OK – actually it is for someone who’s house burned. The insurance company is paying for it though… Apparently we get draws as the various phases of the house are completed – just like when you get a loan from the bank and you get draws. Well, maybe not. I’m thinking the insurance company will give us the regular jerk around and give us the draws 2 months after the particular phase of work is done….
Anyone have any first hand expierence? I’m thinking that maybe we have a good chance of getting this job… since I think the HO’s want us – if that matters… I was thinking I should maybe put a draw schedule with time limits in the bid. Thoughts?
Replies
Never been in your situation but others here have said the following.
1 you work for the HO not the insurance company
2 Due to #1 the HO is responsable for any money that is short from the insurance cheque.
3 heed the warnings and advise from others here.
Did one three years ago. A 1930's cottage had a stove regulator short (or something like that) and we had to gut and rebuild the whole house. Insurance adjuster was very fair, understood that we had to upgrade plumbing, electrical, insulation, windows to be in compliance with city code.
Checks went to mortgage company, mortgage company issued draws to owner. My contract was with owner. She got a complete updated new house for $15,000 out of pocket.
Next insurance project was with the same insurer, different adjuster, and I vowed I would never do another insurance job again.
Bruce
OK - you gave me the good - now how about the bad? You can summarize.
BTW - this house is a total loss. After looking at it we even decided to take out the concrete including the foundation (it's a slab house), driveway and front sidewalk.
Might as well add something to your bid and to your eventual contract with the owner that payments should be made within 7 days of draw request. or something to that effectTFB (Bill)
1. Make sure the home owner has the money up front
2. Have a good conract and be thorogh don't forget any detail's no matter how small they are. small details come out of your pocket.
3. If you are dealing with the insurance company the check usually comes to the HO and the contractor that the HO has chosen.
4. Sometimes before the check is sent or final payment comes through you could get a call from an independent contractor that will wan't to negotiate the final bill. Be tough or they will nickle and dime you.
Hope this helps we do a lot of insurance work and have come through pretty good on most jubs but some insurances can be PITA when it comes to the final cost.
Thanks much.
You said: >> 4. Sometimes before the check is sent or final payment comes through you could get a call from an independent contractor that will wan't to negotiate the final bill. Be tough or they will nickle and dime you. <<
That confuses me. This is fixed price bid to build an entire house, not a time and material, cost plus or any other kind of deal. No part of the original structure will be reused and the utilities (gas, water, and sewer) are at the curb out front. Not sure how they could nickle and dime us, other than trying to get us to give the HO things which weren't intended to be included. We have a ~2 page double column bulleted list set of specs that was from when the house was originally built (it was only 2 years old) and I intend to add another few pages to that.
Matt,
Normally the insurance company ponies up the amount of the entire loss, but the money has to go to the mortgage company, since they're the lien holder. They set the draw schedule, not the insurance company. At least this was my experience.
The mortgage company I dealt with was out of state and slow to inspect when they were called. That essentially stopped the money flow. Their draw checks were payable to the homeowner AND the contractor, and they fouled things up to the point that they were still mailing these large checks to the address of the vacant, burned out property.
At one point, the homeowner got a little unhappy with the contents settlement the insurance company was making, and she refused to endorse the dwelling repair draw check. One thing had absolutely nothing to do with the other.
Be prepared for rocks and shoals.
Greg
That's exactly the kind of thing I want to hear about. From my view, we put some kind of time limit on the draw schedule so that we can limit our exposure, and not act as a lending institution. For example once the house is dried in, as far as I'm concerned, it could sit for months awaiting a check to cover most of our work up to that point. I guess that stuff would be covered in the contract rather than in the bid.
Edited 11/7/2007 6:23 am ET by Matt
Confused, is what your mind does when the phone rings and on the other end is joe slashme who says I was wondering if your price for such and such isn't a little height could you possibly do it for say this amount and some times it can be repetitive calls about every aspect of your bill. Now that is after the job is completely done and everything has been ok'ed by the HO.because in some cases we have been done with the job before the final cheq.In one case the HO had moved back into the house. The insurance companies wants to get the most work for the least amount of money. Insurance companies will also in some cases only pay x amount for certain things.Which amounts to pennys on the dollar. Even if you have a steadfast list of things that need to be done to return the home to the way it was before or better is their motto. Hence make sure you have the money upfront and available and don't forget their deductible because that could be asked for to start the permit process and cover your expenses up to date. Due to the cost to insurance companies in recent years they don't seem to be contractor friendly but there are exceptions to industry. hope this helps.
Thanks for the info on some additional info on pitfalls.
All good advice so far.
Once you get an agreed repair price with the insurance adjuster, for the most part, the adjuster is then out of the picture.
If the home had a mortgage (almost guaranteed if it was only 2 years old), normally the adjuster will pay the ACV or actual cash value amount (the depreciated amount of the loss) up front to the owner and the mortgage holder.
The mortgage company pays you in a draw schedule that you set up and they have to approve. If it is a local bank, usually this is much better than a far away mortgage company. You DEFINITELY want to explain to the homeowner that you will stop work repeatedly if you don't get your draws in a timely manner. The homeowner is the only one who can put pressure on the bank.
Once the work is complete, the insurance adjuster needs to be notified to do their inspection and then release the remaining money. This sometimes can take some time.
The good thing for you is that you know the money is there on a job like this.
carpenter in transition
Know someone who did this. First draw was spent on a new vehicle by the homeowner. Builder stuck with it. Upon completion of the basement rebuild, footers, and slab, owner wanted draw for next threshold--X% complete. Ins co said, no, it's only X/2% complete. No draw. No payment for contractor. He finally had to cut and run.
If you do it, watch the money CAREFULLY.
gotcha!!!