Restoration Contractors: Liability Issues That Can Affect YOU!

If you are the victim of an insured loss, such as a fire, flood, tornado or hurricane, you will likely have to hire a restoration contractor to complete repairs on your home. However, here is an issue that most property owners never consider...until it’s too late.

That issue is the liability insurance of the restoration contractor. No matter if you are the owner of residential or commercial property, you could have major liability issues in the process of the restoration.

Restoration contractors are customarily general contractors. That means that they manage the work of sub-contractors. They may hire plumbers, framing crews, roofers, electricians, drywall crews, painters and other artisans to complete the work on your property. Many times, the restoration contractor has a crew of workers on his payroll. But, there are some restoration contractors that only act as construction managers.

There’s nothing wrong with that arrangement if the job gets done on time and on budget.

You’ll be entering into a contract with the contractor you choose. In addition, you will be granting authority for your contractor to work on your premises, as well as his sub-contractors. Here is where you must take care to protect yourself.

In the pre-contract process of verifying your chosen contractor’s credentials, you will have required the contractor to provide you with a current copy of his insurance certificate. Take a few minutes and phone the insurance company and confirm that the coverage is in effect, and that the policy dates are correct.

You must insist that the restoration contractor carry General Liability, Completed Operations and Workers Compensation insurance (if he has employees). In addition, you must insist that each sub-contractor furnish the same insurance certificates. The only exception would be a contractor who worked alone and had no employees. That fellow would not need Workers Compensation insurance.

Another very important strategy is to insist that ALL the contractors place you on their insurance policies as an “Additional Named Insured.” That way, if anything were to happen in the course of repairs, such as a worker injury or some other liability issue for which they are liable, THEIR insurance policy would defend and indemnify on your behalf.

This one strategy could save you hundreds of thousands of dollars in a lawsuit award, and thousands in legal fees defending the suit.

Don’t leave yourself vulnerable to liability and lawsuits. Use this strategy!

Insurance Jokes: You May As Well Laugh

Here are some insurance jokes to help you keep some perspective while you are dealing with insurance agents and insurance adjusters.

Q: What’s wrong with Claims Adjuster jokes?
A: Claims Adjusters don’t think they’re funny, and nobody else thinks they’re jokes.
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Q: What do claims adjusters use for birth control?
A: Their personalities.
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Q: What is the difference between a dead skunk lying in the road and a dead claims adjuster lying in the road?
A: There are skid marks in front of the skunk.
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A man died and was taken to his place of eternal torment by the devil.

As he passed sulfurous pits and shrieking sinners, he saw a man he recognized as a claims adjuster making love to a beautiful woman.

"That's not fair," he complained. "I face torment for all eternity, and that adjuster gets to spend it making love to a beautiful woman."

"Shut up!" barked the devil, jabbing the man with his pitchfork. "Who are you to question her punishment?"
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A lawyer and an engineer were fishing in the Caribbean. The lawyer said, “I'm
here because my house burned down, and everything I owned was destroyed by the fire. The insurance company paid for everything.”

“That's quite a coincidence,” said the engineer. “I'm here because my house and
all my belongings were destroyed by a flood, and my insurance company also paid for everything.”

The lawyer looked somewhat confused. “How do you start a flood?”" he asked.
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A woman was in the hospital after feeling very ill. The doctor says to her, "I have some bad news for you. You only have three months to live."

"Oh that's terrible," the woman sighs, "what am I going do?"

The doctor replies, "Marry an insurance agent."

"Will I live longer?" asks the woman. "

"No," replies the doctor, "but it will SEEM longer."
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A drunk wanders into the bar of a hotel where an insurance convention is being held. He yells, "I think all insurance agents are crooks, and if anyone doesn't like it, come up and do something about it."

Immediately, a man runs up to the drunk and says, "You take that back!"

The drunk sneers and replies, "Why, are you an agent?"

"No," the man replies, "I'm a crook."
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An insurance agent, a lawyer and a used car salesman are traveling in the countryside. Weary, they stop at a small country inn. "I only have two rooms, so one of you will have to sleep in the barn," the innkeeper says.

The used car salesman volunteers to sleep in the barn, goes outside, and the others go to bed.

In a short time they're awakened by a knock. It's the used car salesman, who says, "There's a cow in that barn. I'm a Hindu, and it would offend my beliefs to sleep next to a sacred animal."

The lawyer says that he'll sleep in the barn.

The others go back to bed, but soon are awakened by another knock.

It's the lawyer who says, "There's a pig in the barn. I'm Jewish, and cannot sleep next to an unclean animal."

So the insurance agent is sent to the barn.

It's getting late, and the others soon fall asleep.

But they're awakened by an even louder knocking. They open the door and are surprised by what they see: It's the cow and the pig!
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Last night as I lay sleeping, I died or so it seemed,
Then I went to heaven, but only in my dream.

Up there St. Peter met me, standing at the pearly gates,
He said "I must check your record, please stand here and wait."

He turned and said "Your record is covered with terrible flaws,
On earth I see you rallied for every losing cause.

I see that you drank alcohol and smoked and used drugs too,
Fact is, you've done everything a good person should never do.

We can't have people like you up here, your life was full of sin,"
Then he read the last of my record, took my hand and said "Come in."

He lead me up to the Big Boss and said "Take him in and treat him well,
He used to work in Insurance, he's done his time in hell."
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The seven-year old girl told her mom, "A boy in my class asked me to play doctor."

"Oh, dear," the mother nervously sighed. "What happened, honey?"

"Nothing, he made me wait 45 minutes and then double-billed the insurance company."
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An insurance agent said to a customer, "Thank you, Mr. Smith, for your patronage. I wish I had twenty customers like you."

"Gosh, it's nice to hear that, but I'm kind of surprised," admitted Mr. Smith. "You know that I file many claims and always pay premium late."

The insurance agent said, "I'd still like twenty customers like you. The problem is, I have two hundred like you."
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The applicant for life insurance was finding it difficult to fill out the application. The agent asked what the trouble was, and the man said that he couldn't answer the question about the cause of death of his father.

The agent wanted to know why. After some embarrassment the client explained that his father had been hanged.

The agent pondered for a moment. "Just write: 'Father was taking part in a public function when the platform gave way.'"
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Two insurance claims managers are discussing business one day. One manager asked "How many adjusters do you have working for you?"

The other manager replied "About half of them."
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An insurance adjuster was teaching his 16-year-old daughter to drive when the brakes suddenly failed on a steep, downhill grade.

"I can't stop!" she shrieked. "What should I do?"

"Brace yourself," advised her Dad, "and try to hit something cheap."
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The other day my house caught fire. The insurance agent said, "Shouldn't be a problem. What kind of coverage do you have?"

I said, "Fire and theft."

Insurance agent frowned. "Uh oh. Wrong kind. Should be fire OR theft."

Apparently, the only way I can make a claim with this coverage is if the house is robbed WHILE it's burning down.
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Two insurance agents were driving down a country road at high speed and passed a pickup truck with an old couple inside. "Look at those fools, Pa! Must be a couple of insurance agents and they will surely meet their maker soon, I tell you."

Well, sure enough, a little while later the couple comes across a bad accident involving the two insurance agents. "Well Maw, we got to do what any good folk would do and give'm a decent burial."

So the couple dug a hole and buried the insurance agents. Just as they were putting their tools away, a cop drives up. "You folks see this accident?"

"No sir, but we knew them dang fools were going to have it when they passed us doing a hunnert miles an hour. Well, we finally come across the accident and gave them insurance agents a decent burial"

"You were sure that they were dead??"
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"Well, they said they weren't, but you know how those insurance agents exaggerate!"
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Two women are playing golf when one of them asks the other, "Do you and your husband have mutual climax?"

The other woman replies, "No, I think we have Allstate."
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A traveler wandering on an island inhabited entirely by cannibals comes upon a butcher shop. The shop specialized in human brains differentiated according to source. The sign in the shop read:

Laywer Brains ... $9/lb

Doctor Brains ... $12/lb

Engineer Brains ... $15/lb

Claims Adjusters' Brains ... $1,000/ounce

Upon reading the sign, the traveler noted, "My, those claims adjuster's brains must be something."

To which the butcher replied, "Are you kidding! Do you have any idea how many of them you have to kill to get an ounce of brains?!"
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What do you get when you cross a monkey with a claims adjuster?
Nothing. There are some things even a monkey won’t do.
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Q: Do you know the difference between a claims adjuster and a whole life insurance policy?
A: A whole life insurance policy eventually matures.
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There! Now, go finish your insurance claim!

Personal Property Claims: The Depreciation Trap

Personal property claims can be some of the most frustrating claims in the insurance claims process. The deck is stacked against you if you have any kind of insurance policy that insures your personal property. This is true for property owned by homeowners and renters as well as the personal property owned by businesses and other commercial entities.

Personal property, also commonly known as “Contents,” is usually described as any property in or on the insured premises not permanently attached to the building. Naturally, your policy will give you a definition that is more exact that this one, and will also have exclusions about some property that is not covered.

Many property insurance policies have the Replacement Cost (RC) Endorsement on the policy that covers the contents. The claims process for your Contents is the trap laid by the insurance companies. Don’t think that your insurer wouldn’t do that to you...they ALL do it.

Here’s the method of settlement found in all policies with the Replacement Cost Endorsement.

You submit your contents claim inventory. On that inventory you will have listed all of your contents, item by item, and the replacement cost. The insurance company will apply depreciation to each item of your contents, based upon its age and condition. Subtracting the depreciation amount from the replacement cost gives you the Actual Cash Value (ACV) of your property, whether business or personal.

The insurance company settles RC claims by issuing two separate checks. The first check will be for the ACV amount. According to the Loss Conditions in the policy, the insurer only pays you the RC of your contents once the replacement has been made.

For example, if you had an item with an RC value of $1000, and the depreciation amount was 30%, or $300, you would receive the first payment of $700. But, $700 does not replace the item. In order to receive the RC amount you will have to use $300 of your own money plus the $700 paid by the insurance company to make the replacement purchase. Then you are eligible for the second check, the $300 reimbursement.

Now...think about the same example if your entire contents claim is $100,000.

The insurance company “holds back” $30,000. In order for you to make the replacement purchases, you will have to find $30,000 of your own money, make the purchases, and then get reimbursed by the insurance company.

Where are you going to get that $30,000? Savings? Credit Card? Get a loan? Or perhaps you’re like many people that don’t have those cash resources available to them. They cannot make the replacements at all.

Do you see the trap?

Here is a strategy of three things you can do to minimize the effects of the Depreciation Trap.

1. Demand that the insurance company provide you a copy of the Depreciation Tables that they used to calculate your loss.

2. Compare each item, line by line, to be certain that the proper amount of depreciation was assessed by the adjuster.

3. Challenge any and all incorrect depreciation amounts.

By using this three-step strategy, you will maximize your Contents claim amount.

There is another Contents strategy that you MUST use when documenting your Personal Property claim. It relates to the personal property you won’t be replacing.

I knew a family that had a major fire loss. The wife was an attorney for many years. Then, when she had her first child, she decided to leave the business world and be a full-time mom. She had a closet full of expensive business suits, blouses, shoes and accessories. She was not going to replace them, since she was not using them any more for work clothing. So, we worked hard at establishing the highest possible value on her wardrobe. The ACV money that the family was paid for her wardrobe was used to make RC purchases of other items that did need replacing.

You can use this strategy in your Contents claim. Your home, condo, apartment or business is full of personal property that you’ve purchased over the years that (a) is obsolete or (b) you’re not using anymore. A business could have inventory items or office equipment that is unsold or obsolete. In each case, you have every right to be paid the correctly calculated ACV for those items. Then, you can use those dollars to offset the “holdback” amount when you are making your replacement purchases.

Don’t be a pushover! Don’t allow the insurance company to depreciate your Contents without a fight!

Fight back and WIN!