By Mauricio Rodriguez, Certified Flooring Inspector, President of Nativo Inc.
Repairing rather than replacing can be an option when adjusting a homeowner’s insurance claim (i.e. floor/roof/appliance). But what are the benefits of repairs? To answer this question, it is helpful to understand the use of repairs in a conventional setting outside the dynamics of an insurance claim.
When there is damage in a daily life setting, conducting most home repairs is a no-brainer. If a manufacturer or a contractor is faced with product or installation issues, the first approach will most likely be to address them with repairs. The same approach is generally used when homeowners are faced with damage in their property. Therefore, homeowners, manufacturers, contractors and others may experience one or more of the following benefits when using repairs as an alternative to replacement:
· The repair makes sense when it is cost-effective, meaning that its cost must be a fraction of the replacement price. The benefit of this strategy is that if the repair is not successful, then the parties can move to a costlier replacement consideration while controlling the final budget. As an example, let us assume that the repair of a few floor tiles is $1,500 while the price of replacing the whole floor is $60,000. If the repair is successful, then the cost is limited to $1,500. However, if it is not, the next step would be to replace the floor. The final price of this process would jump to $61,500. Although higher than the initial $60,000, the extra cost is relatively marginal.
· The repair is usually faster and less traumatic than the replacement option. While a repair can take a few hours, replacing entire structures (as floors or roofs) can take weeks, if not months. Longer times and complex construction processes also mean more inconveniences and hassles for the homeowner (i.e. homeowner’s and family required to relocate during a long period of time in some replacement cases).
· Repairs usually require fewer parts, resources and energy as opposed to an entire replacement because it is constrained to a small section or to a limited process. This means that undamaged parts and structures do not have to be included in the scope of work (kitchen or other built-in cabinets and bathroom floors and fixtures when the claimed floor is installed under the cabinets and in the bathrooms). This is an important benefit in a world that is currently seeking efficiency in the use of resources and energy.
· Manufacturer and/or industry standards are available for products, installations, and repairs.
Summarizing, when the repair is properly used (as not all damages can be addresses through repairs), it is the most common-sense approach before committing to large budgets, efforts and resources. In addition, it is an efficient alternative that allows keeping the overall process in check.
These same benefits can be transferred to a homeowner’s insurance claim. However, the implementation process in a claims setting is not as simple if one of the parties is seeking an adjustment through replacement. To address this issue, there are steps that can be tried. The first and most important step is the ability to identify the claims most appropriate for a repair. Not properly identifying the most suitable claims is a scope deemed for disaster. Once this step has been cleared, follow-up by communicating and creating the right expectations to all parties when planning an adjustment through a repair. This includes outlining the benefits, the process, the timing, the parties/vendors involved, what is considered an acceptable outcome, how the repair is going to be evaluated, and the steps to be taken if the repair was deemed not acceptable. This information needs to be properly transmitted and processed by the claims adjuster (desk/field adjuster). As you can see, the claims adjuster becomes a crucial agent for the successful outcome of this process. Therefore, this person needs to be experienced, have proper training, possess decision-making authority and be customer service oriented. Because not all claims can be adjusted through repairs, it is probably a good idea to create an experienced and properly trained group dedicated only to repairs inside the claims team. Nonetheless, the implementation process does not stop here. Management may also need to create new processes, metrics and a compensation scheme for this new group and for the process in general which may be different from the standard operation.
Keep in mind that each claim is different and that the parties involved in the process may have different expectations. However, the ability to identify the most suitable claims for a repair, defining clear goals and metrics, creating a reasoned and flexible process, proper communication to all parties, suitable repair vendors, and a skillful and trained group of claims adjusters can start the change.