How to Hire a Contractor for Your Insurance Claim

Woman talking with home contractor
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When it comes time to file your homeowners insurance claim, it is important to find a fair and reputable contractor to do the repairs on your home. Finding a licensed contractor who has the right skills to manage the repairs on your claim is an important step to getting your home in the same condition it was in prior to the claim as quickly as possible so that you can enjoy your home again.

This is especially important if the damage to your home makes your home uninhabitable while the repairs are being done and you have to live somewhere else while you wait.

3 Things a Good Contractor Should Provide You With:

  • A written estimate, detailing the costs of material and labor as well as the types of work that will be done
  • A general time-frame that you can expect the work to be completed in
  • Their contractors license number, Insurance policy number for their Contractors General Liability, and amount of liability insurance they carry.

You should not be expected to pay for the above information. A good contractor generally knows that its part of the business when bidding on a good job and working with insurance claims to give an estimate. You will need this information to present it to your insurance adjuster in order to have them approve the repairs on your home by this contractor. The claims process is usually longer for large losses and claims, vs. smaller ones, you can learn more here about what to expect in a disaster claim from the insurance company.

How to Know If a Contractor is Legitimate and Not Scamming You

You can contact local state departments to find out if a person representing themselves as a contractor is legitimate. For example, this site gives information on the state offices you can contact to verify if a contractor is legitimate by clicking on your state.

Licensed contractors should not have a problem providing you with information showing their qualifications.

Unfortunately, there are people or general handymen who may say they are contractors that prey on people’s fears and anxiety during a disaster claim, especially when there is a large disaster area involved. If you are ever approached by one of these sales people that often go door-to-door canvassing neighborhoods to generate new business to offer their cleanup and repair services, be sure and ask them about the above thee items, and explain to them you will need this for your insurance. If they are legitimate, they will be able to. While many of these people are honest and reputable, some are not. 

Tips To Find Good Insurance Claim Contractors

When you have an insurance claim, the insurance company is responsible for paying the damages in the covered loss if the damage happened due to insured perils. Insurance companies have many well-known contractors they work with and can often recommend a good reliable contractor to you, or even offer you options. Consider taking advantage of their expertise and help in the situation, after all that's what you pay insurance for: to help you in a claim.

This is the easiest and best way to find a reputable and accountable contractor.

You are always free to get second opinions and negotiate with your adjuster, however by choosing the contractor the insurance company selected, it often protects you because those contractors are accountable to the insurance company and they do not want to break those ties.

Insurance companies provide contractors with many jobs and are big clients to contractors, so consider that before deciding to go on your own to find a contractor. Letting the insurance company take care of it can save you a lot of stress, time and trouble. 

6 Steps to Take to Protect Yourself and Find a Contractor

Below is a recommended list of 6 steps to take in order to protect yourself and find an honest and legitimate contractor:

1. Contact your insurance company and ask for the insurance adjuster assigned to your claim.

Have the adjuster get the insurance company contractor to assess the damage and make an estimate of the damage and repair costs for your property.

The insurance adjuster will know what kind of coverage you have on your policy and will be able to help guide you accordingly. 

By having this estimate you will be able to have a negotiation tool when a contractor approaches you with their estimate. You should use this estimate to compare against the one your privately chosen contractor provides. 

Sometimes a there will be a difference in the estimate between the insurance company contractor and your contractor, if this happens you need to get your insurance adjuster to review the estimate with your contractor and let you know if the work will be approved. Otherwise, you may not get paid.

The insurance adjuster must always agree to the repairs you are doing, before they are done, or you may not get paid. 

2. Check Contractor Licensing and References

The first thing you should request from a contractor before any work is done is their references. When looking for a contractor, check online reviews, call trusted friends and neighbors and ask them if they have any contractors they could refer to you. Ask the contractor if they are part of your area’s Homebuilder’s Association, and the Better Business Bureau. Most importantly, make sure the contractor is licensed and carries liability and workers compensation insurance and request proof. If the contractor is not insured, you may be liable for accidents that occur on your property.

3. Read the Small Print and Get Your Insurance Company Approval First

Be very diligent about reading any papers the contractor wants you to sign.

Do not sign any agreement with the contractor unless the insurance company has approved the work.

When you are hiring a contractor for the insurance claim, you need to be speaking to your Insurance Adjuster because in an insurance claim you don't actually have the authority to approve repairs. It is only when the insurance company approves repairs that it gets paid. You can ask your adjuster if they can speak to your contractor to discuss the estimates before anything is agreed upon.

Make sure the contract is well written and includes provisions for you such as what work the contractor will guarantee and how long that guarantee lasts.

In addition, verify that there is a cancellation policy that provides you at least 3 business days to cancel the signed contract for any reason, as this will give you time to review the contract just in case you felt rushed to make a decision. Better yet, ask the contractor to leave you a blank copy of the contract to review overnight and avoid contractors that will refuse to do so.

Also, make sure a date of completion is included in the contract. If you are confused about what the contract offers, ask your insurance adjuster to help you. This is what the insurance company is there for. The insurance company will also be able to tell you if your additional living expenses would be covered for this time period or not.

Contractor delays caused by a contractor of your choice would not be covered by an insurance company.

If you want help understanding wordings of the legal contract, you should also consider contacting legal assistance services which many home insurance companies may offer as part of your policy for free or low costs; or your lawyer to review the agreement and your insurance contract before you agree to the terms. Insurance contracts have clauses in them that limit and dictate how claims will be paid and what work will be approved.

Your insurance adjuster or insurance company representative or broker can also help you understand this.  

4. Check Costs on Estimate For Temporary Repairs and Debris Removal

Pay attention to how much the building contractor suggests you spend on temporary repairs. While payments for reasonable temporary repairs are covered as part of the total insurance claim settlement, you don’t want to pay a contractor too large a sum for temporary repairs, since this may deplete the total amount of money you will need for the permanent repairs to be completed. You should call your insurance adjuster and get their approval before allowing costly temporary repairs.

Also note that if there is significant damage, there may be costs involved for debris removal, make sure these are included in the estimate, and if not, ask your insurance company about this.

Avoid contractors who offer you unrealistically low estimates, the insurance company is paying for the repairs for you, so don't cut costs. The insurance company collected premiums from you for many years, and they are happy to pay up for reasonable and well done repairs. Talk to them to get your estimates approved and reviewed, since they are covering the bill.

5. Never Pay Contractors in Advance, Always Talk to Your Insurance Company First

Never pay the contractor before speaking to the insurance company. The insurance company will usually pay them directly or they will issue a check payable to you and the contractor that you will both sign off on. You should never be paying out of pocket unless it is for temporary repairs, in which case you need the receipt detailing the exact work done, and remember this work must have been urgent in order to prevent further damage.  

In an insurance claim, you will never have to pay a contractor for the entire project in advance or before the work is completed. If you are asked to do so, call your insurance company to deal with it. 

6. Keep a Notebook With All Claims Repairs Information, Receipts and Details

Keep a job file of all communications with your chosen contractor and all papers related to work being done. This file should include the signed contract, plans and specifications of work being done, bills and invoices, canceled checks, copies of the certificates of insurance, information about any subcontractors your contractor may use and material suppliers.