Found this great article excerpt by a fellow public adjuster who hails from the “Show Me” state: just read and James H. Bushart will show you how some insurance companies do not pass on the opportunity to pay out quicker but smaller insurance settlements. It’s a maneuvers like this that can sometimes force the “Do-It-Yourself-er” to use inferior materials to repair a home or business. Bushart, a retired building inspector and energy auditor, now practices as a public adjuster in Missouri. He discusses this issue and other interesting points policyholders should know:
What Should the Insurance Company Pay You for the Repair and Restoration of Your Home?
When your home has been partially or totally destroyed as a result from a peril covered by your insurance contract or policy, you have the right to expect to receive financial support from the insurer toward restoring your home to the condition that it was prior to the loss.
The only fair amount that an insurance company should pay for loss to real property (and that an insured should expect to be paid) is the price for repair and restoration work that the specialists who undertake the project agree to work for.
Sometimes, the adjusters paid by the insurance company will encourage home owners to agree to settlements that will provide less than what they may be entitled to that can appear to be reasonable … but are not.
For instance, many insurance company paid adjusters will rely upon and use computer programs or publications that claim to represent prices for various incidents, materials and tasks that are updated by telephone surveys. The errant suggested prices from these computer programs are what the insurance company’s adjusters will often use to base their settlement offers.
These estimating applications are almost always incomplete, inaccurate and unreliable and will likely be used to represent the company’s first offer of settlement. Unsuspecting home owners will feel obligated to accept these lowball offers … particularly when they are in a hurry for cash.
Sometimes, the insurance company will utilize retired or former contractors who they will pay to provide them with ”estimates” for repairing or restoring the home. Many of these folks are removed from the actual repair or restoration process – by either time or experience – to have a real time knowledge of material costs and procedures and are unlikely to actually be the professionals who are going to be performing the actual work. Additionally, being paid by the insurance company for their bid and their future referrals provides some of these folks with an incentive to provide low and unrealistic “estimates”.
Occassionally, the insurer will offer a lump sum “cash out” that will (with quick and fast money) provide the home owner with a fast settlement that will provide less than the required amount to fully restore their home to the original condition. The idea of lower payments for “do-it-yourself” repair work provides the insurer with a lesser payment while leaving the home owner on his own to seek and use lower quality and cheaper materials, inexperienced labor and having no warranty on the final work. This is never a good idea.
Remember, the only fair fair amount that an insurance company should pay (and that you should accept) is the price for repair and restoration work that the specialists who undertake the project agree to work for.