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Thursday, June 29, 2017

The Lack of Imdemnification By Insurance Companies

Ever since that first car wreck, when you were a teenage and had to get your dad to intervene, you have know that insurance companies short sheet your bed of claims. Their first offer is for fools and the desperate who do not repair their loses and go on an emergency medical vacation in Hawaii. Later these individuals learn to perform a decent imitation of the Blues.
Well there are other types of people that don't want to sing the Blues, as in when Steve Martin, in "The Jerk," said to his mother that he didn't want to sing the blues because they made him sad, That is you because you want the insurance to "indemnify you for your loses as you believe the policy you bought and paid for is supposed to do....and doesn't.
When the insurance companies go before the "Board of Insurance Peers," I mean the Insurance Board, one filled at the top level by insurance executives put their by the governor, they make their case for charging a certain rate. That rate is based on historical losses, recent loses and other mumbo jumbo that I do not understand. But I do know part of the cost is the Overhead and Profit" part of insurance claims. That is the 10% plus 10% O&P portion that the insurance companies claim they must pay out. This is 1/6th of their pleading for adjusting insurance policy cost.
This is 1/6th of what insurance is supposed to pay for you to repair your home that they routinely leave out. The make up terms like "complexity" and three large "areas of work." These terms are no where to be found in their petition to the state but they magically appear when their checkbook comes out.
We also communicate with the insurance companies using a fixed price system called "Xactimate." Xactimate sets the prices and we negotiate the scope and quantities of work. But the insurance companies are always claiming something new that they don't pay for. Charges for steep installation, better felt on steep roofs to save roofer's lives,  all kinds of stuff but the big one is O&P.
This Xactimate program specifically states:

General Overhead
are expenses incurred by a General Contractor, that
cannot be attributed to individual projects, and include any and all
expenses necessary for the General Contractor to operate their business.
Examples (including but not limited to):
General and Administrative
(G&A) expenses, office rent, utilities, office supplies, salaries for office
personnel, depreciation on office equipment, licenses, and advertising.
Including General Overhead expenses in an Xactimate estimate
Overhead expenses are not included in Xactware’s unit pricing, but are
typically added to the estimate as a percentage of the total bid along
with the appropriate profit margin. These two costs together constitute
what is normally referred to in the insurance restoration industry as
General Contractor’s O&P, or just O&P. General Overhead and Profit
percentages can be added in the Estimate Parameters window within
an Xactimate estimate. This link will take you to where I got this.
Job-Related Overhead
are expenses that can be attributed to a project,
but cannot be attributed to a specific task and include any and all
necessary expenses to complete the project other than direct materials
and labor.
Examples (including but not limited to):
Project managers,
onsite portable offices and restroom facilities, temporary power and
fencing, security if needed, etc.
Including Job-Related Overhead expenses in an Xactimate estimate
Related Overhead expenses should be added as separate line items to
the Xactimate estimate. This is done within the Line Item Entry window
of an Xactimate estimate by selecting the proper price list items, or
creating your own miscellaneous items.

Pretty clear huh? But the insurance company forces us to use this pricing program and then says "but we don't use that part. Xactimate is a tool used to communicate pricing but the insurance companies remove words from it like "yes" and many adjectives and adverbs. The take out the stuff that makes the language complete, but only after the state has bessed them with the right to charge yo for O&P.

My father called it passing it onto the consumer with reduced profits, a nother way of saying less quality.
Also the insurance commissioner ruled twice that O%P is part of every claim. Here are those rulings.:

Also the State Board of Insurance referred me to this lawsuit as a proof.

My project manager reponded to an adjuster ,who told him they did not pay O%P, that what he said made no sense. The adjuster said why and Scott said that was like selling a new car that had no transmission.  

The only otions you have when dealing with an insurance company is:
1)Take it on the chin
2)Hire a Public Adjuster
3) File a Lawsuit
4) Appraisal.

Over the years some things change. Right now I believe the best way is appraisal. I will discuss these options at a later date. 
Same Bat time
Same Bat Channel.

Good Bye Adam West.



Jon Alan Wright
Jon Wright Industries
1915 Peters Rd., Suite 310
Irving, TX 75061
972.251.1818 Office
214.718.3748 Cell
972.554.8090 Fax
    Follow jwrightroofing on Twitter

1 comment:

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