A house catches fire and the second floor is gutted. A toilet cracks while the homeowner is on vacation, sending a stream of water out the door, ruining walls, ceilings, structure, and furnishings. Wind gusts rip a tree out and send it plunging through the roof and top floor of a home.

Provided proper coverage was purchased, damage from situations like these would be covered by a homeowner’s insurance policy and paid for by the insurance company that wrote that policy. The insurance industry pays out about $200 billion annually to restore property damage. That figure generally rises from year to year, but varies with the number of storms that make landfall, according to industry expert Peter Crosa. And the contractor who would typically do the work is an insurance restoration contractor, that is, one who demolishes, cleans, rebuilds, replaces.

Such contractors — there are estimated to be between 11,000 and 12,000 of them in the U.S. — are either recommended by the insurance adjuster or are contacted independently by the property owner. Those companies range in size from megalith Belfor Holdings to small Mom and Pop shops. Most serve both residential and commercial customers, and the bigger independents such as A&I Fire & Water Restoration, in Myrtle Beach, S.C., typically deal with everything from crime scene protection to putting out forest fires.

Sense of Urgency

The key is rapid response and adroit use of technology in everything from creating and furnishing an estimate to actually remedying the damage. Urgency tends to make restoration contractors more technically adept. “Our estimators typically e-mail photos from the site back to us,” says A&I Fire & Water’s vice president Bill Alford — and are on the scene within hours.

Patti Harman, editor-in-chief of Cleaning & Restoration magazine and director of communications for the Restoration Industry Association, in Columbia, Md., says that in the last 12 to 18 months many home builders and remodelers have sought to enter the insurance restoration business, believing it to be “recession-proof.”

But Crosa and others call it a business that’s “not easy to understand.” A big difference is that restoration work isn’t billed in progress payments. “The contractor is going to end up footing most of the expenses up front. That’s how restoration works. Especially on the residential side,” Harman says.

—Jim Cory is editor of Replacement Contractor, a sister publication of Remodeling.


9/7/2010: An error was made in listing data for Calvary Construction Co. This spreadsheet corrects that error, and Cavalry Construction moves from number 15 to 12 on the insurance restoration list. REMODELING regrets the error.