Know the Three Types of Storm Roofing Contractors
There are three types of contractors that perform storm restoration work, and you’d better know the difference and how to tell which is which, or it could/will really cost you. The three types are:
- Professionals
- Storm Chasers
- Captive Contractors
Before explaining the differences, a brief, basic understanding of what is going on in an insurance claim would be helpful. From your insurance claim department’s point of view, your claim is a financial negotiation.
They are highly skilled negotiators who do negotiations all day long every day – you are way overmatched. Their first estimate of your loss is their initial offer to settle the claim. It’s not really that different than negotiating the purchase of a car or a home. No savvy consumer would ever offer the sticker price to negotiate the purchase of a new car. Likewise, they would never offer the asking price to negotiate the purchase of a home. Everyone knows that in any negotiation the seller starts out high and the buyer starts out low and the two attempt to meet somewhere in the middle.
Many claims adjusters are taught/instructed to omit legitimate building components and refuse to pay legitimate aspects of the consumer’s loss, such as overhead and profit, flashings, etc. Their initial offer to settle is almost always a low-ball offer and no shrewd consumer would ever think anything otherwise. Frontline, residential adjusters are not aware that a financial negotiation is going on – they just think, say and do what they are taught to think, say and do. As an adjuster, I never knew a financial negotiation was going on until I was trained to negotiate claims as a large-loss commercial general adjuster. Typically, the consumer is not aware of a negotiation is occurring either. Imagine the advantage one party has over the other in a negotiation, if the one party has no idea that they are even IN a financial negotiation.
Some consumers believe that getting contractors to bid for insurance restoration work is wise
This is especially true when their adjusters suggested it. Actually, professional contractors never bid insurance work, because they are bidding against themselves. Here’s why, they understand what’s really going on in the claims process and they also understand that storm chasers that bid insurance work are bidding against other contractors to ultimately save the insurance company money. The professional has no interest in saving the carrier any legitimate money. They take the time to perform a thorough inspection so that every single piece of your damaged property is accounted for. They work for the retail price of the work for your area. Storm chasers are happy to bid for the work and once they get it, they short the job to make up for their low bid price. They justify cutting corners (in their own mind) because the consumer made them low-ball the job to get the job.
Carriers are not ignorant, by depreciating the claim (and holding the depreciated amount until the work is completed), they know that they will ask for a final invoice to verify how much you actually paid before releasing (paying) the depreciation being held back. They can even demand cancelled checks if they suspect a consumer is trying to game the system. That is why contractors eating deductibles and bidding for insurance work does not put cash in the pocket of consumers – but it keeps a significant sum in the pockets of the unscrupulous carrier.
Let’s say that you have $20,000 (full retail value) worth of legitimate damage and the storm chaser or captive contractor bids $16,000. Once the work is completed, the consumer asks for the depreciation being held back. The carrier demands a copy of the final invoice, which is $16,000. They will never pay more than what a consumer has actually spent. If a consumer knowingly allows an unscrupulous contractor to send in a fabricated, inflated invoice, that act is conspiracy to commit insurance fraud – a 3rd degree felony in most states. For more on insurance fraud, click here.
I will explain each type of contractor and describe the difference of each.
1. The Professional Roofing Contractor
The Professional Roofing Contractor has the consumer’s best interests at heart, rather than someone else’s. They get the majority of their clients through referrals from past clients, although some do knock doors. They care that your entire roof system is replaced rather than a piecemeal roof installed. Professionals have zero interest in installing a piecemeal roof. They are honest, competent and reliable. You can depend on a professional to be there promptly to rectify any issues if you have problems after your new roof is completed. They work for you and make sure that all the work is performed by skilled tradesmen. Professionals have liability insurance to protect the consumer and take the time to train their crews. Professionals never eat deductibles or play rebate or ‘sign in the yard’ games, because in the vast majority of states, doing so is a crime – a Class A Misdemeanor.
The claims managers of the unscrupulous carriers really dislike professional contractors because their priority is keeping claims costs down, and the professional’s job is to see to it that you are fully restored with quality workmanship in a timely manner. Claims adjusters are routinely trained by these managers to tell their claimants that the professional’s scope of damages (damage assessment and method of repair) are unreasonable and their prices are too high. They make statements such as, “There are lots of contractors that will do your work for our price;” “This is all you’re going to get, so get used to it.” “Your contractor is crazy, I’ve never seen an estimate like this before.” “You need to get a new contractor.” This is because the vast majority of the time, adjusters are dealing with storm chasers and captive contractors who routinely perform work at a low-ball price.
Professionals will work out of large, out-of-town storms. Imagine a huge storm being worked by only local contractors. It could take years to get all the work done. Thank God some professionals will step in and help communities like these get back up on their feet.
2. The Storm Chaser
The Storm Chaser roofing contractors are basically gypsies – moving from city to city, storm to storm – lie the guys who do black-top driveways. The professionals in the industry refer to them as ‘Chuck and a truck’ (a guy has a truck and a hammer, so now they’re a contractor). Local guys who become contractors overnight are referred to as ‘mushroom contractors’ – they pop up overnight (after a storm hits). Storm chasers get the vast majority of their clients through door-knocking or telemarketing. Some professionals will set up offices in cities when a large storm event occurs (other than their home city), but they conduct business the same no matter where they operate. Conversely, the Storm Chaser puts their own interests before the consumer’s. They really could care less if all of your property damage is accounted for and included in your claim unless it benefits them. They don’t care if your entire roof system is replaced – they habitually piecemeal roofs. If the carrier is purposely omitting legitimate roofing components, that is the work that they will perform. They routinely cut corners because they have to – they are performing the work for the carrier’s low-ball price or a bid price if a consumer forces them to give a bid to earn the job. So you will be getting a piecemeal roof installed on your home. All they care about is getting the roof on and collecting the check. You cannot depend on the storm chaser to be there promptly to rectify any issues if you have problems after your new roof is completed. They are predictably less than honest, have marginal competence and reliability. They hire any tradesmen they can get, as long as the tradesman will work cheap. In other words, they hire desperate workers. Storm chasers rarely carry liability insurance to protect the consumer. Many times though, they do have fake certificates of insurance to fool consumers into believing that they do. Sometimes, they will pay a down payment to get a valid certificate of insurance, never make the monthly premium payments and pass off the certificate as valid. Always call the agent listed to verify that the policy is valid and in force.
Storm chasers routinely eat deductibles; hoping he never gets caught by the law. Insurance claims managers love storm chasers because these guys work for their low-ball price helping them keep claim costs down. This arrangement is an obvious disaster waiting to happen and should be avoided in our opinion.
3. Captive Contractor
The third type of contractor is the Captive Contractor – see insider secret #17 on page 50 of my free eBook ‘Level the Playingfield.’ The insurance industry refers to these contractors as preferred service providers (PSP’s) – this is because the carrier certainly prefers them (through the carrier’s referral network) to the professional contractor that is going to cost them more money. The captive contractor does not work for the consumer; they work for your insurance company. The carriers are the ones who feed them the work. They know very well not to bite the hand that feeds them the work through referrals or the referrals immediately stop. Therefore, their loyalty is not to you, but to the carrier, the one who feeds them. The captive has an incentive to turn a blind eye to any damage that they find that is not on the adjuster’s estimate. Again, it bears repeating, if they make waves, the referrals stop flowing their way. They don’t care if your entire roof system is replaced; they are going to do the work that their boss (the carrier) tells them to do. They routinely cut corners because they are performing the work for the carrier’s low-ball price/very close to actual cost. You will be getting a piecemeal roof installed on your home. Their reliability is spotty, and their warranty work is not as dependable as the professional, but to be fair, it could be better than the storm chasers. Their honesty is certainly questionable because they pretend to be working for you when their true client is your insurance carrier. Competence is all over the map, from very good to disastrous. Like the storm chaser, they are forced to hire any tradesmen that will work cheap to make ultra-thin profit margins working for low-ball prices. In other words, they hire desperate workers.
There is little to no difference between captive contractors and storm chasers when it comes to eating deductibles. Insurance claims managers love captives, because these guys will do just about anything they are told to do. This arrangement is an obvious conflict of interest and should be avoided in our opinion as well as consumer protection activist’s opinions as well.
A true professional contractor will make sure that the repair/replacement is up to industry standards/construction best practices and meets code/OSHA requirements regardless of what the adjuster or your carrier says. So who would you prefer to hire? The reason the storm chaser and captive contractor exists is simple – greed. Professionals exist to run a legitimate business, providing products and services to consumers in a timely and proficient manner for a legitimate profit.
How can you tell one contractor from another?
Ask to see a prospective contractor’s certificates of insurance and call the agent listed on the certificate to check that the policy exists, is valid, and is in force. Rarely will any contractor, other than a professional, have insurance. Ask the contractor if they will eat your deductible. If they say yes, or they start talking about sign allowances or rebates, etc., they are not a professional. Professionals are not criminals and criminals are never professional. Choose wisely, because there are consequences to your choices. Positive consequences for doing the right thing and negative if you do anything else. The bitterness of poor quality remains long after the sweetness of low price is long forgotten.
Steve Patrick CEO, Level the Playingfield LLC . Teaching Public Adjusters, and contractors how to overcome unreasonable & uncooperative claims adjusters and win the claims game!