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How Restoration Contractors Can Deal with Insurance Companies

2018-07-21
How Restoration Contractors Can Deal with Insurance Companies
 
The Restoration and Reconstruction Industry is going through an unprecedented phase of growth. Just in the USA, the market has grown to a $210 billion annually. But the industry is also going through difficulties. The insurance companies are exercising more power and control over the industry while the government regulations are also changing. This article first introduces the general outlook of the market that Restoration Contractors are operating in and then looks at how Restoration Contractors can effectively deal with insurance companies in the short as well as the longer term.
 
The high growth experienced by the Restoration, Reconstruction and Remediation market has been due to many factors. One of them is that the average age of houses is increasing, making them more vulnerable to different kinds of damages from water leaks, frozen water etc. According to industry estimates, approximately fifteen thousand people suffer some sort of water damage in their homes, every day in the USA. Another factor has been an increasing number of natural disasters in recent times. Whether the disaster is an earthquake, flood-causing rains or wildfires, they all result in varying degrees of damages to property.
 
Insurance companies play an important role in this industry. More property owners are buying their houses with a mortgage. The banks and mortgage providers require the owners to take up some form of house insurance. This increases the percentage of houses that are insured and therefore issues related to house damage and restoration are increasingly dealt by the insurance companies. Water damages can be one of the biggest expenses for insurance providers, and because these insurance companies also work for profit maximisation, they have to try to curtail the cost of business. This can sometimes make it difficult to effectively operate in this industry.
 
One of the first things that needs to be done when dealing with cases of water damage is to ensure that the damage was sudden and accidental. In case the insurance company determines that the damage was gradual (slowly happening over time) or if it was caused by negligence or some other avoidable act, then the insurance claim is unlikely to be accepted or processed. Insurance companies will also try to see if the damage could have been prevented by regular maintenance or not. Even after the claim has been accepted, the insurance companies can look for ways to minimize or underpay the claim. Therefore, it is important to first prove that the damage could not have been avoided, was sudden and accidental and then to ascertain the full extent of the damage and include it in the claim.
 
Other factors that insurance providers look for when dealing with Restoration Contractors is the extent of services provided. A full service restoration is mostly always preferred over another one providing limited services, e.g. only water extraction. If you provide water extraction services, then you should consider providing other services like drying, repairing and repainting the damaged parts of the property. Both, the insurance companies as well as the property owners, prefer dealing with one contractor who can take care of all the work, from start to finish, no matter how complex it is. It can be time consuming to deal with multiple contractors and if something goes wrong, the contractors might not take full responsibility.
The next important factor seems to be to continuously maintain a healthy relationship with insurance providers. Some insurance companies are preferring to not having a few preferred contractors but rather have more number of Restoration Contractors available to work in a timely manner whenever and wherever needed. At the same time, there is a possibility of Restoration Contractors getting bought out by insurance companies. This is because some insurance companies who want to have preferred contractors are motivated to exercise even more control over the restoration process by vertically integrating with such restoration companies. The expectation by the insurance company is that they should be able to keep down the costs of doing business and avoid the profit margins being paid to contractors. In any case, it pays off to maintain an ongoing working relationship with insurance companies.
 
We hope you enjoyed reading this article. It briefly introduced the restoration industry and how the insurance companies fit into it. We also looked at ways to effectively deal with insurance providers for water damage claims and how to manage them in short as well as the long term.
Next:  Guide to Water Damage Restoration
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