We’ve noticed a troubling trend lately – it involves what’s known as “third-party review,” and we want policyholders to be aware of it. If you’re not aware of this maneuver by the carrier, you might suffer a painful financial cost.
When a homeowner hires us to serve as their public adjuster, one of the first things we do is advise the client on hiring the best possible vendors. We bring these professionals in – whether they’re movers, cleaning or restoration crews, or demolition companies – to get the cleanup and repairs underway at the outset of the claims process.
Typically, the invoice from these vendors gets passed on to the carrier and paid as part of the policyholder’s insurance coverage. Historically, it has been automatic. Lately, however, what we’re seeing is carriers sending these quotes or invoices to a third-party company for review. Without visiting the site, the third-party company will then come up with a new, more “reasonable” price for the vendor’s services.
And the carriers are endorsing these third-party estimates – and making payments based on them.
In one instance, SMW was hired shortly after the start of initial remediation. This remediation company submitted their invoice, and the insurance company sent it to the third-party reviewer who came back with a lower number. The insurance company stuck by the third-party number. The problem with this act by the carrier is twofold: 1. The work was already done; and 2. When this restoration company was initially hired, they had the insured sign a contract that made the homeowner responsible for any shortfall or unpaid balance.
These problems are compounded by the fact that the third-party reviewer has never even been to the loss. They have no idea the conditions at the time of the loss, the urgency to get things cleaned quickly, or other on-the-ground realities. It’s like taking audibles from a Monday Morning Quarterback – in the worst possible way.
We battled the restoration company for months, trying to prevent them from charging the homeowner directly for the shortfall. Meanwhile, the restoration company wants to get paid – and is looking at the homeowner for payment. As PAs, we’re stuck in the middle. We eventually got it resolved, but you can protect yourself against this by being aware of what you’re signing.
Homeowner beware! Don’t sign anything while assuming the insurance carrier will cover it. You might be tempted by thinking the carrier will certainly cover these costs because you’ve been paying your insurance premium for years. This is an area where your PA can lead discussions and avoid this difficult situation.
