What You Should Know about Insurance Related Storm Damage Work

The last few years greater Atlanta has seen an abnormal increase in frequency of storms containing large, damaging hail. Our city has been increasingly set upon by hundreds of “storm chasers” trying to cash in as companies from all over the country set up temporary shops after a storm. Some arrive with a crew of over 20 “door knockers” to canvass targeted neighborhoods. Also, due to the collapse of new construction activity, unemployed construction workers who have never been in roofing have set up new local roofing companies to wait for a storm and get in on the perceived “easy insurance money.” Storm chasers are sophisticated, and the inducement to get a “free roof” is enticing. Therefore, before explaining what you should do if you suspect your home was damaged by a storm it would be prudent to share with you some precautions you should consider.


 
 
Contact Echols Roofing
 
 
 
This is a photo of “hail damage” made by the storm chaser. This individual went to the home while owner was away, caused the roof injury, and then had homeowner call adjuster out. Echols was called in to consult with homeowner.  
roofing_hail damage
 

 

 
Here is Legitimate Hail Damage

The Warnings

The news departments of all major Atlanta networks have featured repeated stories of the risks of doing business with companies that knock on your door:

•One prominent roofing company closed up shop, declared bankruptcy and left the state with the insurance payments of over 6000 homeowners. Those roofs were never installed – the money was in Caribbean banks. The government is pursuing charges, but I would not expect the homeowners to ever see their money. The father of a girl in my daughter’s karate class was one of the victims. The insurance company paid him the initial roof claim deposit less the deductible. After signing a contract to replace the roof with the company that came through his neighborhood soliciting business, he gave them the insurance check as a deposit on the roof. This was required by the terms of their agreement. The roof never got put on and his insurance money is gone. The insurance company will not pay make the final payment until the roof is installed, but now he cannot afford to pay for the roof. The insurance company has fulfilled its legal obligations and he was hustled out of the money. He and his wife are hourly workers and they struggle. He will never recover the $6000. A few storm chasers have installed the roofs they were contracted to install then returned to their home state – but without paying for the shingles on hundreds of homes. In such cases, Georgia law, as in most states, allows the supplier to lien the homeowner’s property to recover the cost of materials, even though the homeowner paid the roofing company. (A friend of mine who owns a roofing materials supply business placed liens on hundreds of homes in metro-Atlanta. The homeowners have no course of recovery other than to pay twice or go through the greater expense of locating and suing the contractor. Realistically, the storm chaser is long gone.) Storm chasers generally hire crews for the storm incident. Quality control can be poor due to the crew turn-over. If they install the roof, no matter how poorly, they have broken no law. At Echols, we have had to tell a few homeowners that called after having leaks and being unable to locate the storm chasers that installed their roof, “I am sorry. But the roof is put on so poorly that it cannot be repaired. This roof must be removed and replaced.” Once the public became more informed and thus more reluctant to trade with solicitors that knocked on their door, two changes in method were employed: solicitous “cold call” phone calls were used to set up appointments for free inspections, and out of state “chasers” approached local companies with offers to let them use the local company’s letterhead, contracts and yard signs so they could claim to be from a “reputable, local company in Atlanta for many years.” The local roofing contractors that agree to this arrangement are paid a percent of the business generated. The professional storm chasers are free to leave the state afterwards and the local contractor is left to decide what to do with any calls into his office for warranty service on roofs his company has never seen. For some, the profits are too appealing to turn the offer down. This is legal and it does not mean that the labor warranties will not be honored, but it does put another layer of potential problems into the roofs going on these homes.

•Not every company that canvasses for storm work is disreputable. Some are true locals that have picked up and adopted this method of doing business. I know of some that are ambitious, tech savvy and responsible. That do legitimate business; but even inside the industry I know of no way to inform a homeowner of how to be sure. Therefore we present to you,

A Few Prudent Suggestions

  • Do not sign a paper promising to give any company your roofing business if they will return and meet with your adjuster. If you have legitimate damage your adjuster will see it, and any company can meet with an adjuster if it is necessary. Many homeowners have been presented with bills, harassed and threatened with legal action by storm chasers that had them sign such papers after offering them a free inspection, and then, after reflection, chose to use a company they were more familiar with for the roof. They begin by soliciting you to offer friendly help inspecting your roof for free, from that point on, everything they do seems to get the two of you more entangled. If they say they can’t work with you unless you sign a letter making them your representative with the insurer, tell them “Goodbye” and make your own calls to a known local roofing company. Do not sign any contract that has no definite contract price. Many storm chasers contracts contain the clause, “Price to be determined.” The signing of a contract should wait until the price has been determined. That is what the contract is for. All contracts should also have additional set prices to replace rotted decking, should that be necessary once the roof is removed, which costs will not be covered by insurance.
  • Do not sign contracts with the clause, “Scope of work to be determined.” Clearly defining scope of work is also what a contract is for. (Read more on this below.) Do not pay for any portion of the work until the job is completed, your grounds are clean and you are satisfied; and require a material lien release when you pay. (The one exception to ‘no money until completion’ may be when the job is particularly large. Even at Echols Roofing, Siding & Home

Improvements on any project over $20,000.00 we require a deposit of half once all materials have been delivered and the crew has begun work; not because we need the money but because that is too much money to be putting out of the company to the trust of any one customer. Just as the customers may not know the integrity of the company, the company almost never knows anything about the customer either. Once the dollar amount gets really large, there needs to be assurances in place for both parties. Of course, if the requirement to receive that deposit, as in the case with Echols, is that the materials be delivered and the men working there is no chance the company is going to take the money and run. They are already working and the materials have been delivered before anything is paid. On smaller jobs, no deposit is needed; the financial risk to the company is not that great if the customer defaults.)

Companies that pursue storm damage claims as a way of doing business want you to sign papers as soon as possible authorizing them to be your sole agent in the replacement of your roof. This is good business from their point of view and not necessarily an attempt to do anything improper; but YOU are in the driver seat. You can say, “No. I’ll wait until I have all of the information and details clearly spelled out. I will talk to other roofer’s to seek their advice as well. Then I will make my decision.” This is good business from your point of view.

Storm Damage or Not, Be Prepared

Let me explain how insurance recovery and storm chasers work: Insurance companies set their pricing to compensate homeowners for loss by the lower averages paid for similar work in the area where the loss occurred. What insurance companies pay for damaged roofs varies widely by region. Obviously the better companies in any region are rarely going to be priced at the lower end for the area they service. The better companies are not going to use the cheapest labor or the least expensive materials. The companies that are set up to do storm work know that their appeal is in telling the customer “We will do the work for whatever the insurance company pays. This will not cost you anything out of pocket.” In order to do that, they have to use roofing crews that agree to work for those rates, buy felts and other materials that are the least expensive and confine their scope of work to absolutely nothing more than the insurance company is paying for. They let the insurer determine both what is to be done and what will be paid for it. That is why often the papers they ask homeowners to sign stipulate “Scope of work to be determined” and “Price to be determined.” That is all left to the insurer. The insurers interest is to spend the least possible.

This seems fine, and often is, however, good roofing practice may require that while the existing roof is being removed and replaced other things, things very appropriately not covered by insurance, should be done. Chimney flashing, valley liners, improved ventilation, even rotted decking replaced are all part of good roofing practice and none may be included. (An Echols roof consultant inspected one roof with rotted wood left around the chimney. At the homeowners request we were attempting to arbitrate various issues between the company that installed the roof and the homeowner. The storm work company that replaced the roof explained that the insurer was not paying for rotted wood to be replaced so it was left. Of course, hail damage cannot result in wood rot in the few weeks it takes to get a settlement and replace the roof, this had to be preexisting, so, this was a proper exclusion as part of the insurance settlement. The homeowner refused to give the final settlement check to the roofer and the roofer refused to do this additional work as he was told he would not be paid for it per his promise, “This will not cost you anything out of pocket.”. I instructed my employee to tell them both there were no victims in this transaction, we would not be sending a bill for our inspection and opinion, and to leave.) The homeowner told the roofer ahead of time that he did not want to pay anything since it was an insurance claim and the roofer complied. Later, trouble resulted. The point is this: when a homeowner takes the mindset, “I pay insurance for this and I’m not going to pay a dime for this work above my deductible” he or she is leaving a great deal of room to be the cause of their own problems later. A roof that is put on according to industry best practices can rarely be put on for what is paid by insurers. They are only responsible to replace what was damaged, nothing more. If a roofer that is reputable tells you, “These things need to be done while your roof is being replaced,” consider well whether it serves your interests to spend the additional ten or twenty percent to get a good roof while the insurance company is paying for the majority of the work.

I offer My Personal Conclusions Based on being ”Inside” the Industry

Many companies that specialize in doing storm related work are responsible and ethical within the restrictions inherent in the way they do business. Many homeowners have had good and satisfying experiences with storm work companies; many have not. The same is true of all non-storm chaser companies and their customers. In my opinion, and it is only my opinion, there is risk in any exchange of goods and services between two parties that do not know each other – and even when they think they do! When you do business with a stranger that solicits you first, rather than you initiating the contact to secure services you may need, no matter the nature of the work, the odds of a favorable outcome of necessity decrease. I think it wise, if you suspect your home may have sustained damage, that you and you alone initiate contact with known local companies for pricing and opinions.