Beware of Hidden Fee & Build Costs Relating to Building Insurance Reinstatement Projects

Building Insurance Reinstatement Project

 

Why use Arun Associates for major-loss insurance reinstatement claims?

Dealing with a major insured-loss and incident such as fire, structural damage, escape of water or flooding of your premises or home can be traumatic and stressful. You may have to deal with loss adjusters, who act for the insurers, to settle a claim. Whilst this might be alright on small insurance claims, it can be a headache and stressful when you are recovering from the shock of a major loss, or damage to your home or business.

Who to appoint?

There are firms out the in the marketplace, who will offer to carry out all the negotiations for a percentage fee of the agreed claim. Note that those firms may wish to tie your hands by wanting to use their contractors, their subcontractors from a so-called approved list. You will not have control over that stage, so if there is a builder you want to be included on the tender list, you may be disappointed. Not all Loss-Assessors are the same, thankfully, but you do have to be very careful in engaging them, regarding hidden costs.

Loss-Assessors are very different from loss-adjustors.

While the Loss-Adjustor plainly acts for the insurance company, to protect the insurer’s interest, and to ensure they are not paying out more than the insured is entitled to under the terms of the insurance policy, the Loss Assessor is different. They may advise that they are acting for the affected policyholder, but they may sometimes have contractual agreements with insurers in the background, which could disadvantage you.

Impartial and Transparent

In contrast, a professional surveyor such as Arun Associates, will work wholly in your interest, be completely transparent in terms of costs and fees, and always be impartial. Arun Associates always must abide by RICS Rules and Regulations, which are very strict.

Fees can be claimed via your Insurers

The good news is that if appointed early enough in the claim, Arun Associates professional fees can be claimed from the insurers, and it has no impact on your financial claim for the money you are
entitled to recover. Those fees are allowable by the insurance company, providing they are reasonable and timely.

That means you can make the appointment of an organisation which has your best interests at heart, and there are no hidden costs or reductions from what you are entitled. Most out there are simply not aware that insurers will pay professional surveyors fees as part of a valid insurance claim. If you don’t have to worry about those fees, then the whole process of appointing a professional surveyor to negotiate with the insurer’s loss-adjuster becomes simpler for you.

Who really pays those fees?

Insurers realise that most clients are not experts in the building industry, have little or no knowledge of building contracts, material costs, payments, etc., and would struggle on anything larger than a small insurance claim. That is why they make financial allowance for professional fees as part of claims, to allow negotiation with loss-adjustors, and to arrange remedial reinstatement works. Those costs are applied back onto the insurance premiums for those seeking insurance cover, in the market. A few pounds here and there for fees and administration costs will form part of the premiums.

Be wary of No-Win, No-Fee

Some organisations such as solicitors operate on a No-win, No-Fee contractual agreement, and some Loss-Assessors can have these too. The arrangement is very similar to some legal advisers, who offer a conditional No-Win No-Fee service, but be aware their fees can be disproportionately high for the service they offer. Arun would not offer such an arrangement, seeing it as potential high-risk for the client. In this instance, the loss -assessor fee is taken out of the negotiated building repair costs resulting in less money for the client to spend on other repairs or improvements to their property they may wish to undertake.

Businesses

Business premises will need to be re-evaluated, such as whether temporary premises are needed, the transfer of files, or salvaged equipment, how to deal with the clients and service contracts, etc. There are times where a loss-assessor can be useful on a claim, or part of a claim, as there are some services they can provide, such as helping to find alternative premises, etc.

Loss-assessors as an option

If Arun Associates are appointed as your surveyor to act for you, where necessary, they can put you in touch with reputable loss-assessors, to deal with those specialist parts of the claim or you can choose your own. However, this would not be needed in every case. Each claim will be different, have different issues to be addressed, and priorities will need to be agreed to make progress. A competent loss-assessor could save you time and cost but must be transparent.

Improvements and Betterment

Few claims or reinstatements following a disaster/damage to premises can ignore the subject of improvements. Improvements are classed as ‘betterment’ by the insurers and loss-adjuster, and will not be generally paid for, so the costs of improvements fall back onto the client. For example, insurers might only want to pay for the replacement of a proportion of damaged floor covering and make an allowance for cleaning the rest.

However, the client may have other ideas and want to renew all the flooring in an area as part of a refurbishment.

Contractors may sometimes take advantage of improvements and changes, as part of the reinstatement works, and add additional, disproportionate costs to those specific areas. That means the client has less money to play with.
It’s a bit like having a ‘Design and Build’ building contract. Stick to what was required at the start, and it’s fine, but deviate into variations, changes, and improvements, and you could pay a heavy price for those other items.

Options

Arun Associates are experienced in insurance reinstatement works and are used to advising clients on areas of betterment and improvements. They will always seek out the best realistic, financial outcome for the client. You decide whether you just want Arun Associates to deal with the insurance reinstatement negotiation and let you organise
improvement works, or, put it all under Arun Associates, to specify works, prepare any drawings, obtain tenders and carry out the contract administration as well.

The advantage of appointing Arun Associates for the whole package of reinstatement and improvement works is that you will not have to deal with any contractor’s cost valuations or potential disputes.

We can recommend the selection of contractors competent in undertaking major insurance reinstatement works and have demonstrated their capabilities on projects administered by us in the past. Alternatively, you may wish to put forward your own contractor(s) to tender for the works however we will need to satisfied that they are of suitable size and professional standing to undertake the works.

It may that you wish not to proceed with reinstating your building and to sell or completely redevelop your site. This is a common situation that Arun Associates have dealt with on past projects and is referred to coming to a cash settlement with the insurer. If you chose to follow this option, we will discuss and negotiate the cash settlement with the loss adjuster, following completion of the tender process.

Arun Associates won’t be intimidated by negotiation with loss-adjusters and have agreed on many satisfactory insurance claims on behalf of residential and commercial property owners. Indeed, they have regular contact with specific loss-adjusters acting for insurers, on a variety of claims.

What is considered a major loss?

Whilst this is subjective, a major loss might be around £75,000 plus VAT and upwards, excluding fees. i.e. The reinstatement works cost.

Of course, add various improvements and additional works, and this can soon escalate, but be aware that insurers don’t cover the costs of improvements, only the reinstatement of the damaged items or structure, subject to the terms and conditions in the insurance policy.

This brief note should give you, the client, or a managing agent, some comfort, in that reasonable professional fees for a claim negotiation can be covered by your insurers. We can provide national coverage and we would be happy to discuss your needs at no obligation so feel free to contact us.

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