurance carriers, we know one thing for certain: Insurance companies are not trying to rip you off, but they sure are trying to hold onto all of their pennies!
Let me explain how they go about this- they will start by telling you something similar to:
“Mr. & Mrs. Homeowner, please get 3 bids to re-roof your home from 3 different roofing contractors and send them to us.” In most everyday situations this is always good practice. However, this is a definite DO NOT in a storm claim situation. Regardless of whether it is roofing, flood damage, or whatever else may be the case, your insurance company cannot:
A. Make you get multiple bids
B. Make you use “their” contractor and/or
C. Force you to incur the costs of bringing your home to code compliance
There are several reasons NOT to get multiple bids related to storm repairs. Each is very valid and very beneficial to you getting everything you are entitled to in regards to repairing your home to its “pre-storm” condition.
- Insurance companies are obligated to pay predetermined market pricing, updated monthly to reflect market increases due to high demands caused by storms. Insurance companies use software called Xactimate or their own similar version, which determines material prices by region as well as labor prices. These numbers are updated sometimes multiple times in a month after a bad storm or series of storms. This software will produce your summary, which lists all of your damage and the value of the claim, which you and your contractor are entitled to upon your home being inspected by your adjuster. Materials and labor are very sensitive to market surges. Shingles, nails, decking, and associated materials can increase by as much as 30- 40 % during storm season. In an area as affected by wind, hail and hurricanes as Texas each year, these price swings are all too common. Labor increases up to 10 to 20 percent are very common each spring and early summer.
- Your insurance company is only liable to pay you their summary amount OR the bid amount from a contractor, whichever is the lowest, minus your deductible. Bids WILL ALWAYS BE LOWER THAN SUMMARY PRICING! That is how you win bids, be the lowest. This is not a situation where you are trying to find the best pricing. When asking you to obtain 3 bids, what they are trying to accomplish is the lowest possible payout on your claim. Herein lies the problem: There are no specs. When I am bidding commercial work or new construction the general contractor or architect is going to give me a list of specs to qualify my bid by. It is my job to make sure that I am bidding everything they are expecting. Your roof does not have a list of specs nailed to it. You have no idea what pieces, parts or materials each roofer will be leaving out in order to give you the lowest possible bid. Are they replacing your drip-edge? Are they using rubber 3-in-1 pipe flashing or are they using fully encapsulating lead pipe flashings? Are they using metal in your valleys or just double felt? Unless you are a roofer, you probably don’t know or care what materials are being used so long as it is the best possible roof. However, your insurance company only has to pay the lowest bid. They do not care if the bids are apple to apple.
- Another thing to seriously consider is who’s on your roof?! Unfortunately, in Texas there is no current licensing requirements for roofing contractors. Cities require them to register, but there are very few that even perform a post roof inspection. If they do, it is typically a drive-by only to check that all trash and debris are removed. Bottom line, there are very little checks and balances to eliminate the possibility that you hired a “Chuck in a truck” that became a roofer about 4 hours after the most recent storm hit. Most aren’t even qualified to apply the products they just bought from the big box do it yourself store, thereby, you may not even have a valid manufacturer’s warranty on the roof you thought was a 30 year roof.
- This is a very taboo word. “Supplements” is most commonly associated by your insurance company as a nasty roofer trying to obtain more money after he agreed to do the job for a certain price. This does happen. However, supplements are honest and allowable parts of your claim. Hopefully, your roof is older than you can remember and has been performing fine up until the storm hit. If that is the case, is it currently up to code? Your insurance policy says your home is to be repaired to the state it was in prior to the storm, or to that point AND brought up to code if it is no longer in compliance. Your insurance company comes out gives you a summary and your roofing contractor agrees to work for the predetermined price. However, once your roof is removed, additional damage is found, or items were missed by your adjuster who had 151 claims to get to when he did your adjustment due to the massive storm your home was damaged by, or your home is not currently in compliance with your city, county or state codes for efficiency, etc. Your roofing contractor files a supplement for the additional costs, your insurance company approves it and you are out no additional costs. Had you had 3 bids and your insurance company granted payment for the lowest, their answer to these previous scenarios would be, your roofer bid the project and we agreed to pay that amount. We are not responsible for any items he failed to find.
- PLAIN AND SIMPLE: THERE IS NO ADVANTAGE TO YOU IN A STORM CLAIM SCENARIO TO GET MULTIPLE BIDS!!! The only winning party is the insurance company. They will be paying the lowest bid minus your deductible. This number WILL BE lower than the summary amount. They do not give you the summary amount for you to then find the lowest bid, because you would be profiting and this is a felony. I repeat. IT IS A FELONY TO PROFIT FROM AN INUSRANCE CLAIM. And believe me when I tell you insurance companies take it very seriously and always make sure the offender is punished to the full extent of the law.
It is important to understand your insurance company is not trying to rip you off. They are not trying to get out of paying for repairs that are needed. They are however, in business to make money. Therefore, they are very interested in settling each claim for as little money as possible while staying within the law. It is not their job to act on your behalf and look out for your best interest. That is why you hire a contractor. This is why it is of the utmost importance to hire as knowledgeable and honest a contractor as possible.