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Your Right to Select the Restorer

When deciding to hire a restorer, you will be faced with one of two choices. Either hire a local reputable company, based upon references, or hire a restorer that is part of your insurance company’s Vendor Program. There are advantages and disadvantages to both.

Before we begin the discussion about the pros and cons, lets address the fact that you, the insured, has the right to choose whomever you want to perform both the emergency services (restorer) and the reconstruction (restoration contractor).  You are not under any obligation to use the company that your insurance company or adjuster recommends.

In either case, it is you that has to sign a work authorization or contract for the services. You have the obligation to pay for the work performed by the restorer or restoration contractor regardless of who recommends them.

Vendor Programs

Insurance companies can enter into agreements with individual restoration companies, franchise organizations or third party administrators to provide services. As long as the restorer meets the minimum criteria, they could be included in the insurance company’s vendor program. The restorer has to agree to certain conditions in order to participate.  Each insurance company’s vendor program is unique in terms of their system and contractual requirements.  Vendor programs do share certain characteristics such as:

  1. The restorer must meet the minimum criteria set by the insurer in order to participate.
  2. The insured is not obligated to use the preferred vendor.
  3. The restorer has reporting criteria to the insurer that must be met.
  4. The time spent on each claim is reduced. (e.g., the claim is closed faster).
  5. The cost per claim is typically lower than a restorer that is not on the vendor program.
  6. All work is guaranteed for a set amount of time which varies with each program

The restorer will enter into a contract with you and will have a contractual obligation to the insurance company. Therefore, some of the control is passed to the insurance company by virtue of the vendor program agreement. Restorers have to be careful to ensure that their contractual obligations are not hindered by this dual commitment.

The advantage is that the restorer has to be prequalified in order to participate in the Vendor Program. The restorer doesn’t pay a fee for the privilege of being on the program.

The disadvantage is that there is no oversight of the work product except as it relates to the scope of services. The insurance company will rely on you to deal with problems with quality. If the problems cannot be resolved the insurance company might step in to assist.

Third Party Administrators

Third party administrators are independent firms that contract with insurance companies to find restoration firms that meet their criteria; enter into an agreement with the restorer to promote them to insurance companies as part of a vendor program; contact insurance companies to provide them with an outsourced vendor program; and then monitor the vendors for a fee. The fee comes out of the monies paid to the restorer. Their function is to relieve the insurer of some of the prequalification activities and to provide a measure of oversight and invoice review. In other words, there is a third party that is discreetly involved with the process. In order for the program to be successful, the third party administrator must provide a good quality service while lowering the insurance company’s cost per claim.

The advantage is a measure of quality and cost control that is provided by a dedicated third party. If a restoration company does not have a quality control program, then the administrator is a protection to both the insured and the insurer.

The disadvantage is the cost to provide the quality control is ultimately borne by the restorer, who should already have a quality control program in place. Any reduction in services or rates further reduces the money available to the restorer to perform the services and make a profit.

Independent Firms

When I refer to “independent firms” in the context of this article, I am taking the liberty of consolidating both firms that are independently owned and those that are a part of a franchise system, but are not necessarily participating in the vendor program. In this context, independent firms are not part of a vendor program and only enter into a contract with you.

Your first question should be, how do you determine that the restorer meets at least the same criteria as a restorer on a vendor program? The answer to this is the Cleaning and Restoration Association (CRA) has developed an application process for its members that require that they meet a higher criterion than those used by the vendor programs. It is called the Select Member Program. CRA is not a third party administrator and therefore does not charge the restorer a fee or percentage for each project. All of the monies paid go directly to the restorer. In order to qualify they must:

  1. A Candidate company must meet the following organizational requirements:
    1. Be a legally organized business entity
    2. Have a current business license
    3. Have the appropriate contractor’s license(s) where required
    4. Have a contractor’s license(s) bond where required
    5. Have technicians with appropriate industry certifications
    6. Be adequately insured for the services offered
  2. A Candidate company must meet the following business practices requirements:
    1. Have a clean BBB report
    2. Have a good financial record
    3. Have a good reputation (customer and industry)
    4. Offer a limited guarantee of their work product
  3. A candidate company must agree to:
    1. Follow the CRA Customer Satisfaction and Ethical Practices
    2. Mediation or arbitration in the event of a dispute
    3. Have the above requirements monitored on a regularly scheduled basis

Select Member Dispute Resolution Policy

While we hope that there will never be a dispute between a Select Member and one of their customers, we require that each Select Member agrees to handle disputes in a specified manner. Our Dispute Resolution Program is as follows:

Dispute Resolution Policy
In the best of business relationships differences may occur. Therefore, each Select Member agrees to the following procedure for the resolution of complaints as they occur.

  1. If there is a customer complaint, the Select Member agrees to address it with the customer promptly (within 2 business days if possible). The Select Member will make every good effort to resolve the issue in good faith and agrees that the following information will be recorded and submitted to CRA:
    1. What the issue is.
    2. How the customer would like to see it resolved.
    3. Any contractual language that may have a bearing on the resolution.
    4. Confirmation in writing of any agreement for resolution that was reached.
  2. If a resolution cannot be reached, the Select Member will invite a mediator to assist in resolving the issue. The mediator or mediators may be formal or informal, professional or otherwise satisfactory to both parties.
  3. If the mediation does not bring a solution, then the Select Member agrees to arbitration under the rules of the American Arbitration Association.
  4. The intent of this provision is to preserve the unity and integrity of CRA Select Member program. Nothing should be construed to prevent any party from exercising its legal and constitutional judicial rights within their jurisdiction.

Code of Ethics

As providers of cleaning and restoration services to the public, we strive to apply the following principles with those that we have a business relationship.

  • conduct our business affairs with honesty and integrity;
  • to treat our customer’s property with care and respect;
  • to render our professional services consistent with current industry standards;
  • to continue to develop proficiency in our services by attending relevant training programs;
  • to share our knowledge with others in our industry; and
  • to avoid or disclose any conflicts of interest with our customers

We need to address one other possibility and it’s that your insurance company might have one of CRA’s Select Members as a restorer on their vendor program. If that is the case then you have a restorer that has gone through two rigid selection programs. If you choose to go with them, please let them know that you are happy to see that they are a part of the CRA Select Member Program.

The advantage is this program is that the restorer is prequalified. The prequalification process is much more extensive than the insurance company’s criterion. There is a dispute resolution policy that the restorer has agreed to follow.  All the monies paid to the restorer will go towards the profitable provision of the services need to restore your property.

The disadvantage is that there is not a third party that monitors quality control. It will be your responsibility to work with your restorer to address quality issues.  Remember that in all cases, it is ultimately you that has the contractual relationship with the restorer and only you can truly compel them to perform to your satisfaction.