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Reasonable cost to repair and more thoughts from winning the storm | Property Insurance Coverage Law Blog



Geoff Hedgepeth, Chip Merlin, and Jeffrey Major

The matches and debates on insurance recovery rates and reasonable costs were discussed warmly at Win The Storm Conference. Merlin Law Group set up a couch next to our booth and more than two dozen entrepreneurs, public adjusters, attorneys, and construction providers had at least 15 minutes of conversations with me about pricing and other topics. Some calls went more than an hour. I learn a lot to listen to others and especially from those who work where "the rubber meets the road."

During the breaks from these conversations, I examined the various issues that my "co-decision makers" arose. An article post I found from Construction Program and Results was particularly interesting for an industry standard pricing standard:

[T] here there is no such industry standard. It has never been and there will never be. If you have read our book " Markup and Profit; An Entrepreneur's Guide ", you know that few entrepreneurs can run a business and breakeven to the cost plus 10%, let alone make a profit. The idea that an entrepreneur can survive with a low mark defies mathematics for basic business and common sense.

Our belief is that this "industry standard" of the cost plus 10% was created by architects. At one point, an architect set a limit in his cost-plus specifications plus 10% on the amount that the contractor could charge the home or building owner. The reason for the border was to help the architect or designer look good for the building or home team. In short, they helped "save" the owner some money.

. . . .

How do you fight this nonsense? Here's my best advice:

Take no jobs where someone else is trying to tell you how much you can pay for your work. (This includes architects, engineers, owners, authorities, insurance companies or commercial companies.) Your price is your decision alone. If all entrepreneurs would stick to this rule, this nonsense would go away because companies trying to dictate which entrepreneurs could pay simply couldn't get their jobs built.

Of course, there is much more to this subject than an article. I find the federal government's change order guidelines to be very thought-provoking when considering proper pricing for construction. We will continue to discuss how pricing can be more specific and how problems are associated with those who become affiliated with Xactimate as the "standard".

My view is that entrepreneurs deserve a fair profit and enough profit so that they can stay in business and do a quality job for the policyholder, as I discussed in yesterday's post Estimating a Reasonable Building Price Thoughts After the Winter Storm Conference and Restoration consultants providing excellent quality work are policyholders Friends but many insurance companies refuse to pay for quality .

Steve Badger must have had an excellent hour workshop because even entrepreneurs complimented their way of presenting. While public adjusters and restaurateurs were upset because they didn't feel he was in agreement with their "other side of history," Badger made several points that no one could disagree with. A primary point is that it is insurance fraud that constitutes false invoices to support a claim. Xactimate construction expert Steve Shannon said the same thing in his workshop.

Badger had many examples to show the entire audience. I have no idea how widespread the problem is, and I don't think anyone can quantify this exactly. Construction Entrepreneurs have an online article, The most common types of anti-fraud discuss false invoices.

I suggest that if you place yourself in the business of an insurance adjuster or claims officer who has seen many of these fake invoices, you may appreciate that those working on the building applications pricing insurance company may be legitimately skeptical. Those who make invoices make it difficult for everyone.

Finally, I want to correct a crazy rumor about Steve Badger that I heard on Win The Storm-Badger does not come on the Texas Association of Public Insurance Adjustments Board. Badger yelled at and shouted after I debated him in Austin, Texas. Many TAPIA public adjustments cannot stand to be in Badger's presence. Personally, I think it is extremely important to hear different opinions and propose those of us on the policyholder and entrepreneurial side, which is intelligent and logically demonstrated why the insurance industry should change heart to many of these important damages issues.

The thought of a Monday

The biggest tension was not on profit on Sunday but in the meeting payroll on Monday.
-Art Rooney, Pittsburgh Steelers Owner ]

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