How Insurers & Adjusters Can Underpay Basic building replacement Cost Values
Many contractors and consumers that are involved in establishing/estimating replacement costs for a catastrophe damaged home or business may run into a very unfair and irrational building evaluation methodology that some insurers try to force on naive or even educated assurance claimants.
Nationwide Home Insurance
To understand how it works, look at the two evaluation examples at the lowest of this article.
The first evaluation is a tasteless and historically basic "Cost Plus 10% Profit" type building estimate.
The second is a insurer contrived synthetic building estimate.
As you correlate the two estimates, keep in mind that tasteless sense dictates that from the roof to the foundation, each building component's costs contain general contractor and specialty contractors business costs, which would contain their own overhead and profit costs.
These are needful and inherent building replacement costs, (like materials and labor), insurers & assurance agents account for, yet assurance adjusters may try to avoid disclosing and paying to claimants, whether they use a contractor or not.
Does the Texas division of assurance Condemn or Condone -
- Insurers Unfair Claim Estimate-Payments to Home & business Owners?
Question: What is one Major claim underpayment task being forced on post-catastrophe home and business owners, (all across Texas), as this note is being written 7-1-2009...??
Hint: As mentioned, it has to do with tasteless building replacement costs that are paid for every month by unsuspecting consumers...as part of their home and/or business safety assurance payment.
Answer: Insurers are not openly and objectively returning general contractor (G.C.) overhead and profit (O&P) costs, or in other words, intrinsic "loss values".
Why should that be a concern to [Texas] citizens as consumers, and contractors?
(Special Note: Nationwide assurance located May-2009 for paying approximately 700,000 G.C. O&P underpaid claimants.)
Well, if a contractor expensed you for 40 year shingles, and 30 pound felt, yet (since He knows they look approximately the same from the ground), used your inexperience in building to intentionally setup 30 year shingles and 15 pound felt, and the contractor alone knows they could (unfairly) pocket the extra money you had trusted them with), would you feel as if they had defrauded you?
The Texas division of assurance has easy to read information to help you make sure that, whether you use a [general] contractor or not, you are paid for your loss properly. The Tdi does not want us to be intentionally or unintentionally defrauded. They do not want insurers to make "illegal windfall".
Tdi Bulletins B0045-98 & B0068-08 makes it clear that insurers, adjusters and agents should not unfairly or intentionally deduct, or keep, money you are owed. Tdi Bulletin B0045-98 states that replacement costs of your insured structure has a "prospective contractors' overhead and profit" built into it.
Bulletin B0068-08 confirms the fact.
Quote B0045-98: "There is No Situation in which the deduction from replacement costs of... Overhead and profit...will be the precise portion of the insured's loss".
--See below for a "correct measure" example of basic building evaluation math form--
From childhood, many have heard about the [primary/general] contractor "Builder Bob". Additional tasteless life taste shows that replacing structures reasonably and likely requires "prospective" general contractors fair and equitable replacement costs, using discrete specialty tradesmen.
In short -- general contractor Costs + Roofing contractor Costs = New building Roofing Costs, or conversely, The Insured replacement Cost Value of Your Roof!
Yes, tasteless Sense Dictates; You have pre-paid for a prospective G.C. To covenant with you to heal or replace your assurance protected roof, And, every other part of your home or business along with it.
So if an assurance adjuster tries to cut out approximately 20-59% (or more) of tasteless contractor market overhead cost, and profit cost, and sales tax cost, article that act to the Texas division of Insurance, or your state's assurance department, so that they can help protect you from being treated unfairly, or financially defrauded.
http://www.tdi.state.tx.us Tdi Fraud Unit - 1-512-463-6492 / 1-888-327-8818 FraudReport@tdi.state.tx.us
Contrived Excuses Insurers, Adjusters & assurance Agents May Use To Underpay Your assurance Claim
Many contractors, consumers, and adjusters are customary with the following claims:
1. "We don't pay general contractor overhead & profit on roofing in [Texas]". (Unfair basic "fair market" building evaluation and loss value logic.)
2. "The damage is well not severe enough to want a general contractor". (Actually, in a fair market a G.C. Determines what work they require, not an assurance company.)
3. "You well don't "need" a general contractor to heal or replace the roof...you can hire a roofing contractor directly". (People pay assurance premiums values for total general contractor involvement for the replacement of every building component of their structure.
People do not pay premiums to qoute solve as an educated and experienced general contractor would when repairs are needed for single trade damage work, like siding or roofing work.) They pre-pay for a trusted general contractor of their choice.
4. "More than 1-3 trades are needed before we "allow" general contractor prices".~ (Double-Speak logic that helps insurers keep general contractor O&P values woven into the 1-3 trades, or Any trades work.)
5. "Roof Contractors "unit costs" contain overhead and profit costs".# (Maybe so, maybe not, but by themselves they Do Not contain general contractor O&P value).
6. If we (repaid) general contractor O&P costs on all claims, we would have to raise rates. (Why would rates have to be raised when G.C. O&P costs are already being expensed to consumers?)
7. "If we paid general contractor and roofing contractor overhead and profit costs for roof losses, we would be improperly paying twice for overhead & profit costs". (Do the math below. This is simply, not true, and more double-speak).
Remember this basic fact - Most likely a general contractor built your home or business, and so their own business overhead costs and profit costs, along with the private specialty trade contractors business overhead and profit costs, are woven into the roof and every other piece of the structure. Period.
Your assurance agent determined replacement costs accordingly. From the roof to the foundation, you have prepaid for a general contractor to fully replace your property, and/or partially replace it.
Do Not Be Misled! The insurer will Not be improperly paying twice for overhead and profit, when they pay once properly for the general contractor + roofing contractor value of your roof, or other loss.
Fair & Unfair building market evaluation Practices
(Imagine these are wind/hail/rain/fire/earthquake etc. Damage replacement cost value (Rcv) estimates.)
Basic Fair market contractor Example
6,800.00 - remove and Replace Roof Shingles
850.00 - remove and Replace Guttering
4,600.00 - remove and Replace Siding
900.00 - remove and Replace Windows
3,400.00 - remove and Replace Sheetrock
5,800.00 - remove and Replace Carpeting
22,350.00 - Sub-Total
2,350.00 - 10% Overhead
24,700.00 - Total (Cost)
2,470.00 - 10% Profit
,170.00 - Grand Total (Correct cost plus 10% profit math.)
A historically fair and cheap ("Builder Bob") line itemed evaluation that shows logical and elementary "Cost plus 10% Profit" mathematical form.
Basic Unfair Insurer/Adjuster Example
6,800.00 - remove and Replace Roof Shingles
850.00 - remove and Replace Guttering
4,600.00 - remove and Replace Siding
900.00 - remove and Replace Windows
3,400.00 - remove and Replace Sheetrock
5,800.00 - remove and Replace Carpeting
22,350.00 - Sub-Total
975.00 - 10% Oh (G.C. Roof/Carpet O&P Costs Ignored)**
23,325.00 - Total (Underpaid)
975.00 - 10% profit (Underpaid)
,300.00 - Grand Total (Underpaid ,870)
**G.C. 20% overhead and profit is unfairly missing towards the roof/carpet work Only, and G.C. O&P is improperly summed up as the same price each, thus the 10% profit math is obviously, yet deceptively, false.
~Allstate Ins. well (misuses) the main contractor's O&P line for specialty trade contractors 29% Op. They pay a 49%+ factor for G.C./Specialty trade contractors combined O&P, but will also unfairly claim that losses need a unavoidable damage level to certify G.C. Work.
#Roof contractor "unit costs" do not contain G.C. O&P in estimating programs historical data.
So, in summary, understand that your or other insured structures did not "Poof" into place, and that a general contractor using specialty contractors are financially accounted for by assurance agents building replacement cost values...values that general contractors costs helped decide nationwide!
From the roof to the foundation, help your assurance adjuster to evaluation accordingly...or in other words, fairly and equitably.
normal contractor + Specialty Contractors Overhead & profit Values in transfer Cost Values
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