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When Your Insurance Company Gives You a List of “Approved Contractors”

• February 1, 2021

“No one can slave for two masters.”

In the contracting world, we serve the interests of our customers. At least for most of us that is the case. But for some contractors there are two masters.   

Let me explain. When a homeowner has damage to an insured piece of property, often the insurance company will “recommend” or provide an “approved” list of contractors.  When this happens, the homeowner is usually very appreciative and thankful to the insurance company that they are being so helpful. If we examine this scenario carefully however, a homeowner will recognize that this is a situation where the contractor now serves more than one master.

Would you agree that contractors that are “approved” or “recommended” by the insurance agent or carrier are probably respected by the insurance agent?  After all, would you recommend a contractor that you did not like or respect?  For a contractor to gain the admiration and respect of an insurance agent or carrier though, they must in some way serve the same interests as the insurance carrier.  How could the contractor then serve only the interests of the homeowner? The contractor has two masters.

I know many contractors that have grown their entire business around just a few insurance agents and their recommendations.  These contractors are eager to agree to the conditions and philosophy of the insurance carriers that help them to provide food for their own families.  It is a much easier way to establish a business when they work for an agency that frequently encounters a need for their services, than to find and work for homeowners who may encounter the need once or twice in their lifetime.

Insurance companies are paying for the work to be performed to their insureds’ homes, and they do not want to pay any more than they have to by contract.  I wouldn’t, and neither would you. When a dispute arises over what should be paid for in a claim and what should not, who will the contractor side with? With the homeowner that they will perhaps see once in their life? Or with the insurance company that is providing them with a steady stream of work? Will they not choose the insurance company over the homeowner as their primary “master”?

As a homeowner that has paid their premiums and deductible perhaps for years without a claim, do you want the insurance company wholly deciding what they will and won’t pay for?  We see this in healthcare as well.  Doctors are constantly having to justify and modify their treatment plans for patients based on what the insurance companies will and will not pay for.  If they do not prescribe to the requirements of the carriers, they will lose their patients because the carriers will not consider them “in-network”.

Other possibilities arise when contractors are being “recommended” by agents.  Often, homeowners trust their agents to be honest and have their best interests at heart; many times they have known the agent for years.  Homeowners usually do not question the integrity of their agents.  However, there are those out there that strike deals with contractors for leads to claims in exchange for a return on the profit of the job, or for gifts.  I would like to believe this is rare. Unfortunately, circumstantial evidence that I have seen leads me to believe that it is more common than can be proven.  Contractors and agents that have chosen to work in this way have developed many ways of hiding their activity.

If you want a contractor that serves you, the recommendation should be. . . find your own contractor.  Use the internet, online reviews, and content to drive your decision on which contractor to hire.  Don’t trust the motivation of someone who is footing the bill to have your best interests in mind, even if you have known them for a long time and consider them a friend that will do the “right” thing.  

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