By REMODELING Magazine Staff. Steady and stable
General remodeling generates about 60% of our business. The remaining 40% comes from insurance restoration work. Right now, we have a preferred-vendor relationship with four insurance companies.
We got involved doing insurance restoration 25 years ago, about three or four years after we'd been in business, when a previous client called with an insurance loss. We've been doing it ever since, and it's helped us grow as a company.
Not all our insurance jobs are small. We've done jobs of more than $200,000, and many at $50,000 to $100,000. We only do the structural work, no cleaning or water mitigation. Once the tear-out's completed, we reconstruct what was there. So, we can do these jobs with our remodeling crews and don't need to have separate divisions.
Cold weather work
Many insurance jobs come up during cold weather, and one benefit of this work is that it provides us with year-round jobs. One result is we've never had to lay off an employee for lack of work.
Companies that want to take on insurance work must be willing to do small as well as large jobs. Insurance restoration is paperwork-intense, so you need a computer system that can process estimates rapidly. You also need good subs, because most insurance companies will want you to handle the entire process.
Mastering insurance repair is a learning process, but insurance work is always there.
Bellamy amp; Sons Construction
Not worth the hassles
When I started my company in 1988, insurance restoration work was one avenue for growth we considered. We felt that by taking on smaller, insurance jobs, we were creating future clients for larger remodels. It was tough. The jobs we were called in to look at were usually small, water-damage jobs -- in the $5,000 to $20,000 range -- from broken pipes or ice damming. Clients were instructed by their insurer to get three or four bids and compare them. Out of maybe 10 estimates we wrote, we ended up with two of the jobs. But we wrestled with all 10.
Insurance adjusters, working with a cost book, see the job through different eyes from ours. They don't, for instance, look at setup and takedown time, among other things. This results in a significant variation between what we think we ought to get for the job and what adjusters feel we ought to get. For instance, our labor rate, dollar-wise, might be $35 to $40; theirs, $25. They also haggle. I might put $1,000 in the bid for floor decking, only to have an adjuster assure me it can be done for $600. We made a profit on our insurance jobs, but not what we would've made on a kitchen.
If you're doing a $90,000 to $110,000 addition, the amount of time invested in taking on that $5,000 insurance job is just not worth it. Ultimately, our company found other niches, such as custom homes, that we can use to build our backlog and keep crews employed all year long.