Avoiding Katrina Claims Headaches

With scenes like this across the Gulf Coast, it's easy to see why damage estimates are reaching well above $100 billion. By Richard Wall Hurricane Katrina left behind an estimated one million insurance claims. That's a lot of potential headaches for Gulf Coast contractors. Many are already running into situations that make them use the L word: lowballing. In Biloxi, Miss., for example, some adjusters are offering to pay well under pre-hurricane replacement costs for post-hurricane roofing jobs. Unfortunately, many homeowners don't completely understand what coverage they have on their property until they make a claim. Even when damages are covered by their policy, how much they can recover often depends on how smart they are in working with the claims adjuster. "Most insurers want to deal with the homeowner only," says Don Santos, owner of Santos Construction Company in Port St. Lucie, Fla., who has worked on many hurricane-rebuilding projects. "But I suggest that contractors put themselves in the middle of this process from the start." Don advises that contractors immediately find out three key elements in an insurance-claims project. "Find out what needs to be done, what the owner thinks should be done, and who is going to pay for what," says Don. Dennis Buford, owner of Buford Construction in Stuart, Fla., builds new homes, but took on several rebuilding projects for friends and family, including his own office and home, after the 2004 hurricanes. He doesn't want to go through storm repairs again because of all the time he spent dealing with adjusters and their unreasonable offers. "I was helping some elderly neighbors of mine, and the insurance company told us the house was totaled," says Dennis. "They told me to strip it down to the studs and completely rebuild, new floor, walls, roof, everything. Then they only offered to pay $28,000. My costs were $108,000." They took it to mediation and finally got $107,500. But it wasn't easy. One vexing reoccurrence was what adjusters didn't tell homeowners. "In several instances, the adjuster would evaluate the cost of damage repair and cut the home owner a check for about 30% of the total cost," says Dennis. "But they don't tell you that there is more money available. You have to find that out yourself." Many homeowners think that's it, and never discover they are due more money. "You have to wonder why adjusters consistently don't explain this to policy holders," says Dennis. He advises homeowners facing storm damage to bring in a qualified contractor or a public insurance adjuster. Adjusting for Adjusters Public insurance adjuster Raymond A. Altieri, Jr. of Transco American Claims in Tampa works for the property owner on commission to get the fairest settlement from insurers. "In one instance, a major insurer offered a hurricane-damaged condominium building its 'final offer' of $300,000," says Ray. "We took the case and recently reached an agreement for a $14 million payout." Contractors should use the following advice from Don, Dennis, and Ray when dealing with insurance adjusters: "The key is credibility," says Ray. "Earn the adjuster's respect." Giving opinions backed by, I've been in this business for 30 years won't give you credibility. Never claim to represent the client in an insurance matter, says Ray. That's illegal in many situations. Don't say anything off the cuff. If you're wrong, it gives the adjuster cause to dismiss everything else you say—and estimate. Back up everything you say with facts and figures—and keep receipts for every dime spent. Don't rush to do all the work at once. Make repairs that mitigate further damage, and wait to see what the insurance will cover. Explain to your clients that, generally, they will have to pay for most of the repair work long before insurers will reimburse them. If you think that what a claims adjuster says or offers is not right, don't talk to the adjuster. Talk to your client, and let him or her bring it up. Be patient and persistent. Stay in touch with the adjuster and your customer. Beware of claims structured to pay you a large percentage upon completion of work, says Don. Insurance money has a way of disappearing by then.