So, I wrote this to explain to all my non disaster and restoration industry friends how our business model has been jammed. When I say jammed....I mean a force so large and with endless funds....that small and medium businesses feel powerless.
Feel free to use the "problem" in your marketing, on boarding, or defense.
Please. I implore you. Join in with being part of the solution that I've included in this blog.
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 heavily impressed upon. Some Insurance adjusters, TPA personnel, or stakeholders will scare the insured and elude to the scenario that if you don't use our people, we may not pay what another contractor charges.
FYI...that is not written into the policy.
Remember.....Still plenty of coverage.
Then when that didn't scare them enough....the work is completed, the emergency contractor sends an invoice to the homeowner and with their empathy, agrees to let the homeowner wait for a check from insurance. This is where SH*T starts to go seriously off the tracks.
Want to guess the industry average wait? 53 days.
That means the contractor has bought all the material, paid their staff and any subs. This could be 10's of thousands of their own money.
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 to make sure they are fulfilling the promise they made long ago with the policy.
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 (financially).
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 ( I said the average was 53....not the normal) and will call the contractor ( without telling the insured) and start negotiating. Yep. Remove all these charges and we will send a check. If you want to see all this explained in writing, grab this book: Delay, Deny, Defend
Not because they did it wrong. Not because they are gouging. But because they have everyone hungry and pressured. So a contractor says sh*t, I need it for payroll. So they cut the bill. The fold from needing the much-needed cash.
They often remove ANY profit, which I told you is how they are financing the next 23 jobs.
Now we come to the question-"why should we make the homeowner pay their part?"
Online reviews. 1 stars
Tell the community you are a mean evil contractor.
The insurance is telling the insured to not pay them.
Todays small and medium businesses 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 without staff.
Some will cut corners and do shoddy work using terrible employees (because they are only being paid what insurance wants).
State Farm reported 5.6 billion in revenue in 2020.
Allstate, USAA, all of them are among the richest corporation in the world.
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 behavior and I challenge you to convince me otherwise.
Insurance makes a policy and contractually promise to pay to return your property to pre-loss condition. Yet they don't. THis occurs maybe 1000's of times per month.
Now maybe you will understand why I'm such an advocate.
I'm watching very highly trained and caring professionals struggle to survive and grow a company.
Think EMT's. Making under $20 an hour. That's the comparison I make with the burden these technicians carry.
I've dedicated to use my voice and the 1000's that join me every day to educate the public that corporate greed is impacting them in their biggest time of need.
Thanks for attending my TedTalks.
Just kidding. That wasn't a TedTalk.
Now that the problem has been exposed (for the 1000th time) the nagging question is what do we DO about it?
Well. Thanks for asking.
Perhaps the Restoration Rebel group was the overflow of what a few of us believed to be the answer to the nagging question.
That group turned into a circus. We removed ourselves from it to band together with others who didn’t want to be part of a circus, but rather a solution.
One of the solutions is the Alliance of Independent Restorers (AIR).
One of the solutions is partnering with the American Policyholders Association.
We are working tirelessly to find restorers who not only want a SOLUTION… but want to be PART of TAKING ACTION.
Will you take action?
Will you join us?
Or will you continue to operate in the frustrating race to the bottom?
It doesn’t have to be all of the initiatives. Hell. You don’t have to JOIN anything.
But by joining, you are speaking up in addition to standing up. You are joining the stadium of voices that is getting louder and louder.
Be strong enough to stand alone, be yourself enough to stand apart, but be wise enough to stand together when the time comes. - author unknown
All it takes is for you to stop playing the insurance games and to work with the party who signed your contract and work authorization. YOU HAVE PERMISSION TO STOP TALKING TO CARRIERS AND ADJUSTERS. Tupac even said so! lol.
Remember that YOUR customer is the one who signed YOUR contract.
Not the carrier.
All it takes is for YOU to create a bulletproof Client Onboarding process and hold the line. Overcome the client's objections.
Provide them with solutions, provide them with unbelievable 6-star service,and ask for 5 stars on Google.
It takes you.
It takes me.
It takes US to be the change.
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