In business, it is important that you do no allow anyone to tell you whether you can or can’t do something. At the end of the day, only you can identify your vision and develop your strategy for success. In property restoration and insurance claims work, you wouldn't have to search far to find someone who speaks poorly of what is referred to as program work (aka third party administrator (TPA) or preferred vendor program).
For most water and fire damage mitigation and repairs contractors, you are either:
Common programs in property restoration insurance claims include:
Our guests for The DYOJO Podcast Ep. 58 (PVJ 012) shared some of their tips and tricks for playing to win the TPA game.
You Play to Win the (TPA) Game
The DYOJO Podcast LIVE, Episode 58 aka Pro vs. Joe 012
Recorded LIVE - Saturday, April 17, 2021 - 8pm PST
The DYOJO Podcast is sponsored by Enlightened Restoration Solutions (ERS). Ben Justesen and his team have put together a dynamic live class which reviews real world estimates and elevates your ability to master the methodology of Xactware. Including how to determine your own labor rates, create your own price list, and navigate pricing feedback.
Bryan Close All American Restoration Services (Tacoma, WA)
Tye Panzone (Bonney Lake, WA)
David Smith (Eugene, OR)
Join us live - youtube.com/thedyojo
For those who work in the insurance claims profession, writing an estimate in Xactimate is a constant learning process. As with any tool, Xactimate has its strengths and weaknesses. Often the issues with the platform are related to communicating the story of the loss to the various parties involved in an insurance claim. We will discuss five common Xactimate issues as well as the corresponding responses and resources that will help you transform them into opportunities to improve your process.
Common Xactimate Estimating Issue One
Writing an estimate that accurately reflects the conditions of the structure and how you plan to restore it to pre-loss conditions is only part of the battle. When working with insurance companies, especially if you do “program work” through third party administrators (TPAs), you have to also learn the requirements of the carriers. Issue number one is poor carrier and program basic level compliance. If you, or your team, is consistently getting rejected for the same basic things, you must STOP blaming “the other side” and START to pull your head out of the dark places of the status quo. Learning from rejection is key to your success with insurance claims estimating.
Response: Develop a better mindset, starting with training and consistent processes for estimating compliance.
Resource: The Three R’s of Mastering Xactimate discusses the mindset of learning from rejection, repetition, and relationships as you develop your estimating skills.
Common Xactimate Estimating Issue Two
Even if you are independent and don’t do any program work, you will want to learn the estimating compliance requirements of the carriers that you want to work with so that you can develop a working relationship with them. There are requirements and then there are nuances. Contractors who have poor execution of initial estimate components, such as opening statements, structure and flow of an estimate, and labeled photographs lead to breakdown in communication of the story of the loss. This is basic stuff for restoration contractors, yet it is often someone else’s fault. If an adjuster doesn’t understand the story you are telling, learn to be a better storyteller. The blame game is NOT The DYOJO Way. Have your tantrum and get it together. If it were easy, everyone would be doing it.
Response: Develop better habits, starting with attention to details. Learn to become a better claims storyteller.
Resource: The Format for Fire Damage Restoration Estimates discusses how to approach and structure your estimate for these complex projects.
Common Xactimate Estimating Issue Three
Xactimate line items have a basic description and then a detailed breakout, it is clear that many who use the program don’t read either. A lack of clarity regarding proper use of line items relevant to the claim is a common source of back and forth between the parties involved in an insurance claim. You can also use this as a good negotiating tool, whenever there is a rejection, ask the reviewer, “Which line items are not in compliance or have not been thoroughly explained?” As Chris Stanley shared on Episode 38 of The DYOJO Podcast, people in a position of leadership should develop structure and cheat sheets for their teams. Chris reminds contractors that everyone has a boss and a box, if you can help the adjuster work within their box you may find mutually beneficial ground. Do as much as you can within the box and then work with the parties involved in the claim to determine an agreed course of action for those items that don’t fit neatly in the box.
Response: Skills development through research, peer to peer counseling, and consistent training will help adapt systems so that everyone is learning from prior rejections.
Resource: Habits of Xactimate Estimating Success discusses those items that will help you to operate at your best and stand above your competition.
Common Xactimate Estimating Issue Four
Each time you get rejected, it should be a learning experience and to the best of your abilities ensure that you don’t get rejected for that same item again. Unless, like myself, you like to push buttons. Assuming you have learned from issues one through three so that you have a consistent estimating structure, you understand the rules of compliance (even if you don’t always follow them) and you know your line items, the next issue is documentation. Poor illustrative support for proposed scope of work will sink your otherwise functioning ship. This ties into the series we did for The Intentional Restorer titled Garbage In, Garbage Out, which reminds managers that we cannot expect our teams to hold a standard that we don’t follow. Telling the story of the loss is a company wide commitment and everyone must learn to master their roles and responsibilities.
Response: As you develop your story telling abilities, make sure your stories are packed with good pictures, supporting documentation, and thorough communication.
Resource: The DocuSketchers shares interviews with three insurance claim professionals who use this resource to assist in their documentation and estimating process.
Common Xactimate Estimating Issue Five
If you are frustrated with the claims review process, you are not alone. If you don’t like someone looking over your shoulder and you take it personally when you get rejected, you should not be doing program (aka preferred vendor) work as a contractor. Yet, even if you are independent, you still have to tell your story well and be prepared to defend your narrative. The claims process requires you to clearly communicate, using the tools of the trade, and defending your proposed scope of work. As Ken Larsesn says, you should speak for the structure, and master Andy McCabe’s approach, “Thickest file wins.” In contrast, if you are making up scope you are in dangerous territory and it will bite you in the end. If you are not supporting your claim narrative, your plan will get picked apart. Capture the details, be accurate and thorough in your presentation, and learn to master the skill of claims negotiation.
Response: Gather data that will inform decisions so that progress (one of the Four Pillars of Success for Intentional Restorers) can be made. Invest in soft skills development for your team in the same (or greater) measure as you do for technical skills (which also should be high).
Resource: Help! Claims Review Shredded My Estimate discusses the process of helping yourself and your team develop a better approach to claims rejections.
Once you have an approved scope and a contract with your client, it’s time to create a project budget. I am always surprised by how many contractors utilized tools such as Xactimate and don’t use all of its capacities. You can go deep into the weeds with any software, but the purpose of this article is to take a quick run through a restoration repairs budget using Xactimate.
Your restoration repairs budget will only be as good as your Xactimate estimate
Once you have written your detailed estimate, supplemented with thorough documentation following the principles we talk about in Be Intentional: Estimating, it’s time to put the plan to work. When you sketch accurately, you enable yourself to efficiently create and extract relevant project information including quantities of materials, estimated labor, and even the project duration.
Restoration repairs budget materials lists from Xactimate
Depending on how detailed you want to be with your budget, this report gives you a deep dive into the materials assumed with the estimate line items. You have a count of framing nails and/or drywall screws at your fingertips. For most projects, I will highlight the larger quantity line items and extract my main data from these. For example, I am looking at an estimate that has a nearly $500 line item on a page where only a few others break $100. This item happens to be a 3 linear foot (LF) vanity, which is an item we will want to note in our materials budget.
If you are separating materials and labor for tracking, or in the event that you are subcontracting portions of your work, you will have to decide how in depth you want to break these items out.
The components list is also helpful for checking your quantities for materials such as flooring, insulation, and drywall. On this page I have 83.25 square feet (SF) of snaplock laminate. If your flooring is 30 SF per box, you can determine how many boxes you need to order. If you estimated to replace the transition strip in multiple rooms, you will also know how many linear feet of material you will need. Before you take the unit price and give that to your client as their materials budget, go back into your components within the estimate and understand the breakdown of labor, burden, materials, etc. Seth Harrision of Actionable Insights has many helpful videos, including this one covering an Xact Hack for creating a materials budget.
To observe the cost factors:
Restoration repairs labor budget from Xactimate
While still in the components print out, you can scroll down to observe the labor quantities by work category, Xactimate unit price, and labor factor totals. Using these figures you can cross reference the labor for each of the scope categories. For finish carpentry (FNC), which is for “Carpenter - Finish, Trim/Cabinet”, we have 7.30 hours based upon the assumptions of the software for this estimate.
Restoration repairs project budget from Xactimate
Recap by Category assembles all of the line items from each room and combines them into core groups. Each of these line totals include materials and labor. If you are creating a budget, this is likely the report that you will want to start with. If your company is built so that you work for less than 20% overhead and profit, then this sheet may be all that you need. Otherwise, you will need to use these numbers to compose your plan.
A simple format for budgeting includes taking the line item totals provided in recap by category, subtracting your profitability goals, budget for project management time, and build in a buffer. You can do this on scratch paper, a simple spreadsheet, utilize budgeting software, or use a program that integrates with your estimating tool of choice.
Restoration repairs project scope from Xactimate
Another good resource from Xactimate is the scope report. This will provide you with a resource that you can print out and post in each room of your project so that everyone on your team is on the same page with regards to what the approved scope is. Too often only the estimator knows what the scope is and that information is not downloaded to the production team. By training your team to read and understand your estimating document you have a better chance of continuity in your workflow and combating the costly effects of scope creep.
Bill Wilson's acclaimed book, When Words Collide: Resolving Insurance Coverage and Claims Disputes, includes an entire chapter dedicated to best practices for this process. Bill is famous for his admonishment to "RTFP", which, in terms safe for work, stands for "Read The FULL Policy." The policy outlines what is covered and what is excluded and as our co-host, David Princeton of Advocate Claim Service, says, Mr. Wilson's book is, "A new bible [for policy interpretations]." As Bill notes, there are areas of ambiguity in every policy potentially leading to claims disputes and/or denials. While many who have had the misfortune of working through a disputed claim have a less than savory view of the process, Bill outlines
Four Basic Reasons Insurance Claims are Denied:
Many restoration contractors believe reason number four always applies to "the other side", but When Words Collide presents a balanced approach to resolving disputes. While policy ignorance is a significant contributing factor, Bill states, "Most coverage disputes likely arise from legitimate differences of opinion about the intent of policy language or the proper way to interpret it." During our discussion on The DYOJO Podcast he reiterated his encouragement for all parties to work together to form reasonable resolutions.
Speaking for the Structure as an Insurance Contractor
Bill shares an example from his own property damage claim, where he thought he was making a reasonable concession with regards to a proposed scope of work for his intricate front door assembly. As a restoration contractor I could hear my fellow professionals cringing at the suggestion that a homeowner would make a compromise to benefit their insurance company, Bill reminds the audience that the claim is ultimately between the insured and the carrier. David and Bill clarified that it is important for homeowners and adjusters to receive the professional input from qualified contractors as it relates to their area of expertise; the structure.
When Words Collide presents the process for resolving insurance coverage claims and disputes; Mr. Wilson emphasizes understanding the policy as the authority and encourages the commitment of all parties to finding a reasonable resolution. As Ken Larsen shared on episode 47, the contractors role is to speak for the structure and communicate the scope necessary for restoration. To the "surprise" of all the restoration professionals in the audience, Bill soon discovered that he would have been better off following the structural assessment of his contractor. David wisely admonishes contractors to learn to effectively communicate your "because" when outlining your recommendations to the insured and the carrier.
The Process for Resolving Insurance Claim Disputes
Understanding the policy and properly interpreting the policy, as it relates to unique claims situations, has been the career long passion of author Bill Wilson. In the book and our discussion, all professionals are reminded to "RTFP" which includes knowing what you are selling, being clear with your communications, and being reasonable with your interpretations. We were glad that he took the time to discuss this important topic with us and share his insights with our DYOJO Podcast audience to help them shorten their DANG learning curve.
You can watch or listen to the full conversation of The DYOJO Podcast Episode 48 on YouTube, Spotify, or Apple (thedyojo.com/listen)
The DYOJO Podcast LIVE w/ Ken Larsen CR WLS FLS CLS CMP CSDS (Episode 46)
This was recorded LIVE on Thursday, January 21, 2021 at 830am PST.
The DYOJO Podcast will be switching to a LIVE format, with episodes releasing Thursdays at 9am PST - www.youtube.com/thedyojo - also broadcast to Jon's LinkedIn and Facebook.
This show is sponsored by the NEW BOOK from Jon Isaacson and a collaboration of talented authors - Be Intentional: Culture - AVAILABLE NOW in Kindle and paperback through Amazon.
Ken states his mission, and career trajectory, is dedicated, "To improve the credibility of the restoration industry with trustworthy technical information and encouraging others to embrace it."
He is the author of the leading industry reference guide on "state of the art" structural restorative drying practices, Leadership in Restorative Drying. If you contact The DYOJO and reference this podcast episode, you can received 40% OFF.
Ken shared a few key principles for growth minded professionals in restoration:
He shares his experiences with restoration industry groups and why Ken believes it's important for modern restorers to rally together. Mr. Larsen is actively involved in the Restoration Industry Association (RIA), which he believes is the premier gathering for industry professionals. He is proud of the momentum the RIA has built with Ed Cross "The Restoration Lawyer" and the Advocacy and Government Affairs (AGA) Committee. He looks forward to meeting with restorers in June at the RIA Annual Convention.
I made a conscious effort to not spend too much time on topics that Ken has already addressed. Do yourself a favor and listen to Ken's appearances on IAQ Radio
We took a "commercial break" for Born to Repair's Tip of the Week 004 and a Christmas message from GMS Distribution.
Michelle Blevins from Restoration and Remediation Magazine also joined us to discuss the Top 10 articles, authors, and videos from 2020.
Are you filing an insurance claim with your home for the first time? These three key questions when filing an insurance claim will help you understand the core principles and navigate the process. These are written from the experience of an restoration professional with nearly 20 years assisting property owner’s recover from water and fire related damages.
As a homeowner, you want to make sounds decisions based upon information gathered from trusted professionals combined with your own experiences. Having the knowledge base to make a smart decision is key when you are attempting to maintain value, address current issues, and keep a long term perspective.
The insurance process can be cumbersome at times as it seems to be riddled with red tape and key words that seem to be written to trap policy holders into the nebulous world of rejected claims. If you find yourself in what is considered a "doubtful and/or disputed claim" our friend David Princeton of Advocate Claim Service (who was on The DYOJO Podcast Episode 1 and Episode 32) can assist you. On Episode 32, David shares a few additional questions that will help homeowners from getting taken advantage of.
Our three key questions when considering an insurance claim will assist you to make decisions on how to proceed with your next property damage loss. We will primarily discuss water damages in the following scenarios as these make up some of the most common homeowner related insurance claims are water related. Eight years of data from Travelers Insurance revealed that water related events accounted for 31 percent of its claims.
Claims Question #1 — Is this a covered loss or peril?
The number one question with a property insurance claim is whether or not it is a "covered peril." Another way to think of this is whether the source of the loss/peril is specifically excluded in your insurance policy. Most plumbing related water sources are included by standard policies which often cover plumbing leaks, pipe breaks, overflows, and the like.
According to the website Policy Genius, "In homeowners insurance, a “covered peril” is an event the insurance company agrees to reimburse you for should you file a claim. Covered perils include fire, lightning strikes, windstorms and hail, weight of snow and ice, theft, and vandalism."
Claims Question #2 — Was this sudden and accidental?
A common loss that is typically covered would be a scenario where the homeowner, or a tenant, returns home and finds that a plumbing line has burst and water is streaming through the structure right out the front door. Interior plumbing breaks are most often covered and the loss classifies as sudden and accidental, most likely this would be a covered loss.
Andrew McCabe, of Claims Delegates, who is a licensed public adjuster as well as a restoration professional, shares nine power questions to help homeowners navigate the claims process:
Mr. McCabe discusses these questions further with Bryan Close and Jon Isaacson on The DYOJO Podcast Episode 37. Water damage from a likely covered peril can become a bit of a grey area when there is a small leak that has caused damage over an extended period of time. Indicators such as extensive discoloration, microbial growth (the four letter word — mold), and/or dry rot could be a source for concern.
A refrigerator supply line leaking behind the appliance may not be noticed by a homeowner or a tenant until there is significant damage to the structure and flooring. While the extent of the damages were not exacerbated by the tenant or homeowner being negligent (they did not know about the loss), the evidence will show that the damages have been occurring outside of what would be considered “sudden and accidental.”
During the claims process the stakeholders will need to work to determine the source of the damage as well as the estimated duration of the loss.
Claims Question #3 — What is my deductible?
Most homeowner deductibles are $500 — $1,000 with many carriers transitioning to a 1% of value related policy (which can be much more than $1,000 on modern homes). An insurance deductible is the amount you as a policy holder have agreed to pay out of pocket in the instance that you file a claim.
A water damage loss that is approved by the carrier as a covered claim (peril) will encompass two parts:
Even if the loss is from a covered peril, and was confirmed as sudden and accidental, understanding the extent of the damages and the estimated cost are factors in determining whether it is in the insured’s best interest to file a claim. Identifying the extent of damages and the estimated cost for mitigation (drying out the structure) and repairs are important considerations in making decision whether or not to move forward with the property insurance claims process.
Restoration Contractors will often provide a free evaluation of your home. By using non-penetrating and/or penetrating moisture meters, thermal cameras, and their experiences, a good water damage specialist can assist you to identify the extent of a water damage in your home and provide you with a rough order of magnitude (ROM) for the scope of work.
Many of the same principles we wrote about in hiring the right abatement contractor apply when interviewing restoration contractors. In life we don’t always need to know the answer to every question, but knowing what questions to ask and who can help us find answers are critical tools for survival. Your home is a source of pride for you as an owner. You want to protect your asset by surrounding yourself with the information you need to make smart decisions.
If you need a recommendation, The DYOJO network may be able to assist. Our friends at All American Restoration Services (AARES) have been helping families in the Tacoma, Washington area repair their water or fire damaged homes for several years and have been a good friend to our podcast.
Jon Isaacson, The Intentional Restorer, is a 19 year veteran of the property restoration industry and a business coach through his organization The DYOJO.