The formulas for equipment use are available to you. Ask to see drying logs or charts that monitor the drying progress. If you are paying the bill, ask to see how it progressed if something looks out of line. Check the standards and adjust their bills accordingly. Then remember who they are the next time a water-loss case comes across your desk.

More Cause for Concern

There is another circumstance adjusters should be concerned with when billings run more than four days. When a water loss occurs over a long period of time, it takes a proportionately longer time to dry the affected area. In this situation, rates should be calculated using a weekly rate, not a daily rate.

Simply put, billing for a daily rate over the course of five days is not acceptable. There are even some people out there who will bill clients more on a single job than the cost of the equipment being used. I have worked both sides of this fence, and a legitimate claim can be made by the insurance company that they have purchased the equipment. Why not take possession and sell it for salvage once the job is over? It's a rhetorical question, but bears some serious consideration. Check with equipment suppliers to verify how much the equipment costs.

Also, I have been surprised many times when reviewing bills on large projects to see line-item costs actually adjusted up from the line-item costs in estimating systems. Logic says that the greater the volume of a task to complete, the greater overall efficiencies (labor and material) can be had. Painting an entire building can be done far more efficiently than painting just one wall. Set-up time can be shortened, and prep time for mask and cover can be lessened. So why do some companies increase their pricing figures instead of reducing them? Be suspicious of companies who operate in this way. Due to increased efficiencies, unit pricing theoretically should go down, not up. Ask questions! It defies logic and should be questioned whenever it is found.

The easiest way to catch changes in unit pricing is to use the features found in Xactimate's software, which highlights adjustments to line-item prices by changing the color of the line from black to green. Re-entering the information and noting where prices do not match your system is another option, but it is labor intensive and time consuming. To best utilize this process, have the estimate data transferred to your system. This will immediately note any changes for you.

Also, use the well known rules about how to properly estimate a job. In insurance restoration, it is assumed that the more detailed the estimate, the better. The greater the detail, the better the knowledge you have about what actually is going to be done on the project. Large, lump-sum numbers should be avoided. Even trade summaries are the minimum to be expected. Some states require estimates in writing before any work can begin. Check your jurisdiction to find out.

Softening Up

Another form of deceit can be found in soft fraud. I'm aware of a contractor who buys three common types and colors of carpet, and only offers those choices for replacement carpet on their jobs. This reduces their overall costs because they are purchasing in volume.

The appropriate method is to offer many different choices for customers to choose from, just as they would have if they had gone to a carpet store. Some require Independent Testing and Evaluation Laboratories (ITEL) to verify the quality of what was there prior to the loss. Many reputable companies send customers to carpet stores for like kind and quality replacement. Ask the customer about their experiences and beware of those companies who do not operate in this manner.

There also is a more fraudulent practice referred to as “substitution” being used by some contractors. Here, the company solicits multiple bids for a project, submits the higher of the two or three estimates received, then once the project begins, they use the less-expensive subcontractor and pocket the difference. On large projects, this can be a significant amount of money.

How can you put a stop to this kind of activity? Stop by and see the job in progress to verify that the subcontractor who won the bid is the same company that is working the job. If you cannot do so, have the customer tell you who it was. On large projects, get a notarized billing from each subcontractor whose bid was used to price the job. If they balk, start worrying. If they actually did the work, they will not care.

Another practice that has many variations involves a contractor offering cash to get customers to sign with them. Others offer to “eat” or absorb the deductible. With increasing deductibles that can equal up to one or two percent of the loss, this can mean a large out-of-pocket expense for the customer. Who pays for this in the end? Ultimately, the customer does in terms of lesser quality work, reductions in scope of repair, and so on. Either way, they pay for it and so do you. Ask the customer how the contractor was when signing the project. Were there any unwarranted incentives?

In the end, there are a number of ways to find out about a reputable contractor. Ask for references, check if they are members of the Better Business Bureau, and ask if they are on any preferred contractor programs. You also should find out how they get their referrals, check to see if they do business with several different companies, ask the adjusters if they are aware of any concerns about their estimating practices, and find out if they bill in accordance with standardized professional governing agencies.

Most importantly, trust your instincts. If something walks like a duck, talks like a duck, and acts like a duck, it's probably a duck.

Matt Everett is the owner and operator of two restoration contracting firms in Wisconsin and owns Everett Associates, a property damage expert consulting firm. He spent 10 years as a claim adjuster, branch manager, and assistant vice president in both the staff and independent claim environments.