When disaster strikes and you need repairs to your home, choosing the right contractor can make all the difference. However, many insured individuals make costly mistakes when navigating the repair and restoration process, leading to financial losses, delayed timelines, and unsatisfactory outcomes. At CPR Claims, we understand the complexities of insurance claims and home repairs, and we’re here to help you avoid these common mistakes when using a contractor.
1. Not Realizing Contractor Profit Margins
Many homeowners don’t realize that contractors typically profit 25-50% on repairs. Understanding this can help you negotiate and scrutinize costs more effectively. Review the contractor’s bid carefully to ensure fair pricing and avoid overpaying.
2. Failing to Read the Contractor’s Contract
A contractor’s contract may include clauses that authorize the insurance or mortgage company to pay the contractor directly, bypassing the homeowner. Additionally, some contracts exclude responsibility for code improvements, leaving you liable for unexpected costs. Always read the fine print to understand your rights and obligations fully.
3. Releasing Too Much Money Upfront
One of the most common mistakes is releasing a large sum upfront without a detailed schedule of payments. Insist on a payment schedule tied to project milestones and withhold the final draw until all work is completed to your satisfaction.
4. Not Requesting Proof of Insurance
Hiring an uninsured contractor can expose you to significant liability. Always request proof of insurance, including workers’ compensation and general liability coverage, to protect yourself in case of accidents or property damage.
5. Skipping a Performance Bond
A performance bond guarantees that the contractor will complete the project as agreed. Without it, you risk losing money if the contractor abandons the job. Consider this extra layer of protection for peace of mind.
6. Overlooking Detailed Repair Lists and Costs
Request a comprehensive breakdown of all repairs, including costs for each item. This ensures transparency and helps you keep track of how much the contractor is receiving for each aspect of the project.
7. Not Demanding a Lifetime Smoke Loss Warranty
For fire-damaged homes, a lifetime smoke loss warranty is essential and should be transferable to future owners. This provides long-term assurance that the repairs are effective and lasting.
8. Neglecting Specialized Tests and Reports
Tests like the smoke analysis and structural engineer’s reports are critical for assessing damage and ensuring proper repairs. Failing to obtain these can result in subpar work or missed issues.
9. Allowing Use of Less Costly Materials Without Compensation
If your insurance pays for plaster walls and ceilings but the contractor installs less expensive drywall, you’re entitled to the cost difference. The same applies to other materials. Ensure you understand and claim these benefits to use the savings for other home improvements.
10. Rushing Into Contracts Too Quickly
Agreeing to repairs before settling all aspects of your insurance claim can lead to a poor allocation of funds. Take your time to finalize settlement figures for all coverages first to ensure a better outcome.
What Should the Contractor’s Contract Include?
A well-drafted contract can help avoid misunderstandings and protect your interests. Key elements to include are:
- Guaranteed Costs: The contract should guarantee costs unless changes are agreed upon in writing.
- Completion Date: Specify a completion date agreed upon by the insurance company in writing.
- Licensed Tradesmen: Require warranties that all work, including electrical, plumbing, and heating, will be performed by licensed professionals.
- Utility Costs: Clarify who is responsible for utility costs during the restoration.
- Material Approval: Retain the right to approve all materials used, ensuring they meet or exceed the original quality.
- Salvage Rights: Contractually secure first rights to salvage materials such as cabinets, siding, or fixtures.
Navigating home repairs after a loss can be daunting, but avoiding these common mistakes can save you money, time, and frustration. By being proactive, reading contracts thoroughly, and ensuring clear communication with your contractor, you can protect your home and your financial interests.
If you need assistance with your insurance claim or contractor negotiations, CPR Claims is here to help. Contact us today for expert guidance and support.
