Insurance Adjusters, Water Damage Companies & You!

Posted by Matt Buchanan

It’s a strange dynamic that isn’t present for almost any other home service you might receive. Normally, you find, interview & hire a contractor on your own, and are left to either enjoy the fruits of their labor or dread the results depending on how they do. But when it comes to getting emergency water damage services, many times there is a 3rd party introduced to the equation: your insurance adjuster.

For many people, the process of working through an insurance claim can be a challenge and the results of any water restoration services can be lacking. Let’s discuss some of the issues that come in to play when you have another party injected into the mix…


Who is looking out for who when your home suffers water damage?


water-damage-insurance-adjusterMany people naively assume that both their insurance adjuster and the water mitigation company they hire have their best interests at heart when dealing with the loss. While many times that is the case, more often times than not one or both parties pay little mind to your home, contents, or any other aspects of your water loss. You’re simply a claim number and a check.

That’s especially true when you’ve called your insurance company and your adjuster has referred you to a specific water restoration service company…let’s dive deeper and understand the dynamics at play and put ourselves in their shoes. But before we do, it’s crucial that you understand why your adjuster has referred you to a specific water damage cleanup company:

Because that service provider has a verbal agreement in place with your adjuster to cap the amount of the loss at a certain number and/or discount their services up to as much as 50% in exchange for the referral.

So now that you know why your adjuster wants you to work with that specific company, let’s put on their shoes to understand their motivations and any conflicts of interest, as well as it’s impact on you!


Your water damage claim from your adjuster’s position


green-dollar-signTo understand an adjuster’s approach to your claim, you have to understand the overarching goal of any public company like a an insurance company: to return value to their shareholders. In other words, make money! Water damage claims represent the largest single loss type for all insurance companies. As such, your loss type puts a huge dent in their profits every year. So when your adjuster gets the call from you, they’re immediately in a position where their company is probably going to lose money and it’s up to them to try and reduce the amount of that loss. And trust us, they’ll do everything possible to lessen their financial responsibility for your loss.


What can happen if I call my adjuster first?


There are 3 outcomes if you call your adjuster first:

() They come out and assess the water damage and cut you a check for what they determine the cost of any water mitigation services will be.
() They refer you to their ‘preferred’ water damage restoration company.
() They tell you to find and hire your own water cleanup contractor.


upset-customer-water-damage-claimIn scenario #1, the most likely outcome is that (shocker!) your adjuster cuts a check for significantly less than the actual cost it will require to cleanup the water damage, dry out your structure, and repair the damages. While adjusters are obviously familiar with water losses, they aren’t professional mitigation providers. And the reality is, that until work begins, it’s impossible to say how quickly things will dry out, what will need to be replaced, etc. An adjuster can’t possibly know the full cost of your loss, so rest assured when they cut you a check they’re going to significantly short change the actual amount of the loss. That leaves you in the position of trying to hire an emergency water cleanup company that will do the work for far less than the actual cost of the project, or paying out of pocket to make up the difference. Either way, it’s a bad situation for you to be in!

We’ve discussed scenario #2 some, but let’s examine what happens in this situation. As we said earlier, they are referring you to that particular water damage cleanup company because they have agreed to bill the insurer for far less than actual cost of the job, and even cap the amount of damages. So let’s say they’ve agreed to cap residential losses at 50% of the cost of the work. That means they’re only billing for half of the work that needs to be done. So if you’re that restoration company, what would you do? If you’re like most restoration companies in that situation, you find ways to reduce the amount of work you do. In other words, you cut corners. When it comes to water mitigation, that’s a terrible proposition for you. Way too many things can go wrong, most notably, not all of the moisture will be removed. When that happens, surfaces continue to get damaged and eventually black mold begins growing. Beyond the obvious problems here, the biggest issue is that you’re going to need to hire someone to come in and fix everything correctly but your insurance company has already cut a check and they’re not about to cut another one. You guessed it: you’re on the hook!

But beyond the obvious issues above, there’s another thing you have to consider: that water damage contractor treats your adjuster as the customer, not you. Their loyalty is to the person that is going to send them a lot more business, not you. Think about that and decide for yourself if you think that’s an arrangement that protects your interests!

happy-customerScenario #3 is what should happen if your adjuster chooses to act ethically. In this case, you’re free to hire the company you feel most comfortable with. Like any other service provider you might hire, you have the freedom of choice. The key here is obviously to hire a reputable provider that won’t do unnecessary work or otherwise attempt to overbill your insurance company. Most water restoration companies understand that doing so will ultimately burn every bridge with insurance companies and if they have any foresight will realize trying to earn a little more money right now will ensure their company can’t earn money in the long term.


What should you keep in mind when working with a water damage company through an insurance claim?


Here are some things we think you should keep in mind when trying to recover from a flood in your home or business:

() It’s your property and no other party is going to be as motivated to see a successful outcome as you are. Be proactive, engage in the process, and make sure you get the positive outcome you deserve.

() You have every right to choose who you want to do the work. You alone will have to live with the results. Don’t feel pressured by your adjuster or anyone else. Ask questions, inform yourself and make the choices that make the most sense for you. If necessary, hire a third party adjuster to take another look at things if you aren’t happy with your insurance adjuster’s initial assessment.

About Matt Buchanan

I grew up in Irving, TX and left for Nashville, TN for college. After college I lived in Washington, DC and then in Cairo, Egypt. After coming back to the states, I spent a couple of years back in Dallas before moving with my wife to Denver!
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