Preferred Contractors: Can You Trust Contractors Referred by Your Insurance Company?
After a loss, your insurance company may recommend using specific contractors to repair damages.
These “preferred contractors” may be your insurer’s favorite contractors to work with. But will they do good work on your home? Should you hire these preferred contractors? Do you need to hire the preferred contractors?
Keep reading to discover what you should know about contractors working with insurance companies and preferred contractors for insurance claims.
Why Insurance Companies Like Preferred Contractors
Each insurance company has contractors they prefer working with instead of others.
- Your insurer will likely tell you they like preferred contractors because they do quality work, are professional and experienced, and have a long history of working with the insurer.
- In reality, most preferred contractors have an agreement in place where the contractor charges reduced rates for work in exchange for receiving higher volumes of work from the insurer.
- In other words, the preferred contractor receives less than they normally would to repair or restore your damage, saving the insurer money.
There’s nothing wrong with working with your insurer’s preferred contractor. However, you are not obligated to do so.
You Choose The Contractor For Your Claim
As a policyholder, you choose the contractor to repair your property after a loss.
You are not obligated to use your insurance company’s recommended contractor. Instead, it’s up to you who will handle your repair work.
Sometimes, the preferred contractor is the best option. In other cases, you might have a trusted local contractor you like better.
Do Your Research
When deciding whether to use the preferred contractor or another contractor, it’s important to do your research.
Preferred contractors aren’t bad. They often perform quality work and are trusted by large insurance companies.
However, another contractor might perform better repairs at the same price. They might have more experience with your specific type of loss, and they may be the better option for your insurance claim repairs.
- Do your research to determine the best contractor for your claim:
- Get referrals and references
- Talk to other people who have had similar claims
- Check the preferred contractor and other contractors on local review websites and the Better Business Bureau
- Ask the contractor about specific experience with your type of claim – like fire damage or water damage repairs
Feeling lost or overwhelmed about working with contractors for your insurance claim? State licensed insurance claim professionals are available to help with a free initial consultation.
Preferred Contractors Versus Independent Contractors
It’s important to understand the differences between preferred contractors and independent contractors.
Here are some of the things to consider when deciding whether to hire a preferred contractor or an independent contractor:
Dealing with Your Insurer: When you hire a preferred contractor, they have firsthand experience dealing with your insurer. They may have a better understanding of what your insurer would typically cover, how much they’ll cover, and how to approach them about costs. An independent contractor may not have this same experience and knowledge. The preferred contractor may ask your insurer for permission to do certain repairs, for example, while an independent contractor might complete repairs and work with the insurance company to ensure those repairs are covered. Keep in mind: in many states, any kind of repair contractor is not legally allowed to interpret insurance policy language or negotiate claim settlements on behalf of the policyholder.
Preferred Contractors Get Paid Less for the Same Work: Generally, insurers have agreements with preferred contractors. The preferred contractor agrees to receive lower compensation than normal in exchange for a higher volume of work from the insurer. Instead of earning, say, $5,000 in profit for repairing your home after a loss, the preferred contractor might earn $3,500 in profit.
All Reputable Contractors Are Licensed, Bonded, and Insured: Whether you work with a preferred contractor or an independent contractor, you should be dealing with a licensed, bonded, and insured professional dedicated to repairing your home.
All Reputable Contractors Effectively Restore your Property to Pre-Loss Condition: Both preferred contractors and independent contractors should be entirely capable of restoring your property to pre-loss condition. Insurance companies shouldn’t be using low-quality contractors to perform shoddy repairs.
Get an Estimate from the Independent Contractor to Verify Costs Fit Your Claim: Sometimes, an independent contractor can’t repair your property as cheaply as a larger contractor. The preferred contractor may be a larger firm that can buy materials in bulk, for example, and undercut smaller competitors. Before working with an independent contractor, make sure their costs are within reach of your insurer’s payout. Otherwise, you could pay for repairs out of pocket.
Consider Hiring A Public Adjuster To Help Manage Your Claim
Major insurance claims are hard work. You need to decide on the right contractor. You need to make sure the insurance covers all damage to your property and home. You need to make sure you receive fair compensation for your loss.
Juggling all of these things can be a hassle.
That’s why many homeowners hire public adjusters to help manage an insurance claim for property damage.
A public adjuster is not a repair contractor. Public adjusters are state licensed insurance claim professionals that assist policyholders. The public adjuster manages your claim from start to finish. The public adjuster advocates for your best interests against the insurance company’s best interests. They analyze your claim and insurance policy, help oversee repairs, and ensure you receive every penny owed to you.
Bottom Line On Working With Contractors For Insurance Claim Repairs
You shouldn’t feel like your insurance company is bullying you into using a specific contractor to repair your home.
You have the right to choose any contractor you like to repair your home. Sometimes, choosing the preferred contractor is the smart choice. In other cases, it’s better choosing an independent contractor for your claim.
Research contractors in your area to ensure you’re getting the best contractor for your project. Or, if you’re feeling overwhelmed, talk to a public adjuster to see how they can help expertly manage your claim.
Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.
