Property insurance companies seem to be at war with contractors and their customers regarding the amounts to be paid for restoration construction. They use different tactics to eliminate overheads and profit margins. Many contractors either go out of business, do fuzzy work or struggle to get paid what is fair. The contractors who give up and make a vague execution of the reduced payments often do not have such work noticed by usually ignorant policyholders. Policyholder problems often emerge years later, leaving policyholders holding the bag caused by the insurance company's alleged tactics and new insurance policies designed to pay as little contractor and overhead as possible.
April Hall has done a fantastic job of putting together a seminar later this month in Dallas regarding the endless claim of Overhead & Profit. Steve Patrick, Mike Klem and I will help give them in insurance claims and restoration operations an in-depth discussion of the General Costs and Profit Act, the current new landscape of changing policy language and practical suggestions on how to deal with these issues.
For me, I plan to go over the costs and benefit from legal issues from a number of different perspectives and how they are challenged. These perspectives will be:
- Historical development of the overhead and profit question
- The general definition
- Insurance techniques for withholding payments based on actual cash value
- The fight against depreciation of labor
- New policy language ̵
- Consequences for policyholders, restoration contractors and public insurance regulators
This is a struggle that policyholders' advocates must inform various insurance departments. For example, more than a year ago, Colorado Overhead and Profit Issues – Merlin Law Group filed a response for Colorado policyholders I noted how insurance company lobbyists run this pay-as-little-as-possible agenda Colorado:
The Colorado Department of Insurance has proposed eliminating one of its long-running bulletins that requires insurance companies to pay contractor costs and profits rather than deducting the amount until it arises. Such an elimination is clearly contrary to the interests of policyholders and is the result of insurance industry lobbyists intruding on Colorado insurers who are supposed to be guardians of the public interest.
We, the policyholders' advocates, prevented this in Colorado. In other states, insurance departments simply do not recognize that it is an issue and approve changes to forms or policies.
As a refresher on the subject, I suggest readers take the time to review Merlin Law Group Lawyer Ed Eshoo's article on this subject, Overhead & Profit: Its place in a Property Insurance Claim published in Adjusting Today .
This is an important question and hope you can come to the April Hall event and learn what you can do. Here is a link to her event.
Thought For The Day
The pursuit of excellence is less profitable than the pursuit of bigness, but it can be more satisfying.