The Confusion Around Multiple Bids

From the ‘three bid’ confusion, to pricing now and in the future, this week American Building Contractors shares two more answers to our most frequently asked questions.

Why is my insurance provider requesting I get a bid (or three bids), but the contractors are telling me not to?

Normally when a homeowner experiences a loss and files a claim on their insurance policy, obtaining an estimate (or three) is not going to be a part of the process. The value of any loss to the home will be calculated by the adjuster using a third-party software like Xactimate. These programs are detailed, kept up-to-date, and are quite accurate at determining a fair market cost to replace, or repair damaged property. 

So why are some insurers in the South Florida market now moving away from standard procedure, and asking insured homeowners to obtain one, or more estimates?

  1. Expediency. With the incredible volume of claims, some insurers are requesting estimates from contractors to aide in the overall process of their adjusters’ time when creating a new claim. Presumably, if your contractor’s bid seems reasonable they may simply approve it, and move on to the next claim. In this circumstance your contractor should be happy to provide a fair-market estimate.
  2. Reducing the insurance company’s overall liability. This is especially a concern if your insurance company asks you to get multiple bids. Keep in mind that if you submit multiple bids to your insurer, they may opt to pay the value of the lowest one. Given you have complete confidence in the lowest bid contractor and feel they will provide the same quality of work, quality of materials and a meaningful warranty then you have no problem. However, if you do not have this confidence in the lowest bidder, you could get stuck with a contractor that may not be able to provide the same quality of materials and labor you deserve.

The advice in this article should not be construed as legal advice, or an attempt to interpret your specific policy language. As a Florida resident you should feel confident that the restoration of your home is being completed by reputable contractors.  Your insurer should not be able to compel you to use a cut-rate roofer. If you feel like that is happening there are avenues of recourse and provisions for dispute resolution in your policy. As a paying customer you deserve to be treated fairly, have your home and property restored correctly and get back your life back to normal.

Would it make sense to wait for the price of roofing materials and labor to come down before I replace my roof?

The sudden need for hundreds of thousands of roof replacements has caused qualified contractors to raise their rates in the face of the tremendous demand. However, there are a few compelling reasons why it is not advantageous to wait for the surge to relent before replacing your roof.

  1. If you decided to delay your project you might be waiting for something that isn’t going to happen. That is the unfortunate reality of the construction business. Ten years ago the cost of asphalt shingles (made from the same petroleum as gasoline) more than doubled in cost. Even when oil prices decreased again the cost of asphalt shingles remained elevated.
  2. By waiting, the only one who saves money is your insurer. The insurance policy coverage for replacement costs is estimated at current market rate. If the pricing is high due to demand, your insurer takes that into consideration and pays the fair market rate, allowing you to have your roof replaced by a reputable contractor today. The third-party software (often Xactimate) is updated frequently and helps insurance adjusters know the current pricing. Waiting for demand to level out, and for rates to decrease potentially leaves your home and possessions in further jeopardy.
  3. Finally, insurance policies often have very clear deadlines to file your claim and complete the restoration. The clock starts ticking the moment your home is damaged. Any time you spend waiting could put you, and the contractor in danger of coming up against those deadlines. Missing a deadline can result in non-payment, or under-payment of your claim. Furthermore, it is important to keep in mind that the incredible demand in the market currently is likely going to result in longer wait times to get your roof repaired or replaced. The expert take away- don’t delay if you don’t have to!