Insurance companies don’t like to make payments, they don’t pay enough, and they take too long. And that’s part of the process and part of the industry.
But how much are the payments supposed to be and what is it based on?
And it’s based on or upon a premise of indemnification, meaning, you should only get as much money as the value of your loss.
That’s the balance. The problem is, we or they may be considered unreasonable.
- So, is it the lowest bid that the insurance company obtains?
- Is that reasonable?
- Is it their actual estimate of damages that they typed in their own estimating system?
- Or is it what the contractor says it can be done for?
And usually, it’s their contractor. I’m going to tell you right now, it’s probably none of those, but it could certainly be a combination of all of them. So you’ve got three estimates.
- So you did the old one, here’s my estimate from the insurance company, they offered me $5,000. And all the contractors came in, at say, 2000 more dollars, all around 7000.
- One of those contractors is somebody you’ve used your entire life, and you’re very, very comfortable with that contractor.
- Or let’s say that they came highly recommended. They were from a neighbor that had worked done, their family.
- But everybody’s coming in really about the same value. They’re all close.
- And I don’t want to use the insurance company contractor, I don’t want to get subpar work.
- It’s not about the price. It’s about, I want the job done right. And that’s really the indemnification of the policy.
- So, the number 14 is how many times the word reasonable is mentioned in an ISO HO3 policy.
Now, you probably don’t all have that policy. But just to go back to it, it’s kind of a base form. It’s a good policy.
But if they mentioned it 14 times, the word reasonable is really the basis of the policy.
If it’s 14 times in there, it certainly means something. It’s not a coincidence. So, the policy owes for reasonable.
Let’s say the insurance company came to that estimate of $5,000, your three contractors are all around 7, they can’t force you to use theirs. They can’t say no, we believe ours is right.
You’ve done your job and you’ve exercised your efforts to show a reasonable amount of payment might be $7,000 to use the contractor you’re comfortable with to do the project. And listen, you got three of them to agree.
So it’s not about money. It’s about reasonable. It’s about the timeframe, quality, and comfort. Listen, they’re going to be working inside your house.
They’re going to be sometimes left unattended, and you’re going to have to deal with the results of the repairs for a long time to come.
So reasonable is absolutely what the policy owes for, not just “indemnification.” Reasonable is part of that indemnification.
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