What to Know About Your Insurance Policy and How to Hire a Licensed Contractor After a Property Disaster

What to Know About Your Insurance Policy and How to Hire a Licensed Contractor After a Property Disaster

Finding the right contractor for a home improvement project can be a challenge at times, because many of which who may be soliciting the work might consider themselves professionals, but often lack professionalism along with some of the basic requirements to perform such types of work in your area.  This process can be especially troublesome for those who have just been victimized by a major property disaster such as a fire, flood, earthquake, or storm and are having to react to the situation when time may be of the essence.

Here are is a Checklist of 5 Important Things to Understand About the Insurance Claims Process Before Hiring the Contractor of Your Choice.

  1. In the event of an emergency, the property owner has both the right and the duty to the insurance company to mitigate the damage in order to preserve the property.  Common examples may be to have the doors and windows boarded-up after a fire, or to have water immediately extracted and the structure dried in order to prevent further water damage or mold growth.  The amount for the emergency service work may not be necessarily known at the time the services are hired, but a signed Work Authorization should outline the general scope of work and a fee schedule such as the cost of time and materials to report to your assigned insurance adjuster.
  2. It is very important to verify your insurance coverage and get a general understanding of the policy from your agent or adjuster.  Ask how much your deductible is, and whether or not you have an RCV policy (Replacement Cost Value) which will essentially replace everything damaged or an ACV policy (Actual Cost Value) which will depreciate the condition of the property.  Also, ask if your policy will cover any potential building code upgrade requirements?
  3. Before reconstruction have all parties determine, understand, and agree upon the scope of work that needs to be performed.  This creates a baseline and will help ensure that any competitive bids will be “apples to apples” in both the scope of work and the price.
  4. Get at least one written estimate from a contractor as well as one from your insurance adjuster.  Your insurance company may recommend contractors to you, but it is ultimately up to the property owner to hire the contractor that will be working for them on their property.
  5. Agree on the valuation or amount of the project and get an understanding with regard to the schedule of payment draws from the insurance company, and how works if you have a mortgage on the property.


13 Questions to Consider Before Hiring a Contractor

Here is a short checklist of 13 basic questions that you may want to ask yourself while researching a contractor, or for them to answer during an interview to help ensure that they meet the essential qualifications to be considered before hiring them to work on your property.

  1. Is contractor licensing required in your area, and for this type of project?  In Arizona for example, The Arizona Registrar of Contractors (AZROC) monitors and investigates unlawful contractor activity.  To ensure that the contractor that you hire is licensed in the state of Arizona and is in good standing call (602) 542-1525 or click here to go to the AZROC website.
  2. Is the contractor in good standing with the licensing department in your area and/or the Better Business Bureau?  Unfortunately, disasters sometimes attract unlicensed contractors or contractors from another state who may initially represent themselves well, but may not be in good standing with the regulation in your area and leave you behind with little recourse.
  3. How long have they been in business, and do they have experience with projects similar to yours?
  4. Are they on time to your appointment, or at least call if they are running behind?
  5. Do they present themselves as professional to you, and are you comfortable with them?
  6. Are they financially sound enough to perform the project, or do you get the sense that your funds may potentially be going elsewhere?
  7. Are building permits, inspections, and/or testing for hazardous materials such as asbestos required before the work can be performed?
  8. Do they communicate well with you, explain the process, and answer your questions?
  9. Are they pressuring you into hiring them?  A contractor with a strong desire to earn your business and perform for you is a good thing, but if you feel that they are really only interested in your money then that’s usually not a good sign.
  10. Do they appear to be organized or methodical and offer an estimated time schedule?
  11. Do you know who would be running the project and how to get a hold of them or their supervisor?
  12. Do they have any references of recent or current customers that they are willing to share with you?
  13. Are they preparing everything in writing?  Make sure that all of the terms of the contract such as the scope of work, agreed price, payment schedule, promises, and change orders are in writing and are clearly understood.