Insurer's preferred contractor or your own?

This is general information. Check your own policy and ask your adjuster or broker how your insurer handles contractor choice.

How the offer comes up

When you report a claim, the insurer often says it can send someone out straight away. That company is on the insurer’s list of preferred contractors, sometimes called a vendor program or managed repair network. The contractor has agreed to the insurer’s pricing, service standards and reporting requirements in return for a steady flow of work.

You can accept, or you can say you would like to use your own.

Do you have a choice?

Generally, yes. In Ontario the contract for repairs is between you and the contractor, and insurers commonly state that the choice is yours. A few policies have managed repair terms, so read yours or ask.

What you cannot choose is the amount the insurer pays. Whoever does the work, the insurer is responsible for the reasonable cost of repairing the covered damage, to the agreed scope. If your contractor’s price is higher than the insurer considers reasonable and they cannot agree, you may be asked to pay the difference.

Using the insurer’s preferred contractor

Advantages

• Speed and simplicity. One call sets it in motion, at any hour.
• Direct billing. The contractor invoices the insurer. You pay your deductible.
• Fewer disputes about price, because rates are agreed in advance.
• A warranty that the insurer often stands behind, in addition to the contractor’s own. Ask for the terms.
• Vetting. The insurer has checked insurance, WSIB coverage and qualifications.
• Familiarity with the insurer’s paperwork, which can move the claim along.

Things to weigh

• The contractor has an ongoing commercial relationship with the insurer and an interest in keeping it.
• Program pricing and performance targets can put pressure on scope and time.
• You may have less say over materials and subcontractors.
• Quality varies between firms and between crews, as with any contractor.

Many preferred contractors do excellent work. The relationship is something to be aware of, not a reason to assume the worst.

Using your own contractor

Advantages

• They answer to you. You are their only client on the job.
• You choose someone whose work you know or have checked.
• An independent view of the scope. A second set of eyes on what needs doing.
• Continuity, if they already know your house.

Things to weigh

• You must do the checking: insurance, WSIB, training and references. See how to choose a restoration contractor.
• The estimate has to be agreed with the adjuster before the work goes ahead, which can take time.
• You may have to pay the contractor and be reimbursed, unless they agree to bill the insurer directly.
• The warranty is the contractor’s alone.
• Disagreements over price land with you if the two cannot settle them.
• A general renovator may not be equipped for drying, smoke cleaning, mold or asbestos work.

A mixed approach

The emergency work and the rebuild are separate jobs. Common arrangements:

• Let the first available qualified company handle the emergency mitigation, then choose your own builder for the reconstruction.
• Use the preferred contractor for the building and your own cleaner for particular contents, or the reverse.
• Use the preferred contractor and get an independent estimate if you doubt the scope.

Just be clear in writing about who is doing what, and do not sign an agreement that commits you to more than you intend.

Questions to ask either contractor

• Who decides the scope: you, me or the adjuster?
• Will I receive a copy of the estimate and the drying records?
• What happens if you find more damage once work starts?
• Who do I call if I am unhappy with the work?
• What is the warranty, who backs it, and for how long?
• Are your workers employees or subcontractors?
• Will you bill the insurer directly?
• What will I owe beyond my deductible?

Protecting yourself whichever you choose

• Read every authorisation before signing. Understand whether it covers emergency work only or the whole repair.
• Be careful with any document that assigns your claim or directs all payments to the contractor.
• Ask for the scope in writing and go through it room by room.
• Take your own photographs before, during and after.
• Raise concerns early, in writing, with both the contractor and the adjuster.
• Do not sign a completion certificate until you are satisfied.
• Keep all the paperwork.

If you are unhappy with a preferred contractor

Tell the adjuster, in writing, what is wrong and what you want done. Because the contractor is on the insurer’s program, the insurer has leverage and an interest in a good result. If it is not resolved, ask to change contractor. For unresolved complaints about how the claim is handled, the insurer’s complaint process and the General Insurance OmbudService are available.

Cash settlement

Some people ask to be paid the value of the repairs and arrange the work themselves, or not do it at all. Insurers may agree, but policies with replacement cost coverage usually pay only the depreciated value until the repair is actually carried out. A lender with a mortgage on the property may also have a say. Ask your adjuster how a cash settlement would be calculated before choosing it.

The short version

• In an emergency, getting a competent crew on site fast matters more than who sent them.
• For the rebuild, you have time to choose.
• The insurer pays for the agreed scope at a reasonable price, whoever does the work.
• Check credentials, read what you sign and keep records.

More: reconstruction and insurance claims help.