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  1. #1
    Join Date
    Apr 2012
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    259

    Default exterior work with an insurance adjustor

    I know that no one likes to talk about pricing since it is so hard to get enough details to make a good comparision. So I will give it my best shot.

    We had a bad hailstorm come thru town about a month ago. Had several clients who have asked for my advice on things that I do not normally get involved in, namely roofing, vinyl siding replacements and gutters. For the easy part. 2 of my customers have obvious damage from hail on one side of the roof and the shingles are about 10 years old. The insurance just wants to pay for part that is damaged which I can understand from their point of view. From mine, it seems that this means for the next roof you are going to need to only do half in another 10 years, the other half in 20 years and so on. That does not make sense to me. You would never get a complete new roof this way. Plus I am no hail expert but just because the storm came from one direction it was still hitting the roof maybe just not as directly and as hard. Wondering if that is a common occurance for the insurance to do that?

    Second has to do with vinyl siding replacement. I was asked to look at the estimates they got from the insuance company to replace probably 40 year old 8 inch wide alumnimun siding with Mainstreet by Certainteed. It is a basic job, one story house with 12 windows to wrap, no soffit and fascia work to be replaced. The siding has to be all taken off and then new installed. By my estimates the insuarnce company is paying out $200 per square for the work which I think is way too low. I am not sure exactly how depreciation and all that works but if the siding is around $100 per square I just do not see how anyone can remove old and install new for another $100. That includes fanfold according to insurance.

    Wondering what kind of pricing might be considered a fair price to talk to the insurance company about. I have not done a siding job in ages but thougt that it was close to $225 a square 5 or so years ago.

    Other thing that I know has nothing to do with depreciation is the estimator says you can get a dumpster to haul things away for $125. Not sure where he is from but that aint going to happen here.

    Do not need exact numbers since I know it is not possible but even a range would tell me if I am wrong and the insurance is right. Thanks.

  2. #2
    Join Date
    Feb 2008
    Location
    Northwest Indiana
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    5,576

    Default Re: exterior work with an insurance adjustor

    Beez,

    What insurance company and what appraisal company. You can send that to me off the forum if you wish.

    If you are handling this for your clients you need to get an exclusive signed by the clients.

    On the roof the courts have ruled they have to replace the entire roof.

    They don't set your prices you do.

    Keep records of your cost the insurance company has to pay your cost plus overhead and profits.

    What the insurance company is required to cover is governed by policy and state law.

    The $225.00 is about $125.00 lite.

    Tom
    Last edited by tjbnwi; 05-29-2012 at 07:29 AM.
    http://chicagocraftsmen.org/2011/06/261.html

    Check with the AHJ, what we say doesn't matter.

  3. #3
    Join Date
    Dec 2005
    Location
    Michigan
    Posts
    7,261

    Default Re: exterior work with an insurance adjustor

    Tom is basically correct.

    Right up front, you can't get involved with insurance pricing as a spectator, "friend" or good samaritan. That's a no-win proposition. Either you take the job or you don't. If you don't, refrain from getting involved.

    If you want the job, you tell the customers that you need a commitment and then you will help them negotiate the best deal you can, up to a point. You give them a quote if the're serious. You make clear to the client that your price has nothing to do with the insurance settlement. You also tell them that insurance companies are neither stupid nor philantropic. And therefore no, they're not going to get a free remodel out of the deal. And most likely the settlement will not cover the cost of repairs by a good contractor.

    Once you get a commitment, you ask the insurance adjuster to give you his spreadsheet, which he does in Exactimate, and start taking it apart line by line. Provide both client and adjuster with well documented reasons why his numbers are BS.

    And yes, I recently had an adjuster write down on a basement flood redo that he allowed $250 diosposal/hauling on the basis of "2 pickup truck loads". You just tell the client and adjuster why that's incorrect. If the adjuster doesn't back down, it's up to the owner to go to war or pay up. Not your problem.

  4. #4
    Join Date
    Apr 2012
    Posts
    259

    Default Re: exterior work with an insurance adjustor

    thanks for the replies guys. Since this is work that I don't normally do, especially the roofing I am not really interested in being the contractor for the job. Was just trying to offer some advice on the job.

    I thought I had heard that the roofs had to be replaced completely but was wondering if that was just a rumor or more of a fact. And I do not really know if they have full replacement insurance or some other form that might allow them to do only a partial replacement.

    The siding I might consider but was fairly certain that the number was light. I will talk some more to them and make a decision as to whether I take the job or not. The homeowners have sent me the estimate and I was acting more as a friend or advisor than anything else at this time. I considered it pretty much the same thing as advising them on who they might hire or who I might recommend for their plumbing needs or anything else that I get involved in but do not do the actual work.

    I also agree that their prices and mine are probably not going to be the same numbers. What I charge is up to me not to them. I keep that in mind all the time when I hear those famous lines "while you are here" "this cannot take long" "how hard can it be" and a host of other lines.

  5. #5
    Join Date
    Jul 2006
    Location
    Portland, OR
    Posts
    2,396

    Default Re: exterior work with an insurance adjustor

    What the insurance company is obliged to pay depends on the insurance policy. Often is is the depreciated value of the damaged materials. Sometimes it is the current replacement cost. Sometimes it is the current replacement cost plus any code required upgrades.

    Most all adjusters use an estimating program called Exactimate - and I still haven't figured out how it works. The inputs tend to be sf of stuff, but not specific line items of materials.

    Adjusters may or may not have much leeway in deviating from their standard Exactimate costs.

  6. #6
    Join Date
    Jun 2004
    Location
    Bellbrook. Ohio
    Posts
    1,737

    Default Re: exterior work with an insurance adjustor

    I am finishing the last of our insurance jobs that came through last year as a result of our hail storm. I didn't want to do them but they were mostly homes that I had built and my clients asked.

    It was a learning experience but what I did was just took the exactimate estimate and adjusted it as needed. Some of their things were low and some were high - it depended on who the insurance company was and also who the adjuster was.

    I added 20% o&p to any estimate that did not have it already - only a few companies didn't want to pay that.

    I did have one roof that only the front half was damaged so we did just the front. We fought it but they stood their ground and really there was no damage to the back half. The home was five years old.
    -Dan

  7. #7
    Join Date
    Oct 2006
    Location
    Greensboro, NC
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    1,514

    Default Re: exterior work with an insurance adjustor

    As said Mark you set the pricing. Add 10 + 10 to your recap. Its up to the HO as who does the work - not the cheapest guy. You will be within reason. It will pay well so why not you.

    Next is the release of liens signed before any work begins....?
    Steve

    "Get three coffins ready" - A Fistful of Dollars 1964

    http://youtu.be/KZ_7br_3y54

  8. #8
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    Dec 2009
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    Sterling Heights, MI
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    Default Re: exterior work with an insurance adjustor

    Beez, I would encourage you to jump into the entire job with both feet; if nothing else, you would learn a lot about the insurance restoration industry.

    99% of my work is insurance related. I am an Xactimate subscriber and since you are friend of this site, I would be willing to work you up a detailed Xactimate report, using the "PROPER" scope and sizing. Preferably, I would want you to get a signed contingency agreement to do the work. In my contingency contract, I leave myself an out if the insurer's do not pay enough to do a quality job. It's a very easy contract to get signed because you basically are getting them to let you wrangle with the insurers, and for your troubles, you get to do the work, if you want it!

    I don't know what price list you are in, so I couldn't pinpoint the exact pricing that they used but if that work was located here in TX, it would be SIGNIFICANTLY higher.

    Most often, I find that the first insurance estimates are low. Sometimes they are only a few hundred dollars low but normally they are 1k, 2k, or more low.

    One of the most profitable jobs I did last year was an aluminum siding job. They bought the entire house of siding but didn't buy the roof?????!!!! They also didn't buy the custom fascia. After I sent in a few pictures, they bought the fascia, end gable vents, foundation vents, and a few other things. The custom bent fascia added about $2500 to the job!

    Xactimate is proprietary software so I can't discuss specifics, but I can give you a specific estimate on the project. Shoot me an email with the specs/scope and I'll be glad to work something up. It's best if you can provide an entire copy of the insurance report. That gives me a little insight into how the adjuster is thinking.

  9. #9
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    Dec 2009
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    Sterling Heights, MI
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    Default Re: exterior work with an insurance adjustor

    Regarding the roof. Specifically; doing only half the roof. The carriers are starting to do this more than they have in the past. Each carrier has their own idea of what constitutes a full replacement. Some want as few as 3 hits on each plane. Some want a dozen. They set their own rules.

    The argument that you would never have a full new roof wouldn't hold water because there is nothing from preventing you from re roofing the entire roof in ten years. The only argument that I can think of, that might hold water is that the two sides would be radically different and therefore the market value would be diminished. That might work, but I'm not so sure. I'm not aware of any court ruling forcing them to buy an entire roof.

    We had one in OKC where they only bought the front of the house for 6k. We argued but could only get them to pay 8k for the front only. When we opened up the roof, we found SEVEN LAYERS!!!!. We called the adjuster and argued that we couldn't remove seven layers from the front, without creating a serious weight imbalance. He balked.

    We got an engineer to verify our argument. We also got the local BI to state that he wouldn't allow us to only do half because of the weight issue. The result? They eventually agreed to do the entire roof. The back roof connected via a breezeway to the garage. They paid for all that. Our Xactimate pricing pushed the bill on that roof to 44K!

    Don't dismiss these insurance jobs without giving them a serious look-see! Sometimes, the ones that seem impossible turn into really nice jobs!
    Last edited by jimAKAblue; 05-31-2012 at 07:36 PM.

  10. #10
    Join Date
    Dec 2009
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    Sterling Heights, MI
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    Default Re: exterior work with an insurance adjustor

    Regarding the adjusters estimate: their estimates are just that: an estimate. The contractor's price is the real deal. It's not an estimate, it's the real cost.

    Xactimate pricing, or other national database pricing, is an average of the high and low contractor and material pricing in each local area. In theory, they claim they are routinely researching these price and updating the price sheets accordingly.

    So, what does that mean? That means that every contractor has their own prices based on their own realities. An insurer does not have the right to set the prices based on Xactimate, but they do have the right to reject any contractors estimate that doesn't fit into the general average market price. So, if Xactimate is paying $4.55 per foot for 5" gutters, and you demand $12 per foot, they can claim that you are out side of the norm. But, if you are looking for $5.25 per foot, the adjuster can simply approve it because it fits within the "highs and the lows" for the region.

    Also, keep in mind that Xactimate pricing make a lot of assumptions. Things like access, site conditions, availability of materials, etc can affect the estimate in a big way. Usually, these things can be documented and most adjusters are glad to pay it, providing that they can provide a legit explanation to the desk adjuster above them. For the most part, they will work with you to get you more money, if you work with them to provide some sort of documentation.

    The O & P thing is maddeningly inconsistent. Lately, I'm hearing more carriers insisting that they won't pay O&P on roofs, even if they are paying it on the rest of the scope. On those carriers, it's a good idea to go into the Xactimate pricing models and adjust the unit pricing to include the O&P. That way, the estimate will get you where you want to be, without including a line item for O&P.

    Remember, the carriers don't have the right to tell you how you set up your business plan or pricing models. They just have the right to determine if your pricing fits into the fair market price structure or not.

  11. #11
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    Dec 2009
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    Default Re: exterior work with an insurance adjustor

    Quote Originally Posted by NW Architect View Post
    Most all adjusters use an estimating program called Exactimate - and I still haven't figured out how it works. The inputs tend to be sf of stuff, but not specific line items of materials.
    The insurance industry bases almost all estimate on a sf or lf basis. EVERYTHING is line item-ed.

    In order to determine how they arrive at their sq ft, or lin ft prices, you can drill down into the breakdown of each item. In there, you and adjust things like labor rates, labor burden, tax rate etc. to come up with your own personal pricing.

  12. #12
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    Dec 2009
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    Default Re: exterior work with an insurance adjustor

    One other thing about the siding job.

    Quite often, there will be lead paint issues under the siding. Make sure that the insurers compensate the homeowner for that element of the reconstruction.

  13. #13
    Join Date
    Feb 2008
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    Northwest Indiana
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    Default Re: exterior work with an insurance adjustor

    Here you go Jim, the court case from 2000 and the ruling upholding it.


    http://www.skjoldparrington.com/news...age_update.php

    Tom
    http://chicagocraftsmen.org/2011/06/261.html

    Check with the AHJ, what we say doesn't matter.

  14. #14
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    Default Re: exterior work with an insurance adjustor

    http://chicagocraftsmen.org/2011/06/261.html

    Check with the AHJ, what we say doesn't matter.

  15. #15
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    Dec 2009
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    Sterling Heights, MI
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    Default Re: exterior work with an insurance adjustor

    Quote Originally Posted by tjbnwi View Post
    Here you go Jim, the court case from 2000 and the ruling upholding it.


    http://www.skjoldparrington.com/news...age_update.php

    Tom
    It's important to note that the main qualifier is “the discontinuation of the specific shingle” as a factor in determining that full roof replacement was necessary.

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