Contractor Damage, Subrogation, And Smarter Claim Handling

Spring doesn’t just bring warmer weather, it brings a whole new wave of claims problems: roofers canvassing neighborhoods, frozen-pipe losses getting repaired, and construction crews breaking ground. We sit down and get specific about what adjusters and policyholders need to watch for when repairs start, because the repair work itself can create brand-new damage. When that happens, you may be looking at two separate dates of loss, a first-party property claim, and a third-party liability claim against the contractor, all at the same time.

We also dig into why “just file it with the contractor” is risky advice. We talk about the duty to open and investigate a claim once the carrier has notice, how subrogation should work in the real world, and why made whole rules can change who gets paid first when limits are tight. Then we tackle valuation and communication: actual cash value vs replacement cost, why market value is not rebuild cost, and how holdback depreciation and the 180-day notice of intent can trigger avoidable disputes if we don’t explain it clearly and follow up in writing.

From certificates of insurance and additional insured wording to workers’ comp verification and contractor liability exposures like New York Labor Law 240, we map out practical steps to reduce chaos during building season. If you handle property claims, liability claims, construction-related losses, or subrogation recovery, this conversation is built for you. Subscribe, share this with an adjuster friend, and leave a review so more claims pros can find it.

For more insights, you might consider a career in liability adjusting or if you're searching for reliable adjusting services, visit Auten Claims Management.

To explore more about Chantal Roberts and her contributions to the industry, visit CMR Consulting.

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Transcript

Welcome And Podcast Purpose

William Auten 0:06

Hello, I'm Bill Auton of Augin Claims Management.

SPEAKER_03 0:09

I'm Chantel Roberts of CMR Consulting, and welcome to the Art of Adjusting Podcast.

William Auten 0:14

Today we're going to talk about life as an insurance adjuster from the perspective of property, auto, liability, or workers' compensation adjusters. Our goal is to bring interesting topics in the world of claims adjusting to people who are working as an adjuster now and to people who are considering a career as a claims adjuster.

Chantal Roberts 0:31

Hi, Bill.

William Auten 0:32

Hey Chantel, how are you?

Chantal Roberts 0:33

I'm doing well. Thank you. How are you?

William Auten 0:35

Doing good. We're keeping really busy this time of year. It's kind of our busy season coming off of winter and all the all the slip and fall claims and stuff like that. So yeah, we're doing good.

Industry News And Education ROI

Chantal Roberts 0:49

We are starting to get all of the roofers coming around. Uh, I think I said last time I'm thinking about putting a sign up on the door saying that we are adjusters, don't bother us. We know that our roof is okay. But it bleeds into over what we're what we're going to be talking about today, which is uh construction claims and building claims in this spring now that things are thawing out, weather's getting warmer, so roofers are getting up on roofs. Uh, you know, break the construction crews are breaking ground. But I think you have some news, don't you?

William Auten 1:26

Yeah, a little bit of news for for ACM. Uh we recently became a member of the New York Insurance Association, and that's a pretty big step for us. Uh, the carriers and organizations that are part of that, um, they they help to shape legislation and regulatory things here in New York State. And um uh most of my client companies are members of that. So uh it's something that we've been wanting to do for a long time. And we applied and we're accepted, and uh, we're very happy about it.

Chantal Roberts 1:57

Congratulations. That sounds like it's fabulous. And and it's and it's always good to uh be involved with legislation or in a group for all of our listeners, get involved because y'all are going to be the ones who can change things. Um yeah.

William Auten 2:18

So it's uh it's a it's not just like a networking kind of organization. Um, they talk about underwriting, claims, legal, and regulatory things all you know at at their yearly meetings, and and uh it's a good place to be. So we're we're looking forward to it.

Chantal Roberts 2:36

Absolutely. Since we're doing news, I this I let me look and see real quick when this podcast will come out. This podcast will be released on April 23rd, which is great. Uh, on May 7th, which is a Thursday, Fred Fisher and I will be doing a panel talk about the return on investment for claims, staffing, and education. And of course, anybody who knows me knows my stance, which is the claims department is the product of the insurance industry, period, because it's not the policy, it is the promise to pay a covered claim. And the people who determine the promise to pay a covered claim are the adjusters. And when governing boards uh put hiring freezes on the adjusters or don't actively pay for the adjusters to pursue education, I mean, they may think that they say, yes, go get, you know, continuing education, but if they don't really, um then we've got a disconnect. And my argument and Fred's argument that we're going to be putting forth in this panel is that if insurers hire more adjusters and educate them, they will make more money. And it sounds counterintuitive, but we have the math to prove it. So that's what we're going to be talking about May 7th. It is noon Eastern time. It's going to be a webinar. So it's free, by the way. Uh with the with the Academy of with the Academy of Insurance, we'll drop a link in the show notes. Okay. So after we've finished self-aggrandizing ourselves, because we are so grand.

William Auten 4:38

We are grand.

Chantal Roberts 4:39

We are grand.

William Auten 4:40

The grandest of grand. Well, that's great. Educating people in claims is is a is hugely important. And uh I come across um carriers that are understaffed and and don't have the talent pool that they probably should have. And um, you know, they wind up paying claims that they don't have to and they are or shouldn't. Um it goes to lawsuit, it just goes right to the attorneys and and they're not saving any money there.

Spring Thaw And Construction Claims

Chantal Roberts 5:08

So and so that's the whole and and and I know the knee-jerk reaction for every single CEO, CFO, uh, SOB in the governing board is oh, AI. I I got the answer for that, guys. AI is not the end all be all. Uh, it it may I remind you of Colossus, but this is a whole nother podcast. Let's go on into let's go on into um can you know it's spring.

William Auten 5:37

It's springtime.

Chantal Roberts 5:38

I am super excited. I don't know about you, uh, because I know you're a little bit further north than I am. However, I have started planting some flowers and some trees and shrubs, and they're just starting to get their little greenery and all of that. So I'm uber excited about it. Uh, we of course will have like 80 degree weather today, thunderstorms tomorrow. It's supposed to be 60, and then Sunday is supposed to be 74, so woo, it's spring.

William Auten 6:13

It's supposed to be 80 degrees tomorrow here and 39 degrees on Monday.

Chantal Roberts 6:20

Ugh.

William Auten 6:21

So I don't know what you're supposed to do with that.

Chantal Roberts 6:24

No, you know, and it's amazing. Uh we get sick, and of course, that's that's the way it is, but uh, you know, when when we have these swings going back and forth, uh we've had our ice storms and then uh snow and then all of these freezing-related claims that we have been talking about for the past what uh four weeks or so.

SPEAKER_02 6:46

Right.

Chantal Roberts 6:47

Um, those losses are now beginning to be repaired. Uh so and like I said, all the roofers are coming out of the rude work rude work. They're not rude. They are not rude. They are very, very polite. They are, they are very, very polite. Um, um, they're coming out of the um woodwork. And uh we've got water damage claims, roof and siding claims. So we're moving on into the construction. And so now we have new risks and new perils that we as adjusters need to be paying attention to when we get these claims. And a lot of times these things overlap.

Contractor Damage And Split Claims

William Auten 7:25

They do. Sometimes the guys that come out to fix your house cause damage to the house. And that's when we get a call.

SPEAKER_03 7:33

Yes.

Chantal Roberts 7:34

So yes. Uh, because you know, sometimes uh, and and it I do want to point this out, and I know I've pointed it out before. If the contractor causes a claim, you know, causes damage, like you just said. Uh I'm thinking of a claim that my husband just just recently had where uh a plumber, I think a drywaller or a no, it wasn't a drywaller, it was a um carpenter. Uh carpenter was putting up some something or other and apparently couldn't see the the pipe, I guess because the drywall is already in or what have you, and drove a nail into the pipe. Well, uh you know, that was fortunately it was sealed, but then when the homeowner decided to move everything went sideways, yeah. And and so in this particular instance, what the adjuster would need to do is not only file or act or do the claim, handle the claim for what the original damage was that was originally being fixed with a drywall waller and the plumber, but file another claim against the carpenter. That's not all one claim because we've got two separate dates of loss, two separate causes of loss, all of this sort of thing.

William Auten 9:04

Yeah. Um so you'd have a liability claim against the carpenter.

Chantal Roberts 9:10

Yes. Um even though it's property damage. And I do make sure that I explain that to my students because a lot of times we just think liability is only bodily injury or slip and falls and trip and falls. No, you you can have property damage with a liability claim.

William Auten 9:28

You do, and we have it a lot.

Chantal Roberts 9:30

Yes, think of cars. Think of cars.

William Auten 9:32

Yeah. Yeah. So um for that carpenter, then um, hopefully there's someone has a written contract with that carpenter, and someone got a copy of the insurance certificate for that carpenter. And um, you know, that you could argue that did he did he do anything wrong? He was just putting a nail in the wall like he was asked to do. Right. Could he have checked for pipes? Yeah, he probably should have. Sure. So I could argue that.

SPEAKER_01 10:00

That's what stud finders are for.

William Auten 10:02

Yeah, I could argue that um, you know, he he could have made a a little bit more effort to to uh avoid that. Um, but the next question is were were the pipes placed that close to the drywall that a nail would be able to reach them? Because usually they're um I don't know. I know there's all kinds of questions you could have about it. Um that's what makes the job so fun.

Chantal Roberts 10:26

I see, and that's my and that's my thing too. It and and a lot of times I know places are are now like municipalities or codes are now saying that if you're going to have a pipe go through a particular like two by four or the frame or whatever, you're supposed to put that metal shield there. So yeah, so that so that a nail won't do this. Maybe that wasn't the case in this particular instance. But yeah, you there are, if you're representing the carrier for the carpenter, there are some investigations that you need to do, and that's kind of what you were just talking about, those those things. But if you are the homeowner carrier, you do need to make a separate claim. These are two separate claims that you would need you so FYI.

William Auten 11:23

Yeah. Um there's there's also subrogation, you know, your carrier can pay for your damages and then go after the carpenters.

Subrogation Basics And Made Whole

Chantal Roberts 11:30

Um let's talk about that. Can we just talk about that for just a minute?

William Auten 11:34

Sure.

Chantal Roberts 11:35

Um, it it seems to me, and of course, and I just did it, me personally, uh just immediately went over to filing a claim with the carpenter, which is what you should do, absolutely. But so many, I see so many times now that insurers and or the adjusters, and I think it goes back to being well educated, is they they are telling the insureds, no, you need to go ahead and file that claim with the carpenter. And they don't open a claim with themselves. Uh and and I gotta tell you guys, that is bad faith right there. And I'll tell you why is because as soon as the carrier knows about a claim, they have the duty to investigate it. It says it right there in the Unfair Claims Trade Practices Act. And you know about it as soon as they tell you about it. And you, as the adjuster, are the represent or an agent, even a even an agent. You are the representative of the insurance carrier. And so you're kind of shooting your own employer in their foot if you don't open a claim. And I know that some of the agents are like, I don't want to because you know their premiums can go up and blah, blah, blah. I get that, but we don't care. Um, what we don't want is to be sued by for bad faith. We want to put Chantel out of business as an expert witness. That's what we want to do. And it's all about me. I'm surprised you all haven't learned this by now.

William Auten 13:06

I mean, well, the other thing that uh that needs to be mentioned here is that chances are you're gonna have um more benefits under your own policy than you would if you were to make that third-party claim because the third party claim is going to be subject to depreciation.

unknown 13:22

Thanks.

William Auten 13:23

Under your own policy, you probably have recoverable depreciation or replacement cost policy. So um you even though you'll have to pay your deductible, you'll get that back if it's subrogated. So um when people ask me often, you know, do I make a claim against the at fault party or should I make a claim under my own carrier? Well, if you want it settled quickly and you want good customer service, you're more likely to get that from your own company than from an adverse company.

Chantal Roberts 13:54

Look, I do both. That's what I do. I do both.

William Auten 13:58

You make a claim against both?

Chantal Roberts 14:00

Yeah, I do. I in my particular instance, I do both. I place the at fault party on notice because they're going to need to do their own investigation.

SPEAKER_02 14:10

Sure.

Chantal Roberts 14:11

It's going to take them longer because you're right, they don't have the same time limitations and duties and all of that to me as a claimant as they do to their insured. So, me, I also file a claim against my own carrier. And listen, guys, what I'm saying is that that insured, even though someone else is at fault, still has coverage for that. So you need to open a claim and investigate it and pay what you can pay, and then you send a subrogation letter over to the at fault carrier. Hopefully, they'll be finished with their investigation. Here's here's also points to to consider, just like you would put your or the insured's deductible in there, like pay the deductible directly to Chantel. If there are any non-covered aspects of my claim that I have, because that you know construction guy put a hole in my pipe or whatever. If if that's the case, then then also put that in there, but put it separate. Like, oh, by the way, you also owe her a thousand dollars for I don't know, mold coverage, and we have a mold exclusion. So we haven't paid that. And so you would need to pay um not only the$500 deductible, but the$1,000 for this. This is what we haven't paid, but everything else you owe us.

William Auten 15:41

Um we uh right reminds me of a claim a few years ago where um it was a first party claim that I handled, and um a multifamily home was struck by a delivery truck and pushed the home right off the foundation. So the the house basically had to be completely destroyed and rebuilt. He had an ACV policy, not great, um but the limit was very low, it was like ninety-five thousand dollars or some crazy thing. So his damages were a lot more. Um we settled the first party claim, but then my estimate, I furnished him with that so that he could pursue the balance of that claim um against the the trucking company, which he eventually did, I believe. So um, yeah, bear in mind that if you don't have enough coverage under your own policy, or you don't have coverage for certain types of damage under your own policy, then you can make that claim against the other party.

Chantal Roberts 16:49

Yes. And and while we're talking about it too, adjusters, remember nine times out of ten, I think all maybe I'm gonna go out on a limb and say maybe almost all states and territories and all that do have that 100% uh made whole policy. I mean, not all of them, but I mean the vast majority of them do. And so you need to know what state you're in to know if you're made whole. Because if you're making a subrogation demand and this is a perfect example where the limit is only$95,000 and the damage, let's say was$200 something thousand dollars, and you make a subrogation demand of$200,000, um, you don't get that money back. And of course, then there's all this uncovered damage, let's say$50,000 uncovered damage. The insured's gonna get that$50,000 of uncovered damage if they accept liability. And then you would, you as the carrier would only get$45,000 because it's all about being made whole. The insured, the person being made whole.

unknown 17:54

Right.

Chantal Roberts 17:54

They getting paid 100% of their damages, so to speak.

William Auten 17:58

Right. Right. So on an ACV basis.

Chantal Roberts 18:01

On an A C V basis, of course. Anyway, um, but this leads to a great topic as well. And uh we we may accidentally go into left field again uh with our replacement cost and hold back depreciation because you and I, of course, are infamously uh uh on different sides of the spectrum on what can be depreciated, but that's not what we're talking about today, but we're we're talking about whole different podcasts which we actually have talked about. I want to say it's like back in the 20s or something like that. Go look for it. Yeah, um, go Google it. Uh we're famous for it, we we debate it all the time. Anyway, um we talked about replacement cost and whole back depreciation, yeah.

Replacement Cost Vs Market Value

William Auten 18:49

Uh depreciation is uh just the um reduction in value of a piece of property because of wear and tear, obsolescence, uh whatever, um, you know, happens to cars too. So, you know, when you go buy a used car, you notice how it costs less than a new car? That's depreciation at work. The same thing happens with the house. Um now, a house actually appreciates in overall value, doesn't it? But the stuff inside the house, like your carpet and your paint and your appliances, those things all wear out and have to be replaced over time. So components of a house get older and appreciate. But a house's value on balance tends to appreciate depending on where your market is.

Chantal Roberts 19:34

Yes. And I would I would, of course, argue a little bit saying, but you you kind of dial it back. Uh in in that, yes, houses are supposed to appreciate, but I think that is seen as an overall whole, and that is more of a marketplace issue than an insurance issue. And this is something that is confusing to adjusters, uh, especially new adjusters, I believe, when we're talking about the the insurance value versus the market value. And this is something you have to learn because you need to explain it to the insured when we're talking about the co-insurance requirements. So, you know, they may feel that they are insured to value by having a house insured at$450,000 because that's what the house would sell for. That's the market value. But if we were to rebuild it today with two by fours and bricks and copper wiring and all of the labor that goes into it, it might be$850,000. So at$450,000, they are way underinsured.

William Auten 20:52

And so replacement cost policy, you have to kind of remember that it really kind of violates the the concept of indemnity because it's not, you know, replacement cost is not an apples to apples necessarily. Right. Um, so and it does get confusing when you talk about the market value of the property and the market itself can have such a uh heavy influence on the value of the property that up or down, you know, uh like you just gave an example where the home was worth less than than it would cost to rebuild it. And if you live in a depressed area where the the real estate market is kind of depressed, then the value of that home is going to be a lot, market value is gonna be a lot less than uh it would likely cost to uh rebuild it, especially if it's an old home. Like our house was built in the 1800s.

Chantal Roberts 21:50

Yes. So I I like to tell uh when I was explaining this to my insurance and to my My students, I usually say, look, it you can, for all intents and purposes, go to any Home Depot or Lowe's, whether it's in the bougie part of town or in the non-bougie part of town. And a two by four is pretty much going to cost the same. I mean, a couple of cents difference, maybe, but you know, a two by four costs the same wherever. And that's what we're looking at, not the zip codes and the school systems and that sort of thing, which is what the the kind of like the market or retail value of your home is. And that's a really good way to explain this. Now, the thing is, and and I totally agree, and and I also like to kind of blow my students' minds after I have drilled into them that you are not supposed to make a profit off of insurance. And I, and then I will immediately turn right back around and ask, is that true? And as you pointed out, you know, because replacement costs just said my TV is worth$500, but I'm you're giving me$700 to go buy a new one.

William Auten 23:12

Right.

Chantal Roberts 23:12

And a better one and a bigger one.

William Auten 23:15

Right. So it it is kind of strange, but that's the premium you pay. You know, that you buy a policy that promises to do that.

SPEAKER_02 23:23

Yes.

William Auten 23:23

And the insurance business has decided that that kind of a product is worthwhile to uh to sell to customers and to pay claims on. Absolutely. Everybody's happy in the deal.

Holdback Depreciation And Deadlines

Chantal Roberts 23:34

Everybody's happy, except for when we get to this whole hold back depreciation thing. And and and let's talk about some of the policy. We need to talk about the policy just real quick, like the homeowner's policy, uh, because I think it's kind of gotten a little twisted. Uh, Chip Merlin happens to bring this up. And and I would encourage you, if you don't read Chip's blog, read it because it's the opposite point of view. And it's always good to know the opposite point of view, right? Uh and the policy, the homeowner policy basically says you have to tell us within 180 days if you're going to replace the property.

SPEAKER_02 24:18

Right.

Chantal Roberts 24:19

It does not say you have to replace the property within 180 days.

William Auten 24:24

You have to notify us of your intent.

Chantal Roberts 24:26

You have to notify us of your intent. So a lot of insurers are sitting there going, oh, well, six months have passed. You passed that, you haven't replaced your property yet, Mr. Insured. So we're closing your file. No, no, no, no, no. They just need to say, Oh, yeah, we're replacing the property. That's that's intent. That's them notifying you.

William Auten 24:48

Yep.

Chantal Roberts 24:49

Uh, and if they're smart, they would of course write that down. And if you are smart, you not only put it in your notes, but you send out a letter uh saying, I understand that you're replacing your property. And then tell them what the statute is. Because they definitely have to do it by the statute or file states.

William Auten 25:05

Yeah, which under the policy is two years. Yes. Um, it's not the statute that would rule over tort claims and things like that. It's a contractual statute.

Chantal Roberts 25:15

Okay. So now we have holdback depreciation, right? And and they've told us that the insurance told us that they're that they're going to replace the property. Of course, our property policies are becoming pretty tight right now because of everything. I have seen roof schedules, like if you have a shingle, you know, asphalt shingle roof that is 10 years old, we depreciate it by this amount of much. And if you have concrete shingles, blah blah blah. And if you have tiles, you got blah blah blah. Uh, there's also the thing that I was talking about earlier with with Bill and me, we we sit there and debate do we depreciate labor? That would be in the policy. Yeah, if we are allowed to depreciate labor and taxes and permits and not just never seen that mentioned in the policy, though. I have. I have really, yes. Um, yeah, I uh they they do I've I've it happens to be manuscript, and of course, what we know is it's that manuscript means that the insurance company has written the policy themselves, but but yes, which which also means by the way, guys, that the doi has either looked at it and approved it or just rubber stamped it. Either way, doesn't matter. It's it got approved, so we gotta follow it. Whether whether Chantel agrees with it or not, that's the contract that the insured signed up for.

William Auten 26:49

So well, on uh on the depreciation part of it and the holdback. So the the concept is for the uninitiated here, um, you get paid uh actual cash value up front, which is replacement cost less depreciation. And that's the check you'll get is is you know, there's paperwork that's going to show that there's been depreciation taken off of the value of the claim. And that's recoverable if you have a replacement cost policy, but only after you've made the repairs. And like you had said earlier, you have to notify the carrier that you intend to make that replacement cost holdback claim. Um, you have to notify the carrier within 180 days of the, I believe it's the date of loss. I think there's some arguments out there that it's the date that a proof of loss was signed, maybe. Um, I've seen arguments about that. But nonetheless, 180 days is a long time. Just send the the desk adjuster an email and let him know if you're worried about it. Right. So once the repairs are made, you can collect the depreciation. However, the language of the policy can confuse things a little bit because a lot of them will say that it's the amount actually spent to make the repairs.

Chantal Roberts 28:08

That's important, guys. Pay attention.

William Auten 28:10

So if you um if you found a cheaper contractor out there that was able to do the work for less than the replacement cost estimate that you were settled, that you settled the claim on, you're not going to get the full holdback. Um, that's just the way it is.

Chantal Roberts 28:27

And and adjusters, here is the deal. Again, don't just cut a check that's lower than the amount of the recoverable depreciation on the estimate. You need to explain to the insured, using your words, as in picking up the phone and then writing a letter why the the payment will be lower, right? Because again, they don't trust us. And what we're doing, and what Bill and I are are are advocating is how to be a better adjuster and how to get them to uh them being the claimant, either first or third party, to trust you so that your job is easier. And we all want to have easier jobs.

William Auten 29:15

We do.

Hidden Damage, Supplements, And ROR

Chantal Roberts 29:15

Yes. Uh so the timing disputes around scope and completed work is is also a huge thing, I think. And I see this quite a bit as a as an expert. It it comes up quite a bit when our insureds are unsophisticated and they don't want to begin repairs because, and we mentioned this very briefly last week, where they don't want to begin repairs because they believe it will, you know, stop or or destroy their ability to have a future claim. And so they sit there waiting for a quote final estimate. And this is where you as an adjuster need to explain there, it's not like there's no such thing as a final estimate, um, but the final estimate is really going to be when the claim is closed and the property is fixed. And so we can't know that until you get the property done. You know, it's kind of like a chicken and an egg thing. And so you just you really need to hold the insured's hand. And again, one of the best ways I have found to do this is to have your field adjuster out there with the insured's contractor at the same time walk in the property uh to discuss the scope of the damages and try to come up with an agreed price.

William Auten 30:45

Yep. And um, I've been in situations where the insured did not want to settle based on the known damage because there was hidden damage that they were concerned about. Yes. And that is easily solved by just making a payment for the undisputed amount of damages. So everybody agrees on what what actually is damaged, and yeah, there might be some more damage that we won't know about until things get started, but we still have an estimate, we still have depreciation, you can still sign a proof of loss, which is not a release of any kind, which we talked about last week, and um life can move forward.

Chantal Roberts 31:23

So and here's what we need to think about in this particular instance, as you said very stalli. Um you pay what you know you owe when you know you owe it. Okay, if you don't, guys, again, we're breaching our duties. Uh, as an insurer, this is when Chantel gets involved, and again, Chantel is lazy, she doesn't want to do that. Okay. So what we would then need to do, I and I look, I get it. Bill gets it, we all get it. The insured is scared, they we deal with this every day. They don't, so they don't know that they don't know if there is hidden damage. You need to tell them what to do. Hey, if there's hidden damage, stop the you know, repair, call me, I'll send Bill out again. Put it down in writing because they don't trust you. And if you have it in, if they have it in writing, then they can go, yeah, see, here you said so. And then also you need to think about possibly sending out a reservation of rights letter. Most insurers don't like doing that, but you need to seriously consider it because if the insured is not repairing their property or protecting it from from further loss, you, as the carrier or as the adjuster representing the carrier, uh, could be waiving that defense. So very important stuff.

William Auten 32:48

And uh, for property owners, when you get a check from an insurance company and you don't agree with the amount, um that doesn't mean that cashing the check is necessarily you saying, Well, I guess that's um, you know, I guess the insurance company wins here and I don't get them. That's not the case at all. Cash the check, get the repair started. You can still, you know, if there's um items that the adjuster still needs to see for by all means make sure those don't get repaired yet or whatever, so that they're available to view so that you can make that supplemental claim. But supplements are a thing, and um they happen almo almost every claim. Not every not every claim, but a lot of them.

Chantal Roberts 33:33

Yes. Um, so now we we have contractors who are on the property repairing the property, and there is some risk there. Um, there's some liability exposures there. The the the one thing I always think about is uh maybe a apartment um complex having a roof claim and how the roofer has to basically kind of shut down that apartment comp that that apartment building, like maybe one out of 20, because they're throwing the roofs, the old roof off the three three three stories high or whatever, there's nails everywhere, blah, blah, blah. And you could have injuries to the tenants, to visitors, to pedestrians, or whatever. And so you could have third-party uh injuries.

William Auten 34:29

Sure. That's our next topic.

Chantal Roberts 34:32

Yeah, absolutely. Yeah. See how it's a good thing.

Contractor Risk And Insurance Certificates

William Auten 34:33

Contractor risk and liability exposure.

Chantal Roberts 34:36

So we weaved it in right there.

William Auten 34:38

So when you get uh when you get these contractors out to your property, whether it's a home or commercial site, um, before they step foot on your property, you're gonna want to make sure that you have a written contract and that you have their insurance information through a certificate. And you'll want to verify that they've got general liability and workers' compensation coverage. So um uh, and if you're a commercial property owner here in New York, you want to be additional insured on that um uh insurance certificate, and you want uh the contract to say that the contractor is going to defend and indemnify you. Otherwise, you're subject to labor law 240 claims, which in New York is strict liability for anybody who falls from a height. Or if a it's a falling worker, falling object statute. Um so that can get um that can get complicated and uh can make your life miserable if you don't have the right coverage in place.

Chantal Roberts 35:41

So what you're looking for, even as the adjuster and or the landlord, homeowner, whatever, is that certificate of insurance? I I never does I have issues with the certificate of insurance because they are only good for that particular point in time. So I mean, it's perfectly plausible that the contractor could cancel it like as soon as he leaves your your location. Does it happen? I mean, not really. And there's very specific information that needs to go on the certificate of insurance, uh, which you know lists the policy, the dates, that sort of thing. Um, sometimes they the insurer or the insured, meaning the contractor, would like all of the endorsements to be listed as well. But whether that can be done or not, I think depends on the states and whatever. Um however, what I would do is simply call that agent that is listed on that certificate of insurance and say, hey, did that do they still have good, you know, general liability coverage or workers' compensation coverage or whatever? And the reason you, as the adjuster, needs to know this is because that contractor would also have contracts with all the subcontractors. And, you know, we need to know, all right, we got to call him and put him on notice. And then we, um, when we're talking to that adjuster over there, do you know who the other people are and all of this kind of stuff? And it's it construction claims are fun, they are huge, especially when you get uh all of the subcontractors involved, and hopefully we don't have that issue.

William Auten 37:36

The other thing to be concerned about is when a contractor does bad work, um we get a lot of claims for poor workmanship, and um that's excluded. Your work product is not covered. Um, even if you have products and completed operations coverage, which is designed to um to protect you from liability caused by your work product, um damage to your work product itself is not covered because that would be like a warranty policy against bad workmanship, and that's not what insurance is designed to do. So, and unfortunately, those don't have any happy happy endings because you've got a claimant, a property owner who's got bad work that has to be corrected, and um and you've got a contractor that doesn't want to correct it. So it's it's just bad a bad situation all the way around.

Chantal Roberts 38:42

So this is again kind of what we were talking about going somewhat full circle, as if you are the insurance company for the landlord andor homeowner, and that happens to be covered, a covered claim, you would need to open a claim for that and do the and and then attempt to subrogate. You don't foist your insured off on the contractor saying, Yeah, you just need to sue. No, that's your job. Uh so so some uh again, I think that this is just you know maybe a educational issue that some of our newer adjusters don't necessarily know.

William Auten 39:30

Yeah, you got to take ownership of of a claim against the policy that you've issued to a policy holder. And and if they make a claim, um handle it.

Chantal Roberts 39:39

Yeah.

William Auten 39:39

Pay it and then subrogate when you have an opportunity to do that.

Chantal Roberts 39:44

Absolutely. Absolutely. Yep. Um, because that's again what they're paying premiums for. Yeah. Yes, yes. Yeah. Um, what other kind of of liability exposure? I one that I happen to be thinking about right now is Overland Park is going to be repaving our side streets and all the way down through the neighborhoods and and everything. And I know how they're going to do it is like they would be paving one side of the street and all of us park on the other side of the street. And then, yeah, a couple of days later, you know, we flip, we all park on the other side of the street, and they pave the the unpaved part of it. And I just sit there and and think, because I've worked to these claims, uh, you're gonna have these tar claims and all of this sort of thing. Uh and I started thinking about how adjusters may not know that there are body shops who can just take off that tar without having to do a whole paint job because we got a lot of claims uh from contractors doing this, like overspray claims or or what have you, um, where everybody wanted to get a new paint job on their car. And that's not necessarily it. And it's not necessarily this contractor risk liability exposure. It's what I'm saying is the claimants don't necessarily get a brand new paint job just because you've uh your your insured has put some tar on their car. There, there's ways to take that off.

William Auten 41:30

There is. Um, and I have you ever had an overspray pay uh claim?

Chantal Roberts 41:35

I have, I I've worked quite a few of them.

William Auten 41:38

Yeah, so bridge work is common because the wind blows and they're spraying the bridge, and a parking lot gets uh blasted with green paint.

Chantal Roberts 41:48

Yeah.

William Auten 41:49

Um, and those can be interesting.

Poor Workmanship Exclusions Explained

Chantal Roberts 41:51

There there is there are body shops that are paint shops that actually deal specifically with that. And it's it's basically they take a Q-tip and they just like take off this little bitty part and they take off this little bitty part. And we're talking maybe$1,500 versus a$7,000 paint job, right? Uh and again, remember, because we're the third party in this particular instance, we only have to pay ACV and we would pay to repair or replace it. And if we can repair it for$1,500, that's what we're going to do. Might not be what the owner wants. And if the owner wants a brand new paint job, then maybe the owner goes to their own insurance company who might pay for a whole new paint job. But again, all we are paying for to the other insurance company is that$1,500 because that's all we owe.

William Auten 42:49

I had one a few years ago, many years ago now, I guess. Uh it was a it was a brand of car that had a lot of black matte plastic, matte finish kind of black plastic parts on it. And they they could not get the paint off it without without altering the finish. So we uh wound up paying for all those plastic parts to be replaced. That unfortunately.

Chantal Roberts 43:13

Yeah, that does happen, but it it it it is rare. I was just thinking about that uh driving to the grocery store the other day, like, oh, this is this is a good topic that we might want to talk about. Uh we have talked we we have spoken a little bit about the written contracts for construction works and certificates of insurance and uh verifying that. And what kind of investigation challenges do you see in these kind of spring claims? I can think of a few right off the top of my head.

Overspray And Tar Damage Reality

William Auten 43:46

Well, um, what I found is contractors, if uh if they do cause damage to something, they want to keep moving. And a lot of times they just fix it and move on, and then they, you know, they'll make the so if you're a contractor and You cause damage to a building and you can fix it, uh uh w at least wait till you make a claim and and allow the adjuster to see it. Um because if you just uh if you um fix it before anybody can see it, you kind of took away any evidence that there was damage. So how are we supposed to verify the cost?

Chantal Roberts 44:24

Yeah. And that is also in violation of your duties as as an as an insured, which is to allow us to inspect the property. If it absolutely one of those things that absolutely positively has to get corrected, such as, you know, we got to turn off water or something like that. Take a picture, uh, which is uh something that that I did. We talked very briefly about how I had a frozen pipe outside. Uh it caused my sump pump pipes inside the house to come undone and I had water spraying everywhere. Wasn't sure if it was immediately going to be covered. But what I started doing was taking video, taking photographs, showing where the water was was uh damaged, showing us cleaning up the damage so that if I did turn in a claim a few days later to my insurance company, they would have that evidence. Even though I've changed the scene. I wasn't just gonna let it keep on spraying everywhere uh uh while I wait for an adjuster to come.

William Auten 45:40

Most people today are pretty with cell phones, they you know, they're pretty quick to take photos and and video. And um so we don't really run into that problem very often. But um one thing that we still do continuously get from contractors is when they cause damage, they go ahead and fix the damage and then they put their hand out and they say, I want to be paid now for the repairs that I made to, which makes it tough because the general liability part of your policy isn't designed to pay your policy holder.

SPEAKER_03 46:11

Yes.

William Auten 46:13

And it makes it uh almost impossible to get a release from from the uh from the property owner.

Chantal Roberts 46:22

Would that not be covered if the cause of loss would be something that the insured did? Because you just said if the insured did bad work, uh then you know that that's not what something that the policy pays for.

Investigation Problems And Contractor Self-Repairs

William Auten 46:39

And here's a here's an example. Um roofer is roofing a house, and um they um they drop a bundle of shingles on the roof and it goes through the roofing uh and crashes down through the living room. So uh they run down there and they fix it all up and they and they fix the roof. And it took them, you know, X number of hours and materials to to make that repair. Um, so that would be an example of um property damage caused by negligence. Um now if they put the roof on and it was horrible and it looked bad and it leaked uh because it wasn't installed properly, that's not covered, that's work product.

Chantal Roberts 47:29

So in this particular instance, the the first instance where they drop the shingles, they go through the attic, through the first floor, down to the second floor, or the second floor down to the first floor, and the roofer fixes all of that up. How do you as the adjuster handle that?

William Auten 47:51

It's tough. Um we've issued checks to to the contractor before. But what what you want to do is do a comparison estimate just to make sure it's fair. Um you're not gonna be able to get a release. I mean, you can ask for a release from the property owner. They may or may not um you know do anything about it. But ultimately, the job of the the job of the liability section of the policy is to defend and indemnify the policyholders. So you're actually indemnifying them. So that's my take on that.

Chantal Roberts 48:31

Okay. Okay. I would also I I guess be asking for receipts, uh invoices showing that they actually did the work and and that sort of thing.

William Auten 48:47

Um most times when I've gotten claims like that, they're not big, you know, and and the contractor feels terrible and and they're like, look, if you just reimburse me for materials, that's all I need, you know. So these are not big disputes, but um, you know, sometimes it can be.

unknown 49:06

Yeah.

William Auten 49:07

The potential's there.

Chantal Roberts 49:09

It it always, always. So, what kind of practical advice do you have for our policyholders and our adjusters who are handling the this uh building season kind of claim?

Practical Advice And Better Communication

William Auten 49:24

I would say um make sure you're going to be interviewing reputable contractors. And I wouldn't go with the first bid or your first interview. I would um get at least three is the general rule and um compare them apples to apples. Your spidey senses should be telling you if someone's a creep or not. Um Better Business Bureau is a good resource. Uh, friends and family, whoever you know can recommend somebody that has actually done work on their property, uh, that'd be a good place to start. Um, another good place to start is to um talk to folks who have already done work at your property who you liked and say, hey, I know you're a plumber, but now I need this roof repair done. Do you have any recommendations for that?

Chantal Roberts 50:15

Those guys talk to one another. Those guys talk to one another. And uh, you know, I love my plumber, and uh he's from Arkansas. So we we joke about how we're really brother, sister, aunt and uncle, grandma and grandpa together. Uh, and because you know, there's there's no branches in our family tree. And and he introduced me to like now my favorite electrician who I think I told you one time I almost burned down the house because I I had pulled some electricity from a higher voltage. I didn't know. And uh he was very kind and didn't didn't mock me and go, oh my gosh, this this homeowner here, he explained to me what the different colors were and and all of this where I'm like, you know, in Arkansas, we don't do that. We don't do that at all. And uh he let me watch him just like I was his little apprentice and and ask him all sorts of questions. So what I'm saying is in that story, again, yeah, ask ask your favorite plumber, ask your favorite electrician, ask your vet or whomever, but because those those people talk to one another. Um yeah, and I would also uh I had a point, but I don't know what it is. Okay, oh setting expectations more for the for the adjusters talking with the insurerts um and and around the holdback and the timelines and and things of that nature, uh overestimate, you know, be like Scotty uh with the Enterprise. Uh you know, I need it done in an hour, Scotty, and you're like, oh, I can't do it in until a week and a half, Captain, and you know, you can do it in 30 minutes kind of deal, but you're not gonna tell the captain that. Uh, same thing with talking to your insured. I'm not saying lie to them. That's not what I'm saying. I'm saying, you know, uh what I would do is I'm going to assign this to uh a field adjuster. They have 24 to 48 hours to contact you, then they have a week to take a look at the property. I would give them, I don't know, three or four days, business days to write up a report and get that back to me. So what are we looking at? Probably two weeks before you hear from me or anything, you know, just and am I gonna get it back before then? Probably, because I'm definitely following up within seven business days. But you see what I'm saying is that we're we're setting that expectation. And with the holdback, we're also gonna set that expectation. Like your policy states that you we're going to take depreciation off of XYZ and explain what that is. And um yeah, I want your contractor out there with my guy so that we can all get this done and and agreed on.

William Auten 53:10

And when uh one thing you'll run into as an adjuster is that when you start talking about the way the policy works and uh policy language and the the overall mechanics of the claim, the insured's eyes are gonna glaze over and they're gonna hear only about 25% of what you say. So it's worth repeating, it's worth um issuing a piece of paper, a letter of some sort to them explaining those things as well, because not everybody is gonna absorb, they're not gonna pick up what you're putting down necessarily. So um you can be as clear as can be about your communication, and you can speak in perfect English and you can um you can verbalize everything perfectly, but it's a complex thing sometimes, and and people just don't always get it.

SPEAKER_02 54:02

Right.

William Auten 54:03

And they have to repeat it. Repeat it and um uh guaranteed they'll ask questions that you've answered two or three times already, you know. But uh that's kind of part of the job. That's why AI isn't going to partake our jobs, you know. It's because we need a human being speaking to another human being.

Chantal Roberts 54:23

Right, right. So uh also make sure you do your good documentation on there, and that's not only your letters, but in your claim notes, uh uh saying that you spoke with who you spoke with, what y'all talked about, these sorts of things. And yeah, use your words. I and I and I know that a lot of people don't want to answer the phones or whatever. Again, I'm seeing a lot of times where people where adjusters will text the insured, hey, I'm gonna call you between nine and ten. Please pick up the phone or whatever. It's a really good thing to do to have the insured pick up the phone so you're not playing phone tag or trading emails, because there's a lot of times that I, as an expert witness, am reading an email. And by the seventh one, I'm sitting there screaming, pick up the phone to to everybody who obviously can't hear me by that point.

Next Topic And Closing CTAs

William Auten 55:20

So so well, uh the building season. It's it's here, whether we like it or not. I think most people are glad it's here so that we can get some work done. Um, uh, we're having our house painted this year.

Chantal Roberts 55:34

Woo! Yeah, yeah, it's what I need to do too. I need to get that done. I got some wood rod that I need to get taken care of. So I will be having contractors um here. Our next episode is going to be on May 7th, which will be that same day that uh Fred Fisher and I have that podcast or webinar. So I mean, you could have a whole day of listening to me, which I know everybody would be like, oh, that'd be fabulous.

William Auten 56:02

Uh except for that'll be a live event, correct?

Chantal Roberts 56:04

Uh yes, yes, it is being recorded. So even if you sign up for it, you can listen to it later. Uh and it's free. So uh, but next in two weeks, we're gonna be talking about summer liability. Ooh, yummy. Um, pools, lawnmowers, and backyard risks, which is gonna be right in time for our summer uh memorial day, July 4th, all of that kind of fun jazz.

William Auten 56:32

Oh, yes, yeah, great fun. Absolutely forward to summer.

Chantal Roberts 56:36

Me too. Me too. So we will see you in two weeks.

William Auten 56:40

Yes, ma'am.

Chantal Roberts 56:41

Bye.

William Auten 56:42

Take care.

Chantal Roberts 56:43

Bye.

William Auten 56:44

Thanks for joining us on the Art of Adjusting Podcast, where we talk about life as an insurance adjuster. Hit that subscribe button real quick and tell all of your adjuster friends to check this out as well. For independent adjusting services, go to www.autin.claims. And for anyone interested in working as an independent liability adjuster, go to the contact us tab to join our roster.

Chantal Roberts 57:07

So this wraps up another Art of Adjusting podcast. If you enjoyed this podcast or this episode, please give us five stars and a review. It does help the algorithm pick us up. In the meantime, you can contact me at theartofadjusting.com for consulting and training purposes.