Filing a claim with your insurance company often presents a more difficult challenge than earning admittance to law school. With adjustors, contractors, obscure clauses in the fine print of the fine print, not to mention the actual physical damage, it’s often easier to simply complete the repairs independently. And the tactic of independent repairs may even prove cheaper since studies show filing a claim actually increases your insurance premium. Which begs us to consider how to handle those repairs which truly require the filing of a claim.
If you recently renewed your homeowner’s policy and courageously sifted through the attached booklet of legal jargon, you may have noticed reference to a “Managed Repairs Program.” With a Managed Repairs Program, your options in selecting a contractor are restrained to those firms and individuals specifically pre-approved by the insurance company. Ultimately, the decision on who will perform the repairs is decided by the company, instead of the client. Which, frankly, violates our autonomy as homeowners! We pay our premiums, we rarely file claims. Decisions about our homes ought to rest in our capable hands! However, the additional protection offered through these programs may dwarf the weight of our moral indignation.
Consider the value added through choosing a contractor approved by your insurer: for liability reasons your company will choose a contractor licensed and insured in the state, repairs will be guaranteed, and in the event of a claim against the workmanship, the full force of a dedicated customer service network and legal team will pack a heavier punch than an individual homeowner. Undoubtedly, there exists an encroachment upon our right as homeowners to choose a contractor, and admittedly, this shift in policy was not designed with the well-being of the homeowner solely in mind.
Fueled by a practice known as ‘assignment of benefits’ Managed Repair Programs developed largely as a result of homeowners failing to adhere to the proper claim submittal process. Simply stated, assignment of benefits occurs when the claimant hires a contractor who guarantees that the work they provide will be covered by the insurer, without either party verifying that with the insurer. The contractor then performs the work prior to an adjustor visiting the property, and the customer pays them, expecting a refund from the insurer. Ultimately denied, claims go unpaid as consequence of failing passage through the appropriate channels, and more often than not, repairs don’t meet code.
But these foibles of human vulnerability could never impose upon our rationale! We would never fall prey to such an obvious scam, patient investors that we are! Yet, the absence of a roof mid-June in Florida proves a powerfully influential motivator to take matters into our own hands.
Circumventing this tendency of claimants to “skip ahead in the process,” insurance companies scripted these additional clauses to avoid paying artificially inflated repair costs, and protect homeowners from fraud. An established list of pre-approved contractors offers policy holders an additional level of confidence in the coverage of their claim, and the ability of their chosen repair man. Mutually beneficial, the same guarantees and protection that safeguard the homeowner, also work in favor of the insurance company.
As homeowners, the best way we can protect ourselves is to ask our agent to review this clause. How many contractors are made available through the policy? What are the requirements for a contractor to be put on the insurer’s list? What protection and course of action do you have as a customer, in the event the work was not performed to a satisfactory standard, or fails to meet code? More and more companies continue to add in these types of programs, and the odds of finding an insurer who does not abide by this policy will quickly devolve into an even more tedious chore. As always, your Macke team is available to answer any questions you may have, and shop your existing policies to ensure you have the best protection for your current needs.