Disaster Contracting and Insurance Companies

Filed under About Ryan & LMGC

As you probably know Hurricane seasons most active months are August and September.  If you are planning on working a major storm clean-up this year for the first time here’s a few things to keep in mind.  If you have a opportunity to partner with a more experienced firm this can be an excellent way to gain experience at first.  If you are planning on going it alone you will need to decided to subcontract from another firm that has contracts in place or to try to land your own.  Many contractors will work with other contractors as a  sub-contractor.  This can be a excellent way to gain experience if you don’t have a contract in place.  However if you decide to go after you own contracts here are a few important things to keep in mind.

Insurance companies are often a big part of the recovery money that will be spent to repair and recover.  If you are working on residential properties you will often find yourself working with insurance companies to resolve claims.  Contractors that are new to storm work are often confused about how insurance companies work.  One of the most important things to know is that insurance companies will rarely pay the contractor directly.  When you do work the adjuster will often meet you and approve the work before you can start.  Once it comes time to pay however the check is almost always written to the insured and requires a signature from the mortgage company.  You can find yourself waiting several weeks for the funds to make it through the system.  Very few clients are willing or able to pay for expensive repairs prior to receiving insurance funds.  You should be prepared to finance your operation for a month prior to expecting to start seeing money flowing from insurance work.

Additionally always make sure you have a written contractual agreement in place with the homeowner or property owner.  Do not rely on any verbal agreements to do the work from the insurance company or its representative.  The property owner is your client and the insurance company is under no legal obligations to the contractor.  The client is the legal party that must make payment for the services you provide.  It is not advisable to make contracts basing payment on the client being reimbursed from the insurance company.  Keep in mind deductibles and coverages vary greatly from policy to policy and are constantly changing.  You should come to an agreement with the property owner about the services you will provide and the cost.  The property owner will be responsible for paying for those services in the end.  Often times a property owners claim encompasses much more than the services you provided.  The claim can be tied up for a long time if the adjuster and the property owner don’t agree on the settlement amount.  If this occurs you can find yourself waiting on payment until the parties reach an agreement and the claim is paid.  Therefore keep in mind that if you agree to wait for the property owner to receive payment you may find yourself waiting a few months if the offer is disputed.

These are a few things you can learn in the school of hard knocks if you venture out with out experience.  So be sure to let your estimators know exactly what you are prepared to agree to.  If you are not careful your estimators may agree to things with the property owners that you will not be happy  living up to.  It can be a real strain on your finances if you find yourself waiting on a lot of money to be paid on projects that you have already paid all of the expenses on.  Any way I hope those pointers will be helpful.  If you are interested in sub-contracting with some of the Veteran General Contractors contact jessica @treeservice.com for info on becoming a DCN member.

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