Contractors generally love construction jobs that are covered by the property owner’s insurance. In fact, when it goes well it can be a great experience for both the contractor and the property owner. The property is repaired or improved, so the owner has a resolution to their problem, and the contractor gets paid for their construction services. Unfortunately, it ain’t always so sweet. In fact, we see issues arise from these kinds of jobs every single day for our clients, and we’ve narrowed it down to three ways they go wrong necessitating unwarranted collections activity.

1. Insurance Denies Payment or Underpays Causing a Collection Issue

Insurance claims are so good for contractors that many of them have built their business around these types of jobs. When a storm or other disaster hits, contractors of all types from areas near and far converge on the scene to provide their services and help get things back to normal. They do so knowing that the vast majority of the work they’re getting is going to be covered by insurance companies, but it doesn't always work out this way.

Many contractors contracts include language that says if the property owner’s insurance company doesn’t pay, the owner is not liable for the work completed.

2. Insurance Pays But Homeowner Holds Check

Most contractors know this one all too well. You’ve done your job well and have had a great relationship with your customer up to this point. All of a sudden, a big fat insurance check lands in the property owner’s mailbox and everything turns sour. Any of the following are things we hear all the time:

  • Silence. The property owner just got a payday and decides to avoid their contractor’s calls.
  • Excuses. They try to find any and every reason to call your work unacceptable.
  • Renegotiation. How much was that roof contract again, $20,000? Surely you’d be able to accept $15,000 and let the owner keep the difference, right? Wrong.

3. Construction Supplementals and Upgrades

It doesn’t matter whether it’s old damage that is just being discovered and therefore included in a supplemental claim, or if an owner is springing for the fanciest marble countertops because they think their insurance company is buying. Here’s the sad truth about supplementals and upgrades: the owner doesn’t think they’re responsible for them.The best safeguard against issues with supplementals and upgrades is good contract practices. Strong and clear contract language, explicit details of supplementals or upgrades, and a requirement for client acknowledgement of additional fees are all safeguards against issues. Something as simple as making an owner initial that section of the contract can be the difference between massive headaches or straightforward payments.

The Bottom Line

Knowing how to navigate insurance claims can make all the difference. Whether you’re dealing with issues currently, or hoping to avoid them in the future, the experts at GreenLight Maximum Recovery can help your business be its best and get paid for a job well done. Give us a call today.