Calling Insuranceguys and anyone else that wants to pile on (1 Viewer)

[gianmarco]

We just had an amazing amount of rain a few weeks ago and my mother's basement (along with many, many others in the area) flooded. While she's had issues with water in the past, it was mostly due to one window that had some seepage. This was an entire flooding of the basement overnight with about 1-2 inches of water. Insurance doesn't cover seepage but she does have sewer back up coverage. A call to her insurance company confirmed this and told her that she can get the water removed and then to get the damage to the floor fixed. She made calls to many restoration companies and found one that came out later that afternoon.

Upon arrival, the guy looked at what was going on and said it should be covered by the insurance company. He started removing the water, moving furniture, and then noticed a sump well in the corner of the basement. However, there is no sump pump and there is no connection to the outside. She just assumed she didn't have a sump pump but had no idea that the well was actually there. When the guy saw this, he said insurance may NOT cover it now and said he would "cover it up" so that when the adjuster came out, she wouldn't have any problems. She was also given an estimate of $3500 to have the water removed, flooring removed (laminate) and floorboards for her ~900 sq ft basement. They leave blowers and dehumidifiers and get the problem taken care of.

Insurance adjuster comes out, no problems, everything will be covered. She has $10,000 worth of coverage for damage and repairs. The estimate to repair all the flooring comes to about $6k per the adjuster. Fast forward a couple days and my mother receives a bill from the restoration company and it's $5800 which is obviously significantly more than the $3500 estimate. When I call the company on her behalf to find out what's going on, he made mention of how they "helped her out" or else she wouldn't have had the insurance cover it. He agreed to meet up later this week to discuss the bill and see what could be done but mentioned more than once how if they didn't do what they did, she would have been in trouble.

Here are my questions:

1) Does having just the sump well but no pump or connection really invalidate any kind of flood claim?

2) If that's the case, is this worth really arguing with this company? It seems they are trying to overcharge as a return for the "favor" they did, however, given the cost of the new flooring, that extra will be coming out of her pocket.

3) Wouldn't they get in trouble for trying to cover up the sump well in their claim to the insurance company?

I can appreciate them trying to help her out by helping her get the flooding damage covered but the fact they are trying to make significant money off of that really irks me. At the same time, I don't want to end up getting none of it covered if that's really the case.

I'll hang up and listen.

 

[TLEF316]

Commercial Insurance underwriter here, so while I'm familiar with how policies read, I can't comment on the coverage specifics for personal lines. (outside of the following...)

You'll have to read the terms and conditions (I imagine there's a section titled "Duties of the insured" or something similar which will spell out what is required to keep the policy in force) to determine whether the lack of a pump would invalidate a flood claim. I've never heard of that, but as I said, I'm not that familiar with personal lines.

How exactly does the contractor claims he "covered it up"? I find it hard to believe that a trained claims adjuster wouldn't look for/notice a board or something over the well if the presence of said well could invalidate a claim.

Is your mother elderly? To me, this reeks of a shady contractor trying to scam an unsuspecting customer out of a few extra dollars by making up a fake story about coverage denial and offering these "Favors". Some of these restoration contractors (especially on large commercial jobs) are notorious for over-billing. I had a large account that had a HUGE flood claim during Hurricane Sandy. Our claims guys were CONSTANTLY finding "mistakes" on the bills from the restoration contractor (a major national company) that would have resulted in a higher payout. Its easy to try and skim a little extra off the top when the insurance company is paying you 40K per day to start working immediately after the storm subsided. A small local guy running a little scam like this wouldn't surprise me at all.

If its me, I tell the dude to go pound sand. Assuming the story about the well invalidating coverage is true (which I don't know) he'd be guilty of insurance fraud as well. And for him, that probably means the end of his business (or at least a MASSIVE hit to reputation).

And in case it wasn't obvious (and I'm not sure how it couldn't be), something like this (if the story about the well sans pump is true) is text book insurance fraud. I get that it sucks to have an uncovered claim, but this was a still a bad idea.

 

[mr roboto]

Yeah this seems like bull#### on the resto company. Don't know how you 'hide' a sump well.

 

[tjnc09]

What did your mother tell the insurance company/adjuster caused the flooding?

 

[gianmarco]

What did your mother tell the insurance company/adjuster caused the flooding?

She didn't. When she called and explained what happened, they said it was consistent with sewer backup and that it would be covered. The adjuster came out and confirmed it apparently.

Her entire basement is finished. The sump pump well is in a closet and all the guy from the restoration company did was move some of the things that were stored there over the cover and didn't make any mention of it in their bill and services.

This is why I doubt this is even a legit issue that wouldn't be covered. Yes, my mother is elderly and I agree that it seems very shady. I did speak to her insurance company yesterday and not having a sump pump does not keep them from paying out. My only question is whether having the well there (i.e. an access for water to come in) without the pump is an issue and I don't know where to really get that information without having access to her full policy.

The insurance company knows she doesn't have a sump pump. Based on the amount of rain and the amount of flooding and the timing of the flooding, they concluded it was a sewer backup issue as far as I know.

 

[tjnc09]

The whole situation in strange to me. Water damage from a sewer or sump back up is often covered by a Homeowners insurance policy. It is covered by a relativitely cheap and common endorsement.

Water damage from rain/snow natural elements is typically not covered by a standard Homeowners policy. Flood damage is usually purchased through a separate program called the NFIP. I believe some insurance companies do offer flood insurance internally but I am not sure who does or how common that is.

It initially sounded like the contractor figured that your mother's insurance company wouldn't cover the damages because they were due to excess rain. He then worked on the sump to make it appear as though that was the cause of the flooding since that is covered by the majority of policies. If this were the case and your mom knew the flooding was due to rain, the contractor put her in an unfortunate position to commit insurance fraud.

If the adjuster already came out to her property and inspected the damages (without your mom/contractor intentually misleading the adjuster), there shouldn't be any issues if the claim repayment has already been improved. If I have been reading everything correctly, it doesn't sound as though the adjuster is very good at his job - unless your mom does have additional flood insurance which you aren't aware of.

In terms of the bill, that is the responsibility of the insurance company now. It is up to them to determine if the bill is excess.

 

[2Young2BBald]

25 years in Property Insurance Claims here and I think with the facts in the OP what the contractor is doing is wrong. The ISO (Insurance Service Office) which guides many insurers on pattern contract language, including the Back Up of Sewer and Drain Endorsement. From memory, the general language on the Back Up Endorsement includes coverage for water from "a sump pump or sump pump well" Sounds like Mom had the well but no pump and coverage should have applied and was offered by her claims department. No reason for the contractor to cover anything up IMO. I will try and Google around for the full ISO verbiage and update my post if found.

 

[gianmarco]

She does not have separate flood insurance that I'm aware of.

As for the cause, my mother honestly wasn't aware. She described the situation to insurance over the phone first. They said it sounded like sewer backup. She called the restoration company, was told after he was there that it may not be covered but that he'd help her out and that was it. When she spoke with the claims department, she relayed that it sounded like sewer backup. Adjuster came out and has since approved the claim.

As to the bill, I called the insurance company and explained what happened with the original verbal estimate and final bill. They said to call the company and try to negotiate the bill since the total bill for restoration + repairs to damage will exceed their payout ($10k) so the excess is coming out of her pocket. There is nothing untoward on the bill but it's much more than what was initially estimated.

I don't know of any specifics that the guy from restoration company may have done other than cover up the sump well with some closet items. Maybe he did more but my mother isn't aware of any of it and I wasn't there. By the time the adjuster came out, the restoration company had already cleaned everything up. The adjuster that came out didn't speak with them nor my mother and made their own determination. However, I don't think the adjuster saw the sump well as they made no mention of it (certainly possible they did as she did not go down to the basement with them).

 

[Johnny Rock]

"We agreed on a price of $3,500. You send me an invoice for that amount and I will pay it."

"What about a little something for the effort?"

"I don't know anything about that. The adjuster came out and validated my claim. They agreed to reimburse your company $3,500."

"We might let it slip to the insurance company that you have a sump well that may have caused the damage."

"If you call them, please make sure to tell them you were trying to extort $2,300 from my elderly mother and expected her to commit insurance fraud to cover the excess charges. If the insurance company needs me to, tell them I can forward the fraudulent invoice. All this may slow down them paying the agreed upon $3,500 so let me know what you want to do. Thanks."

 

[gianmarco]

Just got a call from the insurance company. Restoration company had submitted the invoice (with the $5800 bill) directly to the insurance company. There was an issue with an "emergency services call" portion of the bill that needs to be fixed but then will be approved. The insurance company will pay out to my mother who then pays the company.

Still don't know the actual cost to repair the floors and will be getting that proposal next week from our trusted contractor. At that point, will know how much, if any, would end up having to be out of pocket.

In the end, the insurance company didn't see anything untoward on the bill (with the exception noted above) but also said that we should negotiate to get it lowered (local office, not claims dept) if they told us less.

 

[tjnc09]

She does not have separate flood insurance that I'm aware of.

As for the cause, my mother honestly wasn't aware. She described the situation to insurance over the phone first. They said it sounded like sewer backup. She called the restoration company, was told after he was there that it may not be covered but that he'd help her out and that was it. When she spoke with the claims department, she relayed that it sounded like sewer backup. Adjuster came out and has since approved the claim.

As to the bill, I called the insurance company and explained what happened with the original verbal estimate and final bill. They said to call the company and try to negotiate the bill since the total bill for restoration + repairs to damage will exceed their payout ($10k) so the excess is coming out of her pocket. There is nothing untoward on the bill but it's much more than what was initially estimated.

I don't know of any specifics that the guy from restoration company may have done other than cover up the sump well with some closet items. Maybe he did more but my mother isn't aware of any of it and I wasn't there. By the time the adjuster came out, the restoration company had already cleaned everything up. The adjuster that came out didn't speak with them nor my mother and made their own determination. However, I don't think the adjuster saw the sump well as they made no mention of it (certainly possible they did as she did not go down to the basement with them).

If the insurance company was the one who implied the loss was related to the sump before sending an adjuster out to inspect, it sounds like their claims department is run very poorly. But that is very fortunate for your mother. I truly don't know how this claim was paid out without the claims department being incompetent or some kind of fraud was intentionally/unintentionally committed.

I see your point about the bill now if the insurance company won't pay because the total exceeds their estimate. Unfortunately, I don't have a good idea on how to handle this. It sounds like the contractor preyed on your mother by giving her a lower estimate than what is reasonable and has put her in a very difficult position.

Good luck.

 

[NFL-ons]

I have had some experience with similar situations in the past. The key here for you is to get the insurance company to give the funds to your mother directly, which I think you stated is going to happen. After she receives the funds it is up to her/you to disperse them as seen fit. Do not pay the man/company unless they agree to accept the price they quoted you, make him take her to court and explain everything to the judge.

Like many individuals in the business, he probably NEEDS the money and I would bet he will take the originally agreed upon sum. Make the payment in person and MAKE SURE the invoice/receipt states "Paid in full" and is signed.

Additionally, in my experience, claims may have a fluidity to them where the adjustor states a job is worth $x but in actuality, the cost is $y and they may adjust their pay out accordingly. If in fact she does receive more money, only pay that effer the agreed upon amount.

Hopefully when he did the remediation, he removed a section of drywall and insulation 18" or more from the floor depending upon absorption. This is important to prevent the growth of mold.

 

[gianmarco]

Quick update:

I spoke to our trusted contractor and asked him the question about what could be going on here. His explanation was that there is no way that the amount of flooding over such a short period of time could have come from anything other than a sewer back up. The sump well, even without a pump, would never be able to put out that much water since it would be as a result of the hydrostatic pressure from water in the ground. Same goes for the floor in the concrete that was found. If anything, these were only providing a relief "valve" for some water to exit. This is probably why the adjuster that came out came to the same conclusion (as well as what she was told over the phone initially) since she had a huge amount of water over the course of just a few hours (dry the night before and standing water at 5am). Considering she has a drain in both the utility closet as well as a toilet and a shower down there and there was lots of water in both of those areas, the water was assuredly coming from one of those locations per his explanation.

Thus, he said, this restoration guy was doing exactly what I thought and trying to take advantage of her by scaring her about this not being covered and "helping out". Contractor told us there is nothing that could have been there or that he could have "covered up" based on the information given and that what this guy is doing is 100% criminal. When I next speak to him, I will let him know that he will get the original estimate amount paid and nothing more. If he has anything else to say, I'll gladly bring up what he was trying to say and that I have no problem reporting it to the insurance company, especially since he sent his invoice directly to them and made no mention of any of this other "stuff" that he found that would invalidate her claim.

I appreciate the help provided here as it seems to go along with the same thought process. I've never run into someone like this and it seems they thought my mother would be an easy target here.

 

[2Young2BBald]

The NICB would love to hear about your experience:

Finally, if you believe you have been approached by an unscrupulous contractor or adjuster, or have been encouraged to fabricate an insurance claim, contact your insurance company or call the NICB toll-free at 1-800-TEL-NICB (1-800-835-6422). You may also text keyword “fraud” to TIP411 (847411) or report it online by visiting our Web site at www.nicb.org. iPhone or iPad users can download the NICB Fraud Tips app to make it easy to quickly send a tip and get a response.

About the National Insurance Crime Bureau: headquartered in Des Plaines, Ill., the NICB is the nation’s leading not-for-profit organization exclusively dedicated to preventing, detecting and defeating insurance fraud and vehicle theft through data analytics, investigations, training, legislative advocacy and public awareness. The NICB is supported by more than 1,100 property and casualty insurance companies and self-insured organizations. NICB member companies wrote over $319 billion in insurance premiums in 2010, or approximately 80 percent of the nation’s property/casualty insurance. That includes more than 94 percent ($152 billion) of the nation’s personal auto insurance. To learn more visit www.nicb.org.

 

[gianmarco]

I have had some experience with similar situations in the past. The key here for you is to get the insurance company to give the funds to your mother directly, which I think you stated is going to happen. After she receives the funds it is up to her/you to disperse them as seen fit. Do not pay the man/company unless they agree to accept the price they quoted you, make him take her to court and explain everything to the judge.

Like many individuals in the business, he probably NEEDS the money and I would bet he will take the originally agreed upon sum. Make the payment in person and MAKE SURE the invoice/receipt states "Paid in full" and is signed.

Additionally, in my experience, claims may have a fluidity to them where the adjustor states a job is worth $x but in actuality, the cost is $y and they may adjust their pay out accordingly. If in fact she does receive more money, only pay that effer the agreed upon amount.

Hopefully when he did the remediation, he removed a section of drywall and insulation 18" or more from the floor depending upon absorption. This is important to prevent the growth of mold.

Thanks for this. Yes, all of the above is what I plan. As for the remediation, no, he did not remove any drywall. They were out that same day and got it dried the day it flooded. He checked the moisture in the wall and sprayed antimicrobial to prevent any growth and had fans/dehumidifiers running for 3 days. Based on his checks of the moisture, the walls were fine and didn't need more work, just the baseboards removed.

While I definitely can't trust these guys at all, I can only go with what was done at this point and see what happens. When our contractor comes in to do repairs (i.e. flooring, baseboards, etc.), I'll have them check and see if any more of the wall needs to come out.

 

[gianmarco]

The NICB would love to hear about your experience:

Finally, if you believe you have been approached by an unscrupulous contractor or adjuster, or have been encouraged to fabricate an insurance claim, contact your insurance company or call the NICB toll-free at 1-800-TEL-NICB (1-800-835-6422). You may also text keyword “fraud” to TIP411 (847411) or report it online by visiting our Web site at www.nicb.org. iPhone or iPad users can download the NICB Fraud Tips app to make it easy to quickly send a tip and get a response.About the National Insurance Crime Bureau: headquartered in Des Plaines, Ill., the NICB is the nation’s leading not-for-profit organization exclusively dedicated to preventing, detecting and defeating insurance fraud and vehicle theft through data analytics, investigations, training, legislative advocacy and public awareness. The NICB is supported by more than 1,100 property and casualty insurance companies and self-insured organizations. NICB member companies wrote over $319 billion in insurance premiums in 2010, or approximately 80 percent of the nation’s property/casualty insurance. That includes more than 94 percent ($152 billion) of the nation’s personal auto insurance. To learn more visit www.nicb.org.

Should I settle the bill with him first? Would you still report if he agrees to accept the initial estimate amount?

 

[2Young2BBald]

The NICB would love to hear about your experience:

Finally, if you believe you have been approached by an unscrupulous contractor or adjuster, or have been encouraged to fabricate an insurance claim, contact your insurance company or call the NICB toll-free at 1-800-TEL-NICB (1-800-835-6422). You may also text keyword “fraud” to TIP411 (847411) or report it online by visiting our Web site at www.nicb.org. iPhone or iPad users can download the NICB Fraud Tips app to make it easy to quickly send a tip and get a response.About the National Insurance Crime Bureau: headquartered in Des Plaines, Ill., the NICB is the nation’s leading not-for-profit organization exclusively dedicated to preventing, detecting and defeating insurance fraud and vehicle theft through data analytics, investigations, training, legislative advocacy and public awareness. The NICB is supported by more than 1,100 property and casualty insurance companies and self-insured organizations. NICB member companies wrote over $319 billion in insurance premiums in 2010, or approximately 80 percent of the nation’s property/casualty insurance. That includes more than 94 percent ($152 billion) of the nation’s personal auto insurance. To learn more visit www.nicb.org.

Should I settle the bill with him first? Would you still report if he agrees to accept the initial estimate amount?

I would settle the bill first and would still contact the NICB. The NICB database is HUGE and I am guessing with a tax ID # of even just a DBA that will find this guy has done this before. Not to get all dramatic, but what if you and your mom didn't have access to a resource like you have here? She would have had the $10,000 limited coverage eroded by this guys apparent scam. This guy didn't think up once, no way, this is his MO.

 

[gianmarco]

Update:

Finally received the claim from insurance company. They had to resubmit the bill for a lower amount but very minimal. Guy from the company hadn't called me back for a while but when he learned that the insurance company wasn't paying them directly, got a call that same day. I told him we'd discuss the matter once I received the claim, which came in today.

On the phone, after listening to him go on and on again about how he "helped her" and without what they did she wouldn't have coverage, I point blank told him that I didn't believe that at all, that I actually reviewed the bill and there was nothing in it that would have helped her get the claim as he insisted, and furthermore that the claim was approved by the adjuster without having any contact with him. Knowing this information and the fact that they increased the bill by as much as they did, I didn't trust anything he was saying and basically told him that I know what kind of scam they are trying to run.

The tone of the conversation immediately changed to being very apologetic, the bill was actually a "clerical" issue and the amount is only supposed to be $4200. He was very sorry for the miscommunication and didn't know the circumstances of the job after he got the guy who did the work on speakerphone altogether and I called out his bull####. End resolution, we agreed on a final amount of $4200 and calling it a day.

After the conversation, I just checked the BBB and notice there was almost an identical claim by someone else. When we go and pay the bill and get a "paid in full" on the receipt, I plan on reporting his actions. Despicable.

 

[NJ]

I went through a similar experience a while back when my basement flooded and it is a total racket that these restoration companies are running. My basement backed up with heavy rain during a 12 hour power outage where my sump pump was not running. I was concerned about mold and didn't think I'd be able to pump out the water and rip out the drywall, etc in quick enough time to avoid mold growing so I called several of these companies just trying to get a ballpark estimate on what they charged and none of them would give me an estimate, they were all just preying on your fear and saying "dont worry about the money, the most important thing is for us to get in there right away to pump out the water and get our fans and other equipment running asap or you'll have mold in no time". I finally found a company that told me it should be around 3K but wouldn't give a written estimate or a breakdown of the individual costs, my wife wanted it cleaned up asap so they came in and in a few hours pumped out the water, cut away the bottom 2 feet of sheet rock, sprayed for mold and setup like 10 fans and some other equipment and said it needed to run for 7 days circulating the air. He asked what insurance company I had and when I told him he knew immediately that I was covered for 5K worth of damage so these scoundrels know exactly how much each of these companies provide in their coverages and what they can get away with charging. Insurance company came out and immediately cut a check for the full 5K to me as I obviously had more than that in damages. Fast forward a week and this guy hands me a bill for exactly 5K and acts like he's cutting me a deal with that price. I argued with him about the price being way over the estimate and he was like "What's the problem, the insurance is covering it" and I was like "What about all the other damage I have? That's coming out of my pocket" as if I should just turn the entire 5K check right over to him and be happy about it. I look at the bill and its absolutely ridiculous, he was charging $30/day per fan x 10 fans for a week so $2100 just for the fan rentals, I snapped a pic of the model number off one of the fans before he removed them and looked it up and saw that each one cost under $200 so at $210/week per fan they were making back more than the cost of each fan after 1 week of renting them and then its all profit from there. The guy mentioned to me that he had over 500 of them in a warehouse and whenever they get a big rainstorm he usually ends up putting almost all of them in service which would be $15K/day just for the fans, not even the other ridiculously high costs of pumping water, spraying for mold, etc. We ended up settling in the middle on a $4000 bill but I wanted to punch this guy in the throat.

 

[quickhands]

Commercial Insurance underwriter here, so while I'm familiar with how policies read, I can't comment on the coverage specifics for personal lines. (outside of the following...)

You'll have to read the terms and conditions (I imagine there's a section titled "Duties of the insured" or something similar which will spell out what is required to keep the policy in force) to determine whether the lack of a pump would invalidate a flood claim. I've never heard of that, but as I said, I'm not that familiar with personal lines.

How exactly does the contractor claims he "covered it up"? I find it hard to believe that a trained claims adjuster wouldn't look for/notice a board or something over the well if the presence of said well could invalidate a claim.

Is your mother elderly? To me, this reeks of a shady contractor trying to scam an unsuspecting customer out of a few extra dollars by making up a fake story about coverage denial and offering these "Favors". Some of these restoration contractors (especially on large commercial jobs) are notorious for over-billing. I had a large account that had a HUGE flood claim during Hurricane Sandy. Our claims guys were CONSTANTLY finding "mistakes" on the bills from the restoration contractor (a major national company) that would have resulted in a higher payout. Its easy to try and skim a little extra off the top when the insurance company is paying you 40K per day to start working immediately after the storm subsided. A small local guy running a little scam like this wouldn't surprise me at all.

If its me, I tell the dude to go pound sand. Assuming the story about the well invalidating coverage is true (which I don't know) he'd be guilty of insurance fraud as well. And for him, that probably means the end of his business (or at least a MASSIVE hit to reputation).

And in case it wasn't obvious (and I'm not sure how it couldn't be), something like this (if the story about the well sans pump is true) is text book insurance fraud. I get that it sucks to have an uncovered claim, but this was a still a bad idea.

Yea tell him you will help him out and not bring it up on social media.

 

[Johnny Rock]

Update:

Finally received the claim from insurance company. They had to resubmit the bill for a lower amount but very minimal. Guy from the company hadn't called me back for a while but when he learned that the insurance company wasn't paying them directly, got a call that same day. I told him we'd discuss the matter once I received the claim, which came in today.

On the phone, after listening to him go on and on again about how he "helped her" and without what they did she wouldn't have coverage, I point blank told him that I didn't believe that at all, that I actually reviewed the bill and there was nothing in it that would have helped her get the claim as he insisted, and furthermore that the claim was approved by the adjuster without having any contact with him. Knowing this information and the fact that they increased the bill by as much as they did, I didn't trust anything he was saying and basically told him that I know what kind of scam they are trying to run.

The tone of the conversation immediately changed to being very apologetic, the bill was actually a "clerical" issue and the amount is only supposed to be $4200. He was very sorry for the miscommunication and didn't know the circumstances of the job after he got the guy who did the work on speakerphone altogether and I called out his bull####. End resolution, we agreed on a final amount of $4200 and calling it a day.

After the conversation, I just checked the BBB and notice there was almost an identical claim by someone else. When we go and pay the bill and get a "paid in full" on the receipt, I plan on reporting his actions. Despicable.

Why $4,200 vs. the $3,500 estimate? Legit overages? After what he pulled I'd have had a hard time paying him the $3,500 even, but I only know some of the story.