By Thom Okoneski, Attorney at Law

The storm has struck, the damage is done, and your contracting company has the ability and the desire to work in the insured storm damage market. You have carefully complied with all the solicitation, cancellation, rescission, disclosure, pre-lien notice, and other statutory and contractual matters that your wise legal counsel has educated you about. Your sales person has not promised to pay any deductible or to give away freebies. Your customer has a replacement cost insurance policy with “Insure-it-All,” and the damage is really noticeable to even the most “skeptical” insurance adjuster. Perfect—what could go wrong?

It starts like this:  Insure-it-All’s estimate and your estimate experience fundamental differences.  After several months, you finally get Insure-it-All to agree to a doable number (but only because they felt victorious from having removed the base service charges and the overhead and profit from the re-roofing portion of the work). During this period, you did a pretty good job of convincing your customer that you were not the one responsible for all the delays. You also mostly avoided being labeled as “one of those” contractors by Insure-it-All. Great-you’re still on track to have a successful project and a happy customer.

Then the next storm hits. Your customer doesn’t like the “match” for the siding, there’s lead paint on the friable asbestos shake siding hiding under the dented steel double 6”, the roof deck is made of planks spaced far enough apart to –well you get the picture. Your customer demands a house that looks good, and the regulators and inspectors demand that you follow all their regulations and codes-to the letter. You dutifully produce a revised estimate that turns out to be three times higher in cost than the initial estimate. At least you are smart enough to have the insured break all this bad news to Insure-it-All.  Right?

In a mood, Insure-it-All tells your customer to gather and send to it for consideration all the code sections, regulatory requirements, permits, letters from those in charge explaining why each code and regulation must be adhered to, remediation bids, manufacturer’s installation instructions, two competitive bids for each item, and your over-inflated estimate. Never mind that this will be the umpteenth time Insure-it-All will have seen this information (except your estimate). Your customer begs, really begs, you to help him gather all these items. Oh-and while you’re at it, would you please compose a blind cover letter for transmitting all this stuff to Insure-it-All?  That would be great because your customer is headed out on vacation for three weeks.  He promises to review the letter when he returns and if it looks good he’ll put it on his letterhead, sign it and send it all in or maybe change it a little and do the same.

True to his word, your customer returns from vacation. But, he simply sends the blind cover letter in (with all the other stuff) with a little note letting Insure-it-All know that he didn’t really write the transmittal letter, his contractor did. Also, that he might not agree with or even understand much of what he is supposedly transmitting on his own behalf.

You, Mr. or Ms. Contractor, are now in the path of the perfect storm. Insure-it-All is vindicated and emboldened because you are now indeed, “one-of-those” contractors.  In fact, you seem to be advocating on behalf of the insured and thus, must in fact be acting as a Public Adjuster. This behavior is prohibido (your customer learned this term while in Mexico on vacation). It is just as easy for Insure-it-All to make a complaint to the Minnesota Department of Labor and Industry (DOLI), as it is for them to call you to ask for an explanation regarding your “ghost-writing”.  So, Insure-it-All chooses the DOLI route because it has the added effect of teaching you (at private school rates) not to mess with Insure-it-All. Not now. Not in the future.

Almost none of the above is tongue in cheek. The important facts are from a recent matter that is not fully resolved at this time. There are perfectly legal ways and methods of dealing with customers and insurers that can help you reduce the chances of becoming pen pals (or worse) with DOLI.  Better yet, these same methods work to ensure your customer’s insurance contract is fully honored and the proceeds available so you can be paid for your work. A strong relationship with an Attorney, experienced in the art of business counseling and risk management in the insured storm damage environment, is essential to your financial and mental health.

Is it really possible to get investigated and busted for writing a cover letter? Stay tuned…

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