|
Reconstruction Man
124 Posts |
 Posted - 01/27/2004 : 12:45:16
|
November 14, 2003
Texas Department of Insurance
Complaints Resolutions 111-1A
P.O. Box 149091
Austin, Texas 78714-9091
RE: Document ID #: 584299
Complainant: Roger Poe, Contractor
[Wesalco, Texas Hail / Wind Storm]
Date of Loss 5-29-2003
We are in receipt of your follow up letter dated November 7, 2003 and received in our office on November 7, 2003 regarding the concerns of Roger Poe.
As stated in our response to Mr. Poe dated October 23, 2002, our estimating practices include the payment of overhead and profit when it is appropriate, based on the loss. We do not automatically add the same standard overhead and profit component to each and every loss. Each loss is estimated based on its own merits.
Some losses can be completed by a single tradesman (including a tradesman capable of handling multiple trades), some losses require a specialty contractor (such as roofing flooring, siding, etc.), and some losses require a general contractor.
In the past, our estimating practice on roof replacements involving the need for a specialty contractor (roofer) was to base our estimate amount on the market price – what a roofing contractor in the market would charge – including all necessary components (material, labor, overhead and profit, etc.). By writing an estimate this way, the overhead head and profit component is already included in the unit pricing, and to add any additional amount would be unnecessary.
If the loss was more complex, indicating the need for a general contractor, the necessary additional amount for overhead and profit would be added to the estimate, but not to the roofing components, as it has already been included in the unit cost of those components. All of the estimates discussed in Mr. Poe’s letter were prepared using this philosophy.
__________
Well now…can any one guess which insurer wrote this?
Clever contradictory plain view reverse logic is summed up in the next to last sentence…look carefully because it is somewhat difficult to spot…Particularly interesting is 90% of the initial rational is fairly accurate. The weight of that 90%
makes the estimating philosophy logic seem…to the general public...legitimate.
“If the loss were more complex, indicating the need for a general contractor, the necessary additional amount for overhead and profit would be added to the estimate,
[Here comes the reversal…], but not to the roofing components, as “it” has already been included in the unit costs of those components.
RM: Now class, roofing contractor O+P unit cost factors apply to who?
All: The roofing contractor.
RM: So does the “necessary additional amount” G.C. [10/10] O+P cost factors get paid from the roofing contractor’s O+P...?
All: The G.C. O+P is separate from the Roofing contractor O+P. The estimate sub-total should show G.C. separately as a true 10/10 subtotal of the whole estimates value.
RM: Would anyone like to sum this up?
RM: Yes Jiff…
Jiff: The roofing OP is line itemed for the Roofing Contractor and G.C. OP is line itemed for the G.C. estimate total. The G.C. OP line items accounts for all of the sub-trades combined cost totals…removing the roofing trade costs, or any other sub-trades costs to establish a sound and fairly standard construction estimate does not make sense mathematically and would underestimateconstruction estimates and claim settlements!
RM: Excellent Jiff…Now then…what do we do if a clever insurer asks us to estimate that way?
B.G.: We tell them estimating that way is lying about estimate values and is not right and we will tell on them to policyholders, DOI’s and other important people.
RM: Very good...Now tomorrow we’re going to be discussing how to avoid formal appraisal processes…All who wear glasses, be sure to bring them…
|
|
How Insurer[s] Underpay Claims
Forum Locked
Topic Locked
