The post “What is a Supplemental Claim? Is There an Accepted Insurance Industry Definition and Meaning to the Term?” indicated that the topic of supplemental claims will be addressed in greater detail. After researching the topic, the primary reasons why roofing and insurance restoration company supplemental claims are claimed to be necessary can be summarized as follows:
- They are a normal and necessary part of the insurance claim process, especially for larger restoration projects. The initial insurance adjuster estimate often misses required items.
- Supplements can cover things like additional damage discovered during repairs, building code requirements, detaching/resetting items to complete work, and replacement of components like flashing overlooked or not agreed to by the insurance adjuster.
- Contractors routinely submit documentation and justification to the insurance company for the additional funds after the initial claim has been paid. This is similar to “change orders,” which are often done on non-insurance construction projects.
- Supplements help ensure the property owner has sufficient funds to restore their property to pre-loss condition without having to pay out of pocket for items the insurance should cover.
- Contractors experienced in insurance restoration are familiar with the supplement claim process and work with insurance company adjusters to obtain the documentation needed so that approval of repairs can be completed properly, without litigation and without the policyholder having to hire others for professional help.
- Material Cost Increases: The cost of materials can fluctuate, leading to higher expenses than initially estimated.
- Labor Cost Increases: Similarly, unexpected increases in labor costs can justify the need for additional funds.
- Reputable contractors handle the supplement claim process correctly, either in-house or through supplement estimating companies. This allows them to maximize their revenue and thereby allows the construction to be done legally in compliance with Code, OSHA and insurance requirements. It affords them enough money to properly repair or replace to manufacturer specifications.
Estimate Experts Helping Roofers Get Paid Supplements by Insurance Companies, is a video sponsored by Dmitry Lipinskiy about a supplement preparation company, Estimate Experts. I have favorably noted Lipinskiy in Roofing Educator Dmitry Lipinskiy Calling For Integrity In The Roofing Business. My impression of Dmitry is that he is intelligent, thoughtful, fair and balanced, speaks honestly from his view and that he “appears very well presented and has a lot of content, and some of it is very controversial because Dmitry is not afraid to state his opinion publicly.”
The video begins by explaining the concept of insurance claim supplements. It explains that these are additional requests for funds made after the initial insurance claim has been filed. The video explains that supplements are necessary when the actual cost of repairs exceeds the initial estimate due to unforeseen damages or other factors. One of the crucial points highlighted is the importance of providing accurate and detailed initial estimates. An accurate initial estimate sets the foundation for the entire claims process. It helps in identifying potential areas where supplements might be needed later. Contractors are encouraged to be meticulous during the initial inspection and document everything thoroughly.
The various roles of Estimate Experts in helping roofers get paid supplements are explained. The company has professionals with the experience and knowledge to identify damages that may be overlooked initially. They understand the intricacies of insurance policies and know how to communicate effectively with insurance adjusters. The video emphasizes the value of hiring or consulting with expert estimators to ensure that all damages are accounted for and adequately documented.
Effective communication with insurance company adjusters is another critical aspect covered in the video. The video explains that insurance adjusters are the gatekeepers of insurance payouts, and building a good rapport with them can significantly influence the outcome of a claim. Contractors are advised to present their case clearly and professionally, providing all necessary documentation and evidence to support their supplement requests.
The video discusses several common challenges contractors face when filing supplements. These include pushback from insurance companies, delays in approval, and discrepancies between the contractor’s estimate and the insurance adjuster’s assessment. The video provides strategies for overcoming these challenges, such as being persistent, keeping detailed records, and knowing when to escalate the matter to higher authorities within the insurance company. Estimate Experts can do these activities for the contractor or roofer.
A second video, Why Roofers Supplement Insurance Companies, is a more comprehensive explanation of insurance claim supplements, the need for them, and how the process works. It again claims that supplemental claims are additional requests for funds made after the initial claim has been processed. These supplements become necessary when the actual repair costs exceed the original estimate due to unforeseen damages, changes in building codes, or other factors. The goal is to ensure that all necessary repairs are adequately covered by the insurance payout.
The video features Dmitry Lipinskiy interviewing Jordan Edwards, CEO of Contractor Supplement Solutions (CSS), a company that helps roofing contractors get additional funds from insurance companies on property damage claims. Edwards explains that CSS started organically from his own experience as a roofer. He realized his company was leaving money on the table by not properly supplementing insurance claims to account for missed items like nails, felt paper, square footage discrepancies, etc. He found that these could add up to hundreds of thousands in lost revenue per year.
CSS acts as an outsourced supplementing department for roofing companies. They review the insurance company adjusters’ estimates and identify missed items that should be included for proper repair. Then, they work with the insurance company to get those additional funds approved and paid to the contractor. The CSS office has 19 employees, including estimators, data entry, and “deal managers” who follow up with insurance companies. Each team of 6 handles claims for around 30 contractor clients.
In response to questions that Lipinskiy asks about trends within insurance companies, Jordan notes field adjusters, especially independent adjusters, can be the hardest to deal with as they may rush to close claims without fully scoping damage. Desk adjusters and in-house salaried adjusters are often easier to work with. From my experience, the trend is that independent field adjusters often lack the authority to fully adjust residential claims or are required to adjust to set parameters set by others higher in claims management. Edwards’ view seems accurate.
As for contractors doing supplements in-house versus outsourcing, Edwards says it depends on company size and volume. A small roofing company handling 10-15 claims a year may be able to handle it themselves but will make more money scaling with an outsourced service. Supplementing is time-consuming, taking 3-4 hours a day, and requires different skills than selling to homeowners and overseeing the actual construction.
One of the key topics Lipinskiy and Edwards delve into is the ethics surrounding insurance claim supplements submitted by roofing contractors. Their aim seemed to be an attempt to clear up misconceptions and objections voiced by others in the insurance industry and by some public adjusters. They explain the legitimate role supplements play in the claims process. Edwards emphasizes that his company is not engaging in any unethical “negotiating” with insurance companies when submitting supplements on behalf of roofers. Rather, they are simply ensuring that the proper scope of work is accounted for and paid for in accordance with state and local requirements. The goal is to make sure nothing gets missed in the initial adjuster estimate that would prevent the property from being properly repaired back to pre-loss condition.
Lipinskiy points out that contractors should never feel bad about getting paid for the work they are rightfully owed to fully restore the property for the homeowner. The insurance company has a legal obligation to indemnify the insured and pay for a complete repair, but adjusters often miss items or try to underpay on claims. Lipinskiy stresses that roofing contractors need to stand up for themselves and learn the “rules of the game” when it comes to insurance work. While most roofers are experts at their craft, they may not be as well-versed in the intricacies of insurance policies and the claims process. This knowledge gap can lead to them getting taken advantage of by savvy adjusters and leaving significant money on the table.
For example, an adjuster may only approve replacing half of a roof when the entire roof actually needs to be replaced due to the extent and location of damage. Or they may leave out required items like drip edge, ice and water shield, or adequate waste factor in their estimate. This puts the homeowner in a difficult position if the full scope is not covered, as they may not be able to afford to pay the difference out of pocket.
As Edwards explains, it is the roofing contractor’s job to be an advocate for the homeowner throughout the claims process. The contractor has a professional duty to thoroughly inspect the damage, determine the necessary scope of repairs, and make sure the insurance company pays for all required work. If the contractor just accepts the initial adjuster estimate without question, they would be doing a disservice to the homeowner.
Some roofers mistakenly see the supplement process as being “greedy” or taking advantage of insurance companies. However, Lipinskiy argues it is actually the opposite – insurance companies are often the ones being greedy by intentionally shorting contractors on claims payments and making millions in the process.
The video notes that insurers are notorious for trying to minimize payouts and boost their own profits by underpaying claims. This is why the supplement process exists: To give contractors a mechanism to push back and demand fair compensation for their work. As Edwards points out, supplementing is not about “sticking it” to the insurance company but simply about getting paid the correct amount owed under the homeowner’s policy. By educating themselves on proper estimating practices, supplement procedures, and insurance policy language, roofers can level the playing field and ensure they are compensated fairly for their work. This allows them to maximize profitability while still maintaining integrity and doing right by the customer.
Edwards finally notes that supplementing is not about being adversarial with insurance companies but about working collaboratively to reach an agreement on the proper scope and pricing for repairs. His team aims to build positive working relationships with adjusters and carriers. At the end of the day, everyone should be working towards the same goal – restoring the property to pre-loss condition and making the homeowner whole.
Some of my readers may be wondering why I am researching and writing on this topic in light of the fact that I think that the term “supplemental claim” is misleading and furthers bad faith and inaccurate adjustment. There are two reasons. One is that an audience participant at a recent P.L.A.N. appraisal course last week in New Orleans explained how property insurance claims departments now have dedicated staff dealing with nothing other than supplemental claims. The second reason is that I get an earful from insurance company attorneys and their claims managers about the wrongfulness of supplemental claims (They always complain to me about reasons to Pay Up!). Yet, nobody is writing or explaining this topic about “supplemental claims” in greater detail. At least Lipinskiy published videos about this important and overlooked topic of claims adjustment.
Is there a property insurance claims elephant in the room when it comes to this topic? I will explore and expand upon the numerous criticisms of “supplemental claims” in tomorrow’s post.
Thought For The Day
Leaders who fail to address the elephant in the room are simply avoiding the tough conversations that drive real progress.
—Simon Sinek
