If your home has water, mold, fire, or other property damage there is a good chance you will be hiring a restoration or mitigation company to help fix the damage. These companies provide important services during a stressful time, but it is important to understand what you are agreeing to before work begins.
The Maryland Insurance Administration has received a growing number of complaints involving restoration and cleanup companies. Complaints have included issues related to unexpected charges, work the homeowners did not realize they had authorized, pressure to sign documents quickly, and disputes regarding who is ultimately responsible for the entire cleanup bill.
If you have filed an insurance claim, or plan to file one, contact your insurance company before signing a contract with a restoration or mitigation company.
Your insurance company can tell you what steps you should take to prevent further damage, what emergency work may be covered, and whether the damage needs to be inspected before work begins.
Your insurance company may recommend one or more restoration or mitigation companies, but you have the right to choose the company you want to work with. Keep in mind that a referral from your insurance company does not mean the work or charges will be covered by your policy.
Before Signing a Contract
Like any contract, be sure you read the contract carefully before signing. Don’t let anyone pressure you into signing something you don’t understand. A disaster is stressful enough, so taking a few extra steps before signing can prevent a difficult situation from becoming an even bigger problem.
Get everything in writing. Make sure the agreement clearly describes the work to be performed, the price, and the company’s responsibilities and obligations. Consider providing the estimate for mitigation or emergency repairs to your insurer before the work begins. This keeps your insurer informed and helps avoid surprises when you submit the resulting invoices.
Do not let anyone pressure you to sign. If you do not understand a document, ask questions and take the time you need before signing it.
Keep your records. Save copies of contracts, estimates, invoices, photographs, receipts, and communications with the company and your insurance company.
Know Who will be Responsible for the Bill
Before you sign a contract, make sure you understand who you are hiring, what you are authorizing, how much the work will cost, and who will ultimately be responsible for paying the bill.
If your insurance company denies coverage for the loss, you will be responsible for the restoration or mitigation charges. If the loss is covered, your insurance company generally only owes for necessary and reasonable charges. You may also be responsible for charges your insurance company determines were excessive or not necessary to properly mitigate the damage.
The cost of mitigation can vary significantly depending on the type and extent of the damage. For example, a loss involving clean water, such as a burst pipe, is generally considered a Category 1 loss. A Category 3 loss involves highly contaminated water, such as sewage, and typically requires more extensive and costly cleanup. Understanding the type and extent of damage can help you understand why mitigation costs may vary.
Understanding what you are authorizing and what you may have to pay can help prevent unexpected bills and disputes later.
