*Please note everything discussed in this article comes from a various examples of actual projects experienced by the author. No two losses are alike, and you may experience a very different process than outlined in this article.*
Having a house fire or water loss that results in an insurance claim can be a confusing process. If this isn’t something you’ve been through before, it can be filled with documentation and red tape. In addition to all the documentation and depending on the size of the loss, it may take a long time to complete the restoration.
I have worked losses that have taken upwards of a year and a half to complete. This time frame is usually caused by several factors that we are going to review below, so you have a good idea of what to expect if you have a major disaster at your home.
Getting Started
Let’s start from the beginning. Your biggest responsibility as a homeowner is to prevent further damage to your home. This is called Mitigation. Mitigation efforts can include multiple controls pertaining to the type of loss. For example, in the event of a house fire, it is your responsibility to have the windows and doors that are broken boarded-up and any roof holes tarped and covered. This is to prevent both people and the elements from getting into the house.
In the event of a water disaster, it is your responsibility to begin to dry-out any wet materials to prevent the growth of mold. Mitigation can be completed by you the homeowner, but it is much more beneficial to hire a mitigation company. There are few reasons for this:
1. It places the burden of liability on the mitigation company in case something isn’t done accurately, or someone gets hurt.
2. A mitigation company usually has experience in fire and water restoration and employs certified technicians.
3. It doesn’t cost you anything to have these services done right. Most of the time these emergency services are billed directly to the insurance company and the mitigation company is
often paid directly with a proper direction of payment document.
Remember, you have full control over who you want to hire to complete mitigation. You do not have to use an insurance preferred vendor; however, it may be beneficial to use their suggestion in a mitigation company if you don’t know of any.
Who’s Who?
The next step is a decision that you as the homeowner must make. To hire a public adjuster or deal with the insurance company yourself?
A public adjuster is a licensed insurance adjuster that works for you, the insured, not the insurance company. They work in your best interest and work with your insurance company to make sure that you are paid the proper amount for your claim and are represented throughout the claims process.
A public adjuster is normally paid via a percentage of the total claim. The fee percentage changes from company to company.
It is probably a good time to note at this point that your insurance company will only replace what is lost to equal value that you had before. They usually give you enough to restore your home to pre-loss conditions. This means anything above and beyond the value that you had before that you want done, will probably be an out of pocket expense.
Getting to Work
The next, and probably biggest, step is the hiring of a contractor. It is wise to go with a contractor that has extensive experience in disaster restoration and insurance claims. Using a handyman friend may seem appealing, but usually ends in unneeded expenses and various other issues.
There is a lot of documentation that goes into an insurance loss. If this documentation isn’t presented and in proper format when needed, it may be difficult, or even impossible to get paid for hidden damage such as rot and mold, and code upgrade items.
It is essential for the contractor to know how to effectively write code estimates, understand the claims process, and be willing to work and deal with your mortgage company.
Oftentimes, if there is a mortgage on your property, your mortgage holder will be receiving and disbursing the insurance money to the contractor. This proves to be a fair amount of paperwork and servicing to make sure inspections and disbursements are received on time to make sure the project doesn’t come to a grinding stop due to lack of funds.
It is also important for your contractor to have a working knowledge of how to both read and write estimates in the same software the insurance companies use. (There are many estimating programs that insurances use, with one being the most popular)
With these programs, all prices are set by the industry and every month a new price list is updated. This gives very little wiggle room in pricing and is extremely detailed. Down to line items involving amounts of nails and screws needed to install a box and outlet.
Hold Up
So, after you find a contractor, you’re good to go right? Work should begin and not stop until the very end of the project. This is sometimes very true on smaller losses, but on larger losses, there are a few things that may cause a hold-up. Let’s look at what those usually are:
Hidden Damages
Hidden damages usually consist of rot damage and mold growth. A lot of times these damages are covered under an insurance policy with a low-price cap. Before remediating these issues, however, they must be documented, estimated, and submitted to the insurance company for approval. Only once approval is given, can work begin. Although waiting for approval may take a bit of time, waiting protects you as the homeowner from having to pay out of pocket and wait to get reimbursed (if you get reimbursed) and protects the contractor, because once approved, it basically guarantees that services are going to be paid in full.
Code Upgrade
Code upgrade means bringing the whole house up to current building code, or at least any areas exposed by demolition. If covered, this proves to be one of the more difficult and labor-intensive items for the contractor to get paid for.
Everything must be exact with estimating. There must be an exact count and money figure for every item that needs to be upgraded or added. Most frequently, the trades that require
some sort of code upgrade are electrical, plumbing, and framing.
Especially in New England, where there are a lot of houses built around or before 1950, the need for bringing items up to code is more prevalent.
A whole house must be brought up to code if more than 50% of the interior has been demoed. The process of writing up a code estimate can take a contractor and his subs sometimes over a month to get all the revisions correct. It can take up to three to four months for code to be approved and work begins.
Knowing this hold up, we start writing code and running subcontractors through a house before the demo is sometimes completed. This gives us and your insurance company a head-start to get code completed.
So long as code is written properly and done in a timely fashion, you may not even notice the delay. Again, this is all different from adjuster to adjuster and contractor to contractor. Some code upgrades can be approved within only a couple of weeks. It all depends on the scope of the loss and specific situation.
Mortgage Companies
Mortgage companies usually receive and disburse checks to the contractor in increments as work is completed. They determine when to release money via inspections. They use the final estimate and settlement to determine percentages of completion by using the line items provided in such estimate. (Again, major reason why your contractor using the right estimating software is essential to getting money released in a timely manner).
This normally works out just fine. Contractor requests payment to start and then gets inspections at critical points throughout the project in order to continue working. Usually this is at 0-15%, 50%, and 100%.
The delays can come when there are discrepancies between the contractor and inspector over completion percentages that result in a hold up in releasing funds.
For example, the contractor believes that they are 50% complete and are expecting another disbursement be released and the inspector only reports 35% completion.
Although a bit of a pain, these disputes are often resolved quickly and without much delay.
Completing Restoration
When all is said and done, the process of restoring your property after a disaster may be stressful and confusing; but with the proper help and knowledge, it can be an experience in which many good things can come about.
People have found the good in a bad situation by being able to have the chance to change paint colors, pick out new cabinets, remove their old dingy carpets, and overall see the opportunity to change their homes to the way they want after an unfortunate disaster.
If you or a person you know has recently gone through a fire or water disaster, please feel free to call Boucher and Son Remodeling at (978) 226-5033 to set up a free consultation and put some worries to bed.
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