I lived and built most of my restoration career and insurance adjusting in program work. Now, between working in restor-tech with Encircle, being a technical IICRC/RIA trainer, and an umpire/ appraiser, I’ve learned there is a massive difference between what you’re supposed to do as a restorer and what you’re supposed to do as a restorer in the program environment.
If you live too far inside the vendor program, you can become disoriented and get you and your business in trouble. In a program environment, you’re forced to play by others’ rules —usually, at your business’ expense.
Before I go on, let me clear one thing up. When I say “at your business’ expense”, I don’t mean the decision you’ve made to accept volumes of work in exchange for less margin. That’s a business decision and one I am OK with you making (and one I made with select carriers). The detriment to your business that I am talking about is the legal and ethical hole that occurs, that usually results in exposing your business to major loss potential.
Let me explain these three truths and you will be able to understand much more clearly. For the purpose of this discussion, I will focus on water damage, but these truths do apply to all restoration activities.
As a restorer, your only objective during a restoration project is to actually dry the structure properly. This means you might be required to control the humidity of the building (stabilization), while you clean the building and return it to a sanitary condition. Then, you are expected to dry the materials or remove the materials that cannot be dried.
TRUTH #1: FOLLOW THE STANDARDS NO MATTER WHAT
ALL contractors, regardless if you are on a program or not, are required to follow the standard of care. There is downward pressure from carriers to provide you guidance and direction on how you should restore a property. The Standard of Care or the ANSI/ IICRC Standards don’t say things like:
“The restorer should follow the direction of the carrier and only the direction of the carrier should be considered when making a decision to restore a building. When a decision needs to be made, the restorer should call the adjuster and ask how the adjuster would like the work done.”
Here’s the problem. If the insurer or TPA you are dealing with has a three-day course, maybe a couple three-day courses, or maybe they even did some time in the field, that does not mean they are the party that gets to make a decision arbitrarily. However, if instead that TPA said:
“Based on the standard of care, I believe this decision is something you should do and here is why.” As the restorer, you would respectfully consider that opinion, but the decision and execution in the field would still remain yours. The standard of care is what you are following.
The standard of care for the S500 states:
“ when limitations, complexities, or complications develop or are placed on the project by the owner or owner’s agent, which prevent compliance with this Standard, restorers can choose to negotiate an acceptable agreement, decline the project, stop work, or accept the project with appropriate releases and disclaimers…” ANSI/II- CRC S500-2021 Standard for Professional Water Damage Restoration, Fifth Edition – Section 11.5 Conflicts.
I can tell you with absolute certainty that when you end up in a legal arena, whether it be an appraisal, mediation, or lawsuit, your actions will be reviewed and compared to the standard of care. You’re the expert, and because you are the restorer, you will be held accountable to the standard of care regardless of your experience and knowledge. Whether you are a new business with one course, or a seasoned professional, you will be held accountable to the same standard. This is where most disputes are settled out really quickly.
I have successfully defended restorers who stabilized a building for three months while an insurance investigation was ongoing, and actions were not taken to remediate the property. I have also successfully defended the carrier for having to re-clean the structure because their property was never remediated properly. In almost every case, the standard of care is the basis for decision making.
When you deviate from the standard of care without the direction or consultation of the homeowner, your business is liable. The easiest case to close on a contractor is on one who failed to follow the standard of care. I have yet to lose a file where the restorer followed the standard of care and was able to explain it in their reports.
TRUTH #2: YOU’RE HIRED TO FINISH THE JOB:
Most restorers confuse the three-day or four-day cap on equipment to mean that they are to remove their equipment after three days. I have written a lot about the fact you can’t reasonably expect to dry in three days, but nowhere in the industry does it state a building can or should be dried in two, three, four, five, seven, 10, or 15 days. The building is dry when the materials have reached their drying goal, or you have determined they need to be removed. Period. Full Stop.
Now, the three-day drying philosophy derived from program work. Many thank the marketing team at Paul Davis for introducing three-day drying back in the day where they put an asterisk * that said it was only for category 1 water (sanitary water supply) losses with only carpet and only class 1 (less than 5% of wet and affected floor). Over time, those asterisks got lost and carriers believed three days would cover everything. But this is not based on any reality or science, it’s just an administrative process or a business decision to cap the equipment rental, NOT to stop your drying effort after three days.
Here is what you need to know: if you are on program work and you state you are drying for three days, you will likely not be able to dry all the materials in three days. Actually, where most restorers get into trouble is when they test only the surface materials that usually dry in three days, such as drywall and carpet but fail to do deeper testing of the sill plates, subfloor(s), and insulation behind the wall that can take substantially longer to dry. Remember, you have agreed to only charge for three days, or a weekly cap of four days (or whatever arrangement you agreed to).
Regardless of what you are getting paid, the expectation of you and your business is that once you start drying the building, you are responsible to continue drying the building until you reach the drying goals, or you remove the wet and affected materials. (I repeat this line because it is important.)
There are companies that will follow you around and check your work looking to see if you did the right thing. These companies make a lot of money at the expense of program contractors who don’t understand the difference between an administrative three-day cap and the actual time it takes to dry a building. When a contractor or consultant finds that you left wet structural materials behind after you wrote your readings as being dry, you are holding the liability bomb.
That bomb gets bigger as time goes on and the water has time to deteriorate to a CAT 3 or microbial amplification happens – MOLD. Your liability insurance is going to be paying for that other contractor to finish the job you started.
Worse still, your reputation is on the line —you said the building was dry when you left.
Finish what you started.
TRUTH #3 – CARRIERS WANT TO SAVE MONEY
The first two truths put you in a detrimental position, but this last truth can actually work to your advantage. If you are a power restorer who knows how to document the work you are doing in the field, you should be able to harness this skill and actually improve your relationship with the program. It is important you have the tools and knowledge to articulate three things to the adjuster or TPA in order to get your gold star and move up their ranks.
The three things you want to focus your reports on are:
Reduce cycle time. When they hired you or assigned the job to you, your actions have to demonstrate a reduction in the amount of time it took to restore the building and your ability to reduce the impact to the customer.
Pro-Tip: Mitigation is usually much faster than reconstruction/reinstatement. On jobs that you cannot reduce cycle time, explain why you can’t reduce the cycle time further and explain how what you are doing is the shortest cycle time possible.
Reduce severity. Demonstrate you reduced the severity of the loss. This might mean pointing out you have a higher mitigation cost, but your mitigation actions have reduced the much larger reconstruction/ reinstatement cost.
Pro-Tip: Carriers and TPA’s need assistance seeing the savings. They have files coming in fast and furious and do not have time to figure it out. You need to tell them what they did and didn’t see.
Follow the rules. I don’t have a problem saying this, because when you read the agreement before signing up, you accepted the work with the strings attached. You have to do your best to follow the rules, but your obligation is to follow the standard first and actually restore the building. I highlight the rules I followed and the ones I didn’t, so the appraiser/reviewer/adjuster knows why and what we did, and they get to be part of that decision making process.
Pro-Tip: You signed on for more reporting when you go to a vendor agreement or preferred program. Don’t make them chase you. You wanted the contract work, so go one step above the others and provide clear and concise documentation. Don’t be the restorer who signs on to the program, and then complains they have all these rules you need to follow.
Knowing carriers want to save money, you need to give them a sense of control on the job when dealing with them. I was successful when I said things like:
“Based on the S500, I could attempt to restore the floor and we could find a high probability of success, or we could remove and replace the floor. I would recommend we attempt to restore because it will save more money and reduce the time. I believe there is a 70% chance of success with that process. Would you like us to restore the floor, or would you like to remove and replace it?”
Using language like that will dictate the direction we will go and ensure everyone is in agreement when we go forward. In the event it fails, it’s part of the 30% failure rate that I disclosed ahead of time.
THE CLOSE OUT
It’s no secret I made the most money per job when I worked directly with the customer, where I used my price list, my rules of engagement, and I didn’t have to jump through reporting hoops. Direct work with the customer is where I would have continued to primarily focus my business, only signing programs that aligned with my business operations. But the program work we received from our partners was not only high-quality program work, but it also met the requirement of providing a decent margin. We made the decision to trade margin for consistency and build those relationships with the program to get a steady stream of revenue.
The programs helped us hone and focus on delivery mechanisms that helped with time-related, key performance indicators which helped serve our non-program customers as well.
However, we were quick to end the relationship when the vendor team changed and moved to a practice that didn’t align with actually restoring a building properly. If you want me to take on more risk, you need to pay me more money.
Do the right thing for your business and do the right thing for your customer. Just follow these three rules and you should be able to navigate 80% of the decisions you need to make when looking at programs.