Are you aware of the rules and regulations for testing materials such as wallboard, texture, and floor coverings prior to performing any demolition work? On the latest episode of The DYOJO Podcast (#83) we discuss the importance of identifying and mitigating hazards during water and fire damage restoration projects. There are broad rules such as those in the OSHA General Duty Clause, "The General Duty Clause from the OSHA Act of 1970 requires that, in addition to compliance with hazard-specific standards, all employers provide a work environment "free from recognized hazards that are causing or are likely to cause death or serious physical harm." There are also many specific rules regarding lead and asbestos sampling which are regulated by various entities such as Labor and Industries (LNI) in Washington State. We discuss some of these elements further in a recent article from The DYOJO Blog - thedyojo.com/blog/asbestos-testing-requirements-for-water-damage Many of the safety practices that contractors follow for mold remediation originate with asbestos abatement protocols. We discuss some of the resources for these topics including:
Project your team members, your customers, and your organization by educating yourself and your clients on the best practices and regulatory compliance associated with property restoration. THANK YOU TO OUR SPONSORS: Restoration Industry Association (RIA) Restoration Technical Institute (RTI) Office Services by Brandi Institute of Inspection Cleaning Restoration Certification (IICRC) THURSDAYS ARE FOR The DYOJO Podcast - INFOtainment to help you shorten your DANG learning curve. New episodes of The DYOJO Podcast are released on Thursdays via video through YouTube and/or audio is distributed through platforms such as Apple, Spotify, Google, etc. READ MORE in The DYOJO Blog Additional Resources from The DYOJO:
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Do you know the asbestos testing requirements in your local jurisdiction? In the state of Washington, if you read the LNI (Labor and Industries) regulations, the letter of the law requires everything, regardless of age, to be tested for asbestos prior to demolition or remodeling. This would apply to water and fire damage scenarios where materials such as wet drywall are being removed. As a contracts you want to do your best to:
Test for lead and asbestos before you do any work It must be understood that these regulations are not suggestions, they are the law and compliance is mandatory. Many restoration contractors are adhering to high standards and best practices, yet they encounter pushback from insurance representatives or clients who are unaware of these compliance factors. Homeowners, adjusters, and property managers will benefit from documentation that educates them on the responsibilities of all parties to adhere to testing requirements. I was discussing this with a local mitigation contractor who was being questioned by a representative from the insurance company on a claim. It may be that this person has never heard of these laws or encountered a contractor charging for them, so we forwarded this citation from LNI in Washington, “Building owners and construction contractors both share responsibility for asbestos testing when doing work on the building. A good faith inspection for asbestos, performed by an AHERA certified building inspector is required before any remodel, repair, removal, or other work that could disturb suspect materials.” Educate homeowners and property managers on their responsibilities Previously we wrote more extensively on this topic for an article in Restoration and Remediation (R&R) Magazine on the responsibilities of property owners, property managers, and contractors. You may find that content helpful in your efforts to educate various parties during an insurance claim. For additional reference, see the picture attached to this article which was taken at our local landfill in Puyallup, WA. The landfill requires proof of clearance following asbestos testing prior to being able to dispose of worksite debris. At times citizens of the United States joke that Florida is another world. The current insurance mess in The Sunshine State would point to one area where this is statistically accurate. More specifically, insurance claims lawsuits. Current Governor Ron DeSantis recently cited statistics demonstrating that his state generates 9% of property insurance claims but is the clear leader with 79% of the nation’s homeowner insurance lawsuits. In response, the Governor has called for a special session on property insurance, declaring that Florida citizens need assistance in the face of ever-rising premiums. While anyone who has insurance should be asking, what can we learn from this situation, what most observers are asking, is who can/should we blame? Insurance Companies? Senator Gary Farmer, a Democrat out of Ft. Lauderdale points the finger at insurance companies who routinely deny claims. He is a trial lawyer and stated, “We must protect homeowners in Florida by calling a special session to address our state’s property insurance crisis, and the only way to effectively do so is to ensure that insurers are held accountable to their obligations to their customers.” According to Insurance Journal, Florida’s domestic marketplace lost $1 billion during the first three quarters of 2020 which is reported to be more than double its underwriting losses in 2019. While the concern expressed by many is to protect the consumer from excessive rate hikes, the driver appears to be losses incurred by the insurers. Contractors? As chief spokesman for the Insurance Information Institute, Mark Friedlander, throws shade upon, “Bands of unscrupulous roofers, going door-to-door, soliciting claims.” He believes that consumers are being persuaded to sign over benefits to their claims. In scenarios where coverage is denied by the carrier, the insurer settles rather than risk a trial in what Mark believes are, “Frivolous lawsuits by the thousands.” If you listen closely, even Mark notes that claims denials are a factor. In 2021, Florida Insurance Commissioner David Altmaier alerted the Florida House Commerce Committee of what he observed as consistently high litigation trends. According to The National Association of Insurance Commissioners (NAIC) and data from the Florida Office of Insurance Regulation (OIR):
OIR analyzed the data between Florida and other states to attempt to determine the contributing factors. The research was inconclusive in detecting systemic patterns and the office offered no conclusion for the state's outlier status. Attorneys? Altmaier suggested that legislators look into, “Reforming the state’s one-way attorney’s fee statute.” They want to enable policyholders to retain their rights to filing lawsuit but remove incentives for attorney, “To file illegitimate claims.” In 2019 the state enacted assignment of benefit (AOB) reforms which he believes, “Preserves important consumer protections, while providing a framework to ensure litigation brought against insurance companies is legitimate.” Many argued leading up to 2019 that the AOB was at the root of rate increases. As such, consumer protection was the flag under which the calls for reform were waving. Yet, even with these reforms, Barry Gilway, president and CEO of Citizens Property Insurance, states, “The reality is, while AOB is going down, first-party litigation is going up.” If I understand this correctly, this means that AOB, which allowed contractors (third-party) to sue the carrier on behalf of, or in the first-party position, is now down but policyholders, the first-party contract holder with the carrier, is now suing directly? Florida? If the above is true, consumers in Florida are dissatisfied with the actions of their carriers at the time of claims processing. As we stated in the opening paragraph, Florida is otherworldly as it is home to a buffet of natural disasters, including hurricanes, tropical storms, tropical depressions, tornadoes, wildfires, and floods, the state has several unique insurance-related operational factors, a few of which include:
We mentioned the “consumer protections” language which drove the AOB conversations and now they are the same concerns underlying this next round of reforms. Take a look at what proponents say about Senate Bill 76 and help me discern who is being “protected”:
Protection From Whom? Do the three items above protect the consumer or the carrier? The insurance companies are clear in who they have on their suspect board as the “bad guys”. If that wasn’t already clear, they blame contractors and attorneys. But they know that few would listen to them if they came out and said that consumers need to be protected from excessive insurance rates while also presenting themselves as the mediators of justice in righting this wrong. How does this logic go, “If contractors and attorneys didn’t charge so much, we (the insurance companies) could charge you less?” Does anyone believe this would be the outcome? If the politicians could pass legislation that would restrict what contractors and attorneys can charge for, then of course, the insurance companies will gladly reduce their prices. Just so we are clear, this is sarcasm. Yet, it appears that this is the consensus among many commenters following this, and similar stories. How Do We Protect Consumers? If the goals is consumer protection, the people must accept their responsibility to educate themselves on what they are buying, what the insurance policy covers, what it excludes, and what to expect during the claims process. As a general rule, it is best for the consumer to do business with people invested in their local market. If you are an insurance policyholder, when you purchase your homeowners policy you should hire a local insurance agent who will walk you through the process and is committed to being actively involved whenever there is a claim. The opposite of this is shopping for the lowest rate, without understanding the coverage limitations, and/or hiring an agent who will direct you to a 1-800 number for claims filing while washing their hands of the process. If you are a homeowner who has experienced damage, find a contractor who is based and active in the local community. You want to hire people who are going to care about their reputation when it comes to work quality and ensuring project completion. While it is fun to talk about blame, the reality is that there are bad actors in each of the groups we discussed. Homeowners are not excluded from being in that category. There are plenty of opportunistic insureds who believe their policy should do more than restore them to pre-loss conditions during a claim. In the rush to assign blame, often the loudest voices, or the deepest pockets, will prevail in painting the picture of who the culprit is. Consumers must pay attention to and play and active role in understanding that insurance is a key factor in protecting your largest asset, your home. Listen for fear tactics that attempt to persuade you, and your elected representatives into doing the wrong things for the right reasons. We should all be careful not to make a bad situation worse by restricting consumer options in future circumstances. Everyone struggled during the COVID-19 shutdowns, right? Well, a recent $140 million civil money penalty was leveled against insurer USAA by the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) for "not maintaining an anti-money laundering program" according to News 4 San Antonio. In short, their profits soared during the pandemic, and even though they made some policy dividends, premium credits, and other financial relief efforts, their "kindness" did not exceed their profits or reporting.
Many consumers are callous to the headlines of "record profits" as it has been a hot topic for some time. But policyholders for homeowners and business property insurance should take note as this is a common point of contention where the carrier is often able to leverage the consumers' lack of knowledge in this area to shortchange themselves and their contractors. Contractors who specialize in responding to (mitigation) and repairing damaged structures during the insurance claims process are no strangers to endless arguments regarding overhead and profit. For the reader who may not be familiar with these terms,
These are very simplified definitions but they should be helpful in framing what we are about to discuss. If you file an insurance claim because there is damage to your home, you likely will work with a property restoration contractor who specializes in navigating the nuances of the insurance claims process. It should be known that only within the insurance claims paradigm is overhead and profit presented as a markup, often observed as "10 and 10" (10% overhead and 10% profit). Whereas in the example from above the O&P is embedded into the overall cost of goods and services. When you go to the grocery store, the price of a tomato includes the "loaded" cost, i.e. the overhead and profit of the grocery chain is included in the price that you pay. It's the same as when you purchase your insurance policy for your home. Your insurance company does not show you what their overhead costs are or how much they plan to profit for the year; the cost is the cost. If you file an insurance claim for damages to your home, you may find that you learn more about the inner workings of the insurance claims process than you ever wanted to know. You may find that your contractor composes an invoice for their drying services or an estimate for their repair services and one of the many potential arguments may be over the structuring of overhead and profit. Just so we are clear:
A recent article demonstrated that a prominent insurance carrier, USAA, benefited from reduced driving by their insureds during the pandemic. Reduced driving resulted in reduced automobile accidents which resulted in reduced cost of anticipated payouts on claims. On the one hand, the insurance carrier provided the same level of coverage for the cost quoted, so there was a net-zero effect on the insured. Yet, a lawsuit alleges that, "At least 30% average refund of paid premiums would be required to make up for the excess amounts paid by consumers for just the period between mid-March and the end of April 2020." USAA was aware of the windfall and continued to charge the same rates throughout 2020 and 2021. Your costs for your insurance premiums may have gone down some, but your carrier likely still hit or beat their profit goals. Your local contractors were shut down and/or had their costs for goods and services increased. If you happen to be reading this, understand that when a contractor and the carrier are engaged in a heated discussion about whether overhead and profit are owed on your insurance claim, insurance companies have consistently defended their "right" to both O and P. Contractors don't disagree that businesses should cover their indirect expenses (overhead) and maintain a healthy profit, but are frustrated when the insurance company negates their responsibility to provide the consumer and the contractor with access to the same considerations. The policy that you purchased included the insurance company's O&P as well as the risk of covering these costs in the event of a claim. You paid for O&P. Keep this in mind if there is a scenario where your insurance representatives are arguing against the scope and cost of the work that your chosen contractor is presenting. O&P should be paid by your insurance carrier to your contractor. And if you are insured with USAA, you may want to keep following this case. Episode 74 of The DYOJO Podcast will release on YouTube and Spotify on Thursday, January 13, 2022 at 9am PST. This will be the first part of a multi-part discussion on the topic of insurance appraisals for property damage repairs and restoration. We will discuss what the insurance appraisal process is with a veteran of the industry who is a public adjuster and a claims advocate who, "Calls them like he sees them." What is an insurance appraisal?According to our guest, Roger Howson, and his organization Claims Dispute Resolution: In property insurance, the terms “appraisal” and “appraisement” refer to a private adjudicatory process created in an insurance policy by which disputes over the amount of a loss are resolved by competent and disinterested appraisers. The purpose of an appraisal provision is to provide a determination of the extent of the loss. When triggered, the appraisal process is mandatory unless the other party agrees to waive its right to appraisal. Property damage insurance appraisalsThis is a introductory video for the upcoming episode of The DYOJO Podcast addressing the topic of insurance appraisals for property damage claims with special guest Roger Howson. Our audience will benefit from hearing many perspectives on this topic as well as topics that intersect with this issue including:
Insurance appraisal podcastOur ensemble discussion on this topic will include:
The DYOJO Podcast New episodes of The DYOJO Podcast are released on Thursdays 9am PST via video through YouTube and/or audio is distributed through platforms such as Apple, Spotify, Google, etc. Learn more by visiting our website - www.thedyojo.com/listen Liens are an important resource to aide the contractor in securing payment for the work that they perform. Unfortunately, many general and restoration contractors have expressed some reservations regarding using or enforcing Mechanics Liens. As contracts lawyer Ben Cushman, shared in our last video, "Liens are the best security a contractor has for non-payment, and it provides all kinds of strong remedies." The history of Mechanics LiensThe conceptual origin of a mechanic's lien goes back to the early days of the United States. The lien was first developed by Thomas Jefferson to create a landed gentry in the new nation. The U.S. had vast stretches of productive land and a mechanic's lien helped citizens monetize the land and build farms. The lien is called a mechanics lien because construction workers were referred to as mechanics (or people who work with their hands) in those days. This video is one of many questions we asked contracts lawyer, Ben Cushman of Deschutes Law Group, as we sought his perspectives on the importance of Mechanics Liens in the construction and property restoration process. Ben has been practicing construction law for over 25 years, the last 5 of which have been with his own firm based in Olympia, Washington. Mr. Cushman will be joining us for our January meeting of the Fellowship of Construction Knowledge and Entrepreneurial Development. He will help educate our peers on the proper use and execution of liens and attendees of the meeting will benefit from discussing the experiences of other contractors as well. This group is for Pacific Northwest, specifically Washington, based professionals who work in the insurance claims industry (i.e. contractors, adjusters, providers, etc.). MEETING 004
Mechanics Liens resources for contractors:
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