09/09/2022
All new contractors should read this.
So, I want to explain to all my not disaster or restoration industry friends how our business model has been jammed.
A homeowner (or business) has a fire or flood.
They have insurance (and plenty of coverage).
A contractor is contacted to perform emergency services (2 am).
Insured makes a claim with their trusting insurance (premiums paid for 13 years, always on time).
The first thing that happens is they look for evidence to deny the claim. That's effort 1.
Then when it seems to be a covered issue, they have a list of vendors that have agreed to be their preferred. This only means that they have agreed to rates and sometimes omission of charges that can equal UP TO 30-40% less than what it truly takes to do the RIGHT JOB. These are urged. Some adjusters will scare the insured and say if you don't use our people, we may not pay what another contractor charges.
FYI...that is not written into the policy.
Still plenty of coverage.
Then when that's is past....work is complete, the emergency contractor sends an invoice to the homeowner and with their empathy, agrees to let the homeowner wait for a check from insurance.
Want to guess the industry average wait? 53 days.
That means the contractor has bought all the material, paid their staff and any subs.
They are now doing the next jobs with any profits from checks back in early summer.
Why isn't the carrier paying quick? Because they can use premiums to invest in the open market and make more money. Yep. Legal.
Each month they delay, they make more.
So you ask why a contractor agrees to wait to be paid? Because the average homeowner doesn't have 10k. Their insurance should be sending a fed ex check over.
But we discussed why that doesn't happen.
The homeowner doesn't quite feel stressed enough to demand their insurance to pay this invoice.....because they have not felt any burden.
Everyone thinks the contractor and the insurance will "settle it".
So now here comes the next mafia round.
They have made a contractor wait 63 days and will call the contractor ( without telling the insured) and start negotiating. Yep. Remove all these charges and we will send a check.
Not because they did it wrong. Not because they are gouging. But because they have everyone hungry and pressured. So a contractor says s**t, I need it for payroll. So they cut the bill.
They often remove ANY profit, which I told you is how they are financing the next 23 jobs.
Now we come to "why make the homeowner pay?"
Liens
Collections
Attorneys.
Online reviews. 1 stars
Tell the community you are a mean contractor.
They insurance is telling the insured to not pay them.
Todays small and medium business thrive from
Positive reviews.
So I'll wrap it up.
A few things happen.
Contractors go broke.
Contractors can't keep anyone on staff (emergencies don't happen every day), so they Can't do new work, no staff.
They cut corners and do shoddy work and use terrible employees (because they are only being paid what insurance wants).
State Farm reported 42 billion in revenue in 2017.
Allstate, USAA, all of them are among the richest corporations.
How? By collecting premiums and not having to pay what they should.
Lastly. Personal injury claims.
People that cannot work are strong armed for a year or more until they will settle for nickels on the dollar.
It's mafia. You can't convince me otherwise.
Insurance makes a policy and contractually promised to pay to return your property to pre-loss. Yet they don't.
Now maybe you will understand why I'm such an advocate.
I watching very highly trained and caring professionals struggle to survive and grow a company.
Think EMT's. Making under $20 an hour.
I'm dedicated to use my voice and the 1000's that join me everyday to educate the public that corporate greed is impacting them in their biggest time of need.
Thanks for attending my TedTalks.
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