Desperate for any advice re: house fire (1 Viewer)

Back in April,  my family and i had a house fire. We chose a fire resoration contractor and, long story short, the company went under after about 40% of the repairs were made. Fortunately,  they only got one draw from the bank as payment, and I'm confident they at least satisfied  that. Here's the problems:

1. He sent a bill for the repairs done and they are about 20k more than what they are paid thus far.

2. The insurance company had been little help. 'We are in meetings about this. This is something we haven't dealt with before. Etc. Etc'.

3. The mortgage company is basically putting everything on the insurance company.

I'm not a contractor.  I can recognize some of the line items that were done. Some I'm sceptical about. A lawyer isn't in the cards. I started a new career last year and, even though I'm guaranteed a much better salary after my schooling is complete next year, I'm making much less now. I just need to find out who might be able to help grease the wheels a bit. The insurance company is only paying for housing for a few more months and after that we'rescrewed.

Do you have a contract with the restoration contractor?  I assume you did and the contractor failed to complete the agreement.  Get a new contractor (at least three quotes) to give you an estimate to complete the job.  Only pay Contractor A what his total quote was minus what the new contractor estimates.  At least that is how I would approach it.  

No advice. Just want to say I'm sorry you're going through this and wish you nothing but the best. 

If you haven't done so yet, I would immediately photo document the exact condition of the house in order to document exactly what was and wasn't done.

And I agree with Megaton, get quotes from 3 new contractors and ask them each to look at the itemized bill and confirm which items have been completed and which items have not to the best of their ability. Hopefully there will be some consensus on what has and hasn't been done along with what needs to be done.

ETA: I would also call the insurance company and let them know exactly what you're going to do and that you're expecting that they'll pay the newly selected contractor based on their estimate and their assessment of what is left to be done. It's total garbage that the insurance company hasn't re-sent an adjustor to verify what the previous contractor performed. If the previous contractor is lying about the work done, that's insurance fraud. If they're not, then the insurance company needs to pay up. It's not your job to verify that, it's the insurance company's IMO. They have the experts, not you.

How long was the reconstruction project supposed to last?

Deranged Hermit said:

Back in April,  my family and i had a house fire. We chose a fire resoration contractor and, long story short, the company went under after about 40% of the repairs were made. Fortunately,  they only got one draw from the bank as payment, and I'm confident they at least satisfied  that. Here's the problems:

1. He sent a bill for the repairs done and they are about 20k more than what they are paid thus far.

2. The insurance company had been little help. 'We are in meetings about this. This is something we haven't dealt with before. Etc. Etc'.

3. The mortgage company is basically putting everything on the insurance company.

I'm not a contractor.  I can recognize some of the line items that were done. Some I'm sceptical about. A lawyer isn't in the cards. I started a new career last year and, even though I'm guaranteed a much better salary after my schooling is complete next year, I'm making much less now. I just need to find out who might be able to help grease the wheels a bit. The insurance company is only paying for housing for a few more months and after that we'rescrewed.

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What percentage of work was the first draw supposed to cover?

ChiefD said:

What percentage of work was the first draw supposed to cover?

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33%. Next draw at 50%. Apparently this is standard as all the contractors we spoke with acknowledged they were ok with it.

EYLive said:

How long was the reconstruction project supposed to last?

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No one would give a hard estimate. Just a broad 9-12 months.

Deranged Hermit said:

No one would give a hard estimate. Just a broad 9-12 months.

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Geez. Do you have a broker than handles your homeowners insurance or do you deal with the carrier directly? If you have a broker, I would request a recommendation of contractors that they have a working relationship with and have them push to expedite the process if possible.

Deranged Hermit said:

Back in April,  my family and i had a house fire. We chose a fire resoration contractor and, long story short, the company went under after about 40% of the repairs were made. Fortunately,  they only got one draw from the bank as payment, and I'm confident they at least satisfied  that. Here's the problems:

1. He sent a bill for the repairs done and they are about 20k more than what they are paid thus far.

2. The insurance company had been little help. 'We are in meetings about this. This is something we haven't dealt with before. Etc. Etc'.

3. The mortgage company is basically putting everything on the insurance company.

I'm not a contractor.  I can recognize some of the line items that were done. Some I'm sceptical about. A lawyer isn't in the cards. I started a new career last year and, even though I'm guaranteed a much better salary after my schooling is complete next year, I'm making much less now. I just need to find out who might be able to help grease the wheels a bit. The insurance company is only paying for housing for a few more months and after that we'rescrewed.

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They are out of their mind if they think they should be paid for a half complete job.  Your insurance company should be telling them to pound sand and that they will be putting together a credit memo for cost associated with breach of contract.  Your insurance company should have an inspector that releases funds each time milestones are hit.  Have them send that person out to opine on the progress of the work.  You need to get a new contractor in their ASAP to give you a new budget.  Hopefully there is someone willing to pick up where they left off within spitting distance of what is left outstanding. 

Out of curiosity did the insurance company approve the contractor?  Remind them of that. 

I know a guy who likely can finish this for $5k. 

sbonomo said:

They are out of their mind if they think they should be paid for a half complete job.  Your insurance company should be telling them to pound sand and that they will be putting together a credit memo for cost associated with breach of contract.  Your insurance company should have an inspector that releases funds each time milestones are hit.  Have them send that person out to opine on the progress of the work.  You need to get a new contractor in their ASAP to give you a new budget.  Hopefully there is someone willing to pick up where they left off within spitting distance of what is left outstanding. 

Out of curiosity did the insurance company approve the contractor?  Remind them of that. 

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They were an approved contractor. 15+ years in business. Well, before Dec 30th anyway.

Deranged Hermit said:

They were an approved contractor. 15+ years in business. Well, before Dec 30th anyway.

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Honestly, it really sucks for them to lose out on work that they may or may not have already done but, there is not way that AR is any good.  Do not pay them. 

EYLive said:

Geez. Do you have a broker than handles your homeowners insurance or do you deal with the carrier directly? If you have a broker, I would request a recommendation of contractors that they have a working relationship with and have them push to expedite the process if possible.

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They were an approved contractor.  One of the workers that was working on our house has his own company,  and has offered to continue. I'm understandably scepticle.

Are you paying or is the insurance?

What kind of insurance company are we dealing with here? (Large national carrier? A smaller regional company? Some dopey budget carrier?) I can't imagine any company worth its salt would let this sort of issue drag on. 

When it comes to personal lines insurance, most carriers are selling like 95% the same thing. (Coverage and terms are pretty much the same with a few exceptions unless you're in the high end personal lines market) What sets the best companies apart is service, reputation and the ability to properly and promptly pay claims.(at least the ones their contracts mandate they pay)  Letting this situation get to this point (and making you front the money for it) is a very poor business decision on their part.  Most of them would be falling all over themselves to make you happy before they'd risk the hit to their reputation that you could deliver here.

TLEF316 said:

What kind of insurance company are we dealing with here? (Large national carrier? A smaller regional company? Some dopey budget carrier?) I can't imagine any company worth its salt would let this sort of issue drag on. 

When it comes to personal lines insurance, most carriers are selling like 95% the same thing. (Coverage and terms are pretty much the same with a few exceptions unless you're in the high end personal lines market) What sets the best companies apart is service, reputation and the ability to properly and promptly pay claims.(at least the ones their contracts mandates they pay)  Letting this situation get to this point (and making you front the money for it) is a very poor business decision on their part.  Most of them would be falling all over themselves to make you happy before they'd risk the hit to their reputation that you could deliver here.

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State Farm. Been a customer since I've been old enough to drive. Trust me, that part is what's really sticking in my craw. They got no problem taking that auto withdraw out every month.

belljr said:

Are you paying or is the insurance?

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Insurance 

Deranged Hermit said:

Insurance 

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Oh, ok. So this is more about you just wanting to get back into your house (rather than the $$ issue).

Not to minimize it, but that's a different problem. Is State Farm paying for you to live elsewhere while the work is being done?

State Farm is telling you that they've never dealt with a contractor going bankrupt before!? 



Tell them to go screw themselves and that you expect it resolved by end of week with work restarting by next week. They've absolutely dealt with this exact situation thousands of times. And if it's not resolved by end of week you're hiring another of those approved contractors and expect them to cover whatever gap there is.

Completely ridiculous.

Ugh but  I'm happy to hear that they were approved by State Farm. 

Squeaky wheel gets the grease. Youre going to need to call daily. 

I'm in the insurance restoration industry. I will ask around tomorrow at work to see what your options are. 

STEADYMOBBIN 22 said:

Ugh but  I'm happy to hear that they were approved by State Farm. 

Squeaky wheel gets the grease. Youre going to need to call daily. 

I'm in the insurance restoration industry. I will ask around tomorrow at work to see what your options are. 

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Awesome!  Any advice would be great.

Forgive me if I'm reading this wrong, but did you say that the bank already has the funds?  If they do, wouldn't that infer that the insurance has paid for the projected repairs?

If SF paid based on the estimate and a contractor just quit working, I don't see how that is the insurance company issue if they have paid for repairs.  It is essentially a civil issue between the owner of the property and the repair firm.  Now its a different issue of course if some of the damages were not assessed or included initially, which is not terribly uncommon on major repairs.

My recommendation would be to find a contractor that can not only write the estimate, but most importantly do the work.  It can be a lot harder than one might think finding qualified contractors to do major repairs.

flranger said:

Forgive me if I'm reading this wrong, but did you say that the bank already has the funds?  If they do, wouldn't that infer that the insurance has paid for the projected repairs?

If SF paid based on the estimate and a contractor just quit working, I don't see how that is the insurance company issue if they have paid for repairs.  It is essentially a civil issue between the owner of the property and the repair firm.  Now its a different issue of course if some of the damages were not assessed or included initially, which is not terribly uncommon on major repairs.

My recommendation would be to find a contractor that can not only write the estimate, but most importantly do the work.  It can be a lot harder than one might think finding qualified contractors to do major repairs.

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Insurance work is a different animal. 

Typically the contractor and the insurance estimator come to a agreed scope of work and price. The home owner really only comes out of pocket for change orders/upgrades. 

The contract is between the homeowner and the contractor but it's a little. Ore omvolved than that. 

flranger said:

Forgive me if I'm reading this wrong, but did you say that the bank already has the funds?  If they do, wouldn't that infer that the insurance has paid for the projected repairs?

If SF paid based on the estimate and a contractor just quit working, I don't see how that is the insurance company issue if they have paid for repairs.  It is essentially a civil issue between the owner of the property and the repair firm.  Now its a different issue of course if some of the damages were not assessed or included initially, which is not terribly uncommon on major repairs.

My recommendation would be to find a contractor that can not only write the estimate, but most importantly do the work.  It can be a lot harder than one might think finding qualified contractors to do major repairs.

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The mortgage company has the check from the insurance company. They dole out money according to how much work is done on the house. First draw is 33%. That is the only money the contractor received. They are trying to get more .

Deranged Hermit said:

The mortgage company has the check from the insurance company. They dole out money according to how much work is done on the house. First draw is 33%. That is the only money the contractor received. They are trying to get more .

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OK, that's what I interpreted.  Based on that, I'd have the same recommendation:

My recommendation would be to find a contractor that can not only write the estimate, but most importantly do the work.  It can be a lot harder than one might think finding qualified contractors to do major repairs.  The insurance company has paid for repairs based on an estimate.  If the estimate is "good", they would not be liable to pay more because a contractor quit working.  In a large fire loss, it is really common to have supplemental repairs needed due to hidden or unobserved damage.  It's not like a car where repairs are a lot more predictable.  But if you don't have a contractor who is able to scope those additional damages, the insurance company has no basis to pay additional money.  

Most insurance policies have dispute resolution processes and some states require mediation.  And of course there is the ability to file suit.  But if you don't even have another contractor yet who can say where the insurance company has not properly scoped the repairs, there is no reason for them to get back involved.

The big problem is you have a civil issue with the chosen contractor.  I could be wrong, but understanding the industry as I do I'm pretty sure the contract for repairs is between you and the contractor.  @Henry Ford may have some advice on this as I believe he has some litigation experience with homeowners policies.

Nothing good happens until you find a qualified contractor who can actually do the repairs.  I'd focus heavily there.

BTW:  I forgot to add initially, sorry to hear about the fire loss.  It is a major hassle for certain and disruptive to your family.  I wish you the best getting back into your home, and believe the quickest way to do that is finding a qualified contractor who can actually do the repairs.