At What Point Do You Hire a Contractor in the Home Insurance Process?

January 26th, 2020

If the damages to your property appear significant enough, you may want to have a contractor prepare an estimate of damages and their cost to complete the repairs. You do not have to enter into a contract at this point and may obtain estimates from two other contractors, so you have three independent estimations of damage. Some insured choose to have an insurance adjuster review the damages first. Or, you may have the contractor meet with the adjuster during the inspection.

You should understand that if you are dealing with an established contractor–not a one- or two-man operation who is local and hand writes their estimate–then you will probably have to enter into a legal contract with the contractor. Once you sign the contractor documents, it could be difficult to get out of the contract.

Also, there is nothing wrong with dealing with a small, local contractor as long as you research them as you would any contractor. In fact, in my opinion, some of the best estimates and work come from a roofing company that consists of a man and his sons, established 50 years ago. Hiring a contractor can provide you with wide variety of benefits. It’s like getting what are 3 film insurance policies every filmmaker must have. You can gain efficiency and reliability of service.

There can be problems in the contractor process, especially if the contractor disagrees with the adjuster estimate. The differences can most of the time be worked out and an agreement reached between the contractor and insurance company.

Most insured will choose not to pay the contractor the complete insurance payment upfront. They will select to make a partial payment to start work, and the final payment once all work is completed. In fact, the final payment may be held by the insurance company until all work is completed. Don’t forget you may have to include your policy deductible payment in the payment to the contractor.

Following major storms in cities where there is widespread damage, insured need to be aware there may be storm chaser contractors who rush in from out of town and may not have the best of intentions. Or, at best they are not prepared to handle the work very well away from their home base. This does not mean all contractors who come in from out of town are not professional and equipped to do the job. Indeed, local contractors will be overwhelmed and behind schedule to complete estimates and begin repairs, so some outside help is usually called for. Just do not write a check to an unknown contractor until you have checked references and feel satisfied they will complete your repairs. It is rare but it does happen, once a check is cashed the contractor disappears and cannot be located.

Although some insurance companies are now in a beta phase of working with preferred contractors, and in some regions of the country will provide the preferred contractor information to the insured, most customers are still on their own to locate and hire a contractor. Often an agent can be of assistance, since they have a rapport with many insured throughout the claim process.

If you chose to make your own repairs, this may be allowed by your policy. You would need to prepare your estimate, and if recoverable depreciation is withheld until repairs are complete, you may have to provide materials receipts. If you hired help, payment receipts would also be appropriate to prove repairs were made. Before and after photographs could be crucial using this method of repair.

Insurance policy and regulations vary from state to state, and are subject to change at any time, especially following a major storm. For the latest information on your coverage and procedures you should immediately contact your insurance company and agent. You should not assume coverage or take any major steps in mitigating or repairing damage until you get direction from the adjuster assigned to your claim. Although you may speak with several insurance employees in the process, you should only take direction regarding major decisions, from your adjuster. Remember, your policy may require that you prove your loss, and this includes cause of damage. Keep receipts and take and verify photographs.