Cross Examination: Don’t Be a Restoration Cannibal

Restorers complain that insurance companies pay too little and don’t treat them fairly, but some restorers contribute to the problem by pandering to insurance companies and foolishly undercutting the value of restoration services.

I understand and respect restorers’ desire to have a good working relationship with the insurance industry, but it should not be done at the cost of sacrificing quality, eroding the fair market value of restoration services, or jeopardizing public confidence in the restoration industry.

In one case, an attorney for a famous member of the San Diego Chargers engaged a contractor as a confidential litigation consultant on a water loss. We’ll call the contractor “Mit.” Mit agreed to inspect the Chargers’ upscale residence and prepare a cost of repair estimate for the attorney. The estimate was to be used for an insurance claim filed with an insurer we’ll call “Allstate Farmers.”

However, when Mit arrived at the inspection, he recognized a representative of Allstate Farmers, and the two disappeared behind a hedge together, like a couple of teenagers looking for place to smoke a joint. They came back 15 minutes later, and the attorney was shocked to hear his consultant Mit suddenly announce that he would be working for the insurer on the claim, instead. Just like that, he had switched sides. The attorney said, “but I hired you to work for us,” to which Mit snappily replied, “If you think I would jeopardize my relationship with Allstate Farmers, you’re crazy.”

This is wrong on so many levels.

First, Mit received confidential information from the attorney that was protected by the attorney work product doctrine, one of the most important protections of communications in American law. For his personal pecuniary gain, he cavalierly disregarded his duty to guard that sensitive information.

Second, courts recuse experts from a case when they switch sides. I wait to file a motion to recuse opposing experts until after my opponent’s deadline to designate experts has expired, so it will be too late for them to designate a replacement. That leaves my opponent doomed without the necessary evidence to prove their case. In that case, they could sue the turncoat for the full amount of the loss.

Third, unscrupulous Mit engaged in a blatant conflict of interest, which made him look like a charlatan.

Fourth, Mit subjected himself to civil liability for conspiracy to defraud the Charger and intentional interference with the insurance contract.

Fifth, Mit dishonored his commitment to the attorney and the homeowner.

Sixth, no one asked Mit to “jeopardize his relationship” with Allstate Farmers. Experts are sup-posed to be independent and objective. If writing the estimate for the homeowner would have jeopardized his relationship with the carrier, that can only mean that Mit intended to be dishonest. And since he had a stronger loyalty to the carrier, he would have been even more dishonest in his work for the carrier. So, he actually did the lawyer and the Charger a perverse favor.

That case settled, but of course, it was the last time Mit received any work from the attorney.

But the attorney did not forget.

And wouldn’t you know it? A few years later, Mit found himself on the opposite side of the same attorney in another case. Mit found himself under subpoena, ensnared on the witness stand, in front of 12 San Diego jurors, where he was mercilessly cross-examined by the attorney, with nowhere to run to smoke a joint. Karma’s a bitch. Mit atoned for his sins that day and justice was done.


In another case, Mandy, a mother of four, contacted a restorer I’ll call “Rosie’s Restoration” to write a repair estimate after she suffered a major plumbing failure that destroyed 10 rooms in her large home. The estimate was for $120,000, which she sent to her insurance company. After a long delay, the insurance company sent Mandy a check for $70,000 based on “the revised estimate from Rosie’s.”

Wait. What revised estimate?

Mandy asked what the adjuster was talking about. He said he called Rosie’s and that the company revised its estimate to $70,000. He refused to explain what he said to inspire it to chop $50,000 off the estimate, or why the price had changed, except for some very cursory comments that the original price was too high.

Rosie’s failed to provide Mandy with a copy of the revised estimate, even though she was the one who engaged them in the first place. Rosie’s was allegedly working for Mandy, yet never asked for her approval to discuss the claim with any third party, and never disclosed that it had been contacted by the adjuster. The company went behind Mandy’s back, tortiously interfered with the insurance contract for its own personal gain, and shattered her impression of Rosie’s, who could have earned her as a referral source for future business.

After failing to get any explanation from Rosie’s, Mandy told them she just wanted her house fixed and asked if they could return the house to its pre-loss condition for $70,000. Rosie’s responded, “I’m sorry, we’re too busy now, you’ll have to find another contractor,” and then ghosted her.

Of course, the adjuster’s contact with Rosie’s was all done on the phone, so there is no paper trail. It was another clandestine meeting, like the one Mit had with the adjuster behind the hedge. After multiple demands, she finally received a copy of Rosie’s mutilated, incorrect estimate from the adjuster. She provided the new estimate to three other contractors who responded with full-throated laughter, exclaiming there was no way the job could be done for anywhere near that price. She told the adjuster the house could not be fixed for $70,000. The adjuster responded, “your contractor, Rosie’s, agreed to repair the house for $70,000 and no further payment will be made.” She replied that Rosie’s refused to do the job and that no other contractors would do that job for that price. She asked the adjuster what she should do. The adjuster refused to help, saying “we do not recommend contractors and do not warranty their work.”

It’s no wonder homeowners have started suing restorers for conspiracy to defraud and for tortious interference with contracts of insurance.

Consulting for insurers is lucrative and important work. I would much rather have insurers getting prices from real contractors than from adjusters, but partisan consultants can badly upset the restoration ecosystem. Their bias ultimately backfires on them. Restoration sales volume can be built in an honest way while charging a reasonable price for the work.

In most states, a policyholder can prevail on a claim for civil conspiracy against an insurer’s consultant by proving that (1) that insurer intended to defraud the policyholder; (2) the consultant was aware the insurer intended to defraud the policyholder; and (3) the consultant came to a mutual understanding with the insurer with the intent that the fraud would occur. Direct evidence is not required. A conspiracy may be inferred from the circumstances, including the nature of the acts, and cozy relationships between the insurers and their consultants.

To prevail against a consultant on a claim for tortious interference with contract, the policyholder must generally prove (1) the existence of an insurance policy; (2) that the consultant knew of the policy; (3) that the consultant knew that disruption of the policy benefits was substantially certain to occur; and (4) that the consultant’s conduct was a substantial factor in causing harm to the policyholder.

Many restorers lack insurance coverage that would provide a defense to claims like conspiracy and interference with contract. Both of those claims give rise to punitive damages, which are designed to punish the defendant and deter similar conduct in the future. Furthermore, disloyalty, like that shown by Mit and Rosie’s, will harm a contractor’s hard-earned reputation, hurt company morale, and subject it to harmful online reviews.

The restoration industry and its beloved customers have enough trouble with insurers as it is, without fellow restorers treating adjusters like gods and bringing prices and service down below acceptable levels.

So don’t be a Restoration Cannibal. At the beginning of each claim, decide whom you’re working for, and work only for them. Don’t slink around behind your client’s back, and don’t abandon them without a really good reason. Most importantly, don’t write a competitive bid unless you are ready, willing, and able to return the property to its pre-loss condition for the price stated in the bid. Anything less is a sham.

Edward Cross, Esq.

Ed Cross, “The Restoration Lawyer,” represents restorers nationwide from offices in Palm Desert, California and Honolulu, Hawaii. His firm drafts restoration contracts, collects money for restorers, and represents them in litigation. He is the Restoration

Contractor Advocate for the Restoration Industry Association. He can be reached at (760) 773-4002 or by email at EdCross@EdCross.Com. For more information about assignments, please visit

Hey there! We're glad you're here!

This content is only available for subscribers. Please enter your email below to verify your subscription.

Don't worry! If you are not a subscriber, simply enter your email below and fill out the information on the next page to subscribe for FREE!

Back to homepage