How Restoration Contractors Can Deal with Insurance Companies


How Restoration Contractors Can Deal with Insurance Companies

The Restoration and Reconstruction Industry is going through an unprecedented phase of

growth. Just in the USA, the market has grown to $210 billion annually. But the industry is

also going through difficulties. The insurance companies are exercising more power and

control over the industry while the government regulations are also changing. This article

first introduces the general outlook of the market that Restoration Contractors are operating

in and then looks at how Restoration Contractors can effectively deal with insurance

companies in the short as well as the longer term.


The high growth experienced by the Restoration, Reconstruction, and Remediation market

has been due to many factors. One of them is that the average age of houses is increasing,

making them more vulnerable to different kinds of damages from water leaks, frozen water,

etc. According to industry estimates, approximately fifteen thousand people suffer some sort

of water damage in their homes, every day in the USA. Another factor has been an

increasing number of natural disasters in recent times. Whether the disaster is an

earthquake, flood-causing rains, or wildfires, they all result in varying degrees of damages to



Insurance companies play an important role in this industry. More property owners are

buying their houses with a mortgage. The banks and mortgage providers require the owners

to take up some form of house insurance. This increases the percentage of houses that are

insured and therefore issues related to house damage and restoration are increasingly dealt with

by the insurance companies. Water damages can be one of the biggest expenses for

insurance providers, and because these insurance companies also work for profit

maximization, they have to try to curtail the cost of business. This can sometimes make it

difficult to effectively operate in this industry.


One of the first things that need to be done when dealing with cases of water damage is to

ensure that the damage was sudden and accidental. In case the insurance company

determines that the damage was gradual (slowly happening over time) or if it was caused by

negligence or some other avoidable act, then the insurance claim is unlikely to be accepted

or processed. Insurance companies will also try to see if the damage could have been

prevented by regular maintenance or not. Even after the claim has been accepted, the

insurance companies can look for ways to minimize or underpay the claim. Therefore, it is

important to first prove that the damage could not have been avoided, was sudden and

accidental, and then to ascertain the full extent of the damage and include it in the claim.


Other factors that insurance providers look for when dealing with Restoration Contractors is

the extent of services provided. A full-service restoration is mostly always preferred over

another one providing limited services, e.g. only water extraction. If you provide water

extraction services, then you should consider providing other services like drying, repairing,

and repainting the damaged parts of the property. Both, the insurance companies as well as

the property owners, prefer dealing with one contractor who can take care of all the work,

from start to finish, no matter how complex it is. It can be time-consuming to deal with multiple contractors

and if something goes wrong, the contractors might not take full responsibility.


The next important factor seems to be to continuously maintain a healthy relationship with

insurance providers. Some insurance companies are preferring to not having a few

preferred contractors but rather have more Restoration Contractors available to

work in a timely manner whenever and wherever needed. At the same time, there is a

possibility of Restoration Contractors getting bought out by insurance companies. This is

because some insurance companies who want to have preferred contractors are motivated

to exercise even more control over the restoration process by vertically integrating with such

restoration companies. The expectation by the insurance company is that they should be

able to keep down the costs of doing business and avoid the profit margins being paid to

contractors. In any case, it pays off to maintain an ongoing working relationship with

insurance companies.


We hope you enjoyed reading this article. It briefly introduced the restoration industry and

how the insurance companies fit into it. We also looked at ways to effectively deal with

insurance providers for water damage claims and how to manage them in short as well as

the long term.


Word Count: 744

Keywords: water damage, restoration, remediation, reconstruction, contractors, insurance

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