The Hidden Costs of Water Damage Mitigation

When talking about these hidden industry costs, the thought going through your mind may be that of an unscrupulous contractor packing a mitigation loss site full of equipment beyond written industry standard –with the intention of maximizing his daily rental profit.

Though not unlikely, this scenario only describes part of the problem. For example –equally important to consider is the possibility of a contractor who might install TOO FEW pieces of drying equipment.

In any case, you end up with an inefficient and poorly managed drying program.

The result will be missed deadlines and costs overruns.  And since the vast bulk of a mitigation invoice is made up of the costs of equipment rental –guess who gets stuck with the bill…

That’s right –the Carrier!

In this article I’d like to cover the most common causes of unnecessary costs of water damage mitigation, and how to avoid them.

So, let’s start with…

THE GAPS IN TOOLS, TECHNOLOGY, AND TRAINING

Not all contractors invest time, money, and training to ensure they’re providing the most efficient drying programs to policyholders.

For example, the difference between a mitigation contractor who uses infrared thermography to monitor losses and one who only employs moisture meters is huge from an outcomes perspective.

Equally as important, is the difference between the mitigation contractor who TRAINS his/her technicians on how to properly interpret what an infrared camera is showing them over the contractor who doesn’t!

These gaps in tools, tech and knowledge allow for a wide range in drying results –in addition to the potential risk for secondary damage, like mold for example.

If you’re hiring a water damage mitigation contractor, what are some questions that you might ask to ensure you’re getting a company that values the latest tools and techniques?

 

LACK OF DATA VERIFICATION & HOW THE NUMBERS GET MURKY… REAL FAST!

Any reputable mitigation contractor backs his drying program results up with empirical data, compiled into what is referred to as moisture mapping.

And this seems all well and good, but how is the accuracy of these numbers verified?

Even among well established nationally franchised brands, mitigation contractors can and do manipulate some of these numbers in order to show a linear and effective dry down –whether that was the case on a particular loss or not.

Furthermore, it’s seldom the case when the carrier and their adjusters have any significant grasp on what the numbers on the spreadsheets sent to them really mean, and/or how to interpret them.

This lack of oversight process, coupled with once again, a gap in knowledge –is costing carriers millions of dollars in unnecessary water damage mitigation costs.

To the consumer: Plan ahead, always be prepared to ask a water damage mitigation contractor to supply you with a copy of their daily drying logs.

To the carrier: What are some instances you can think of where you could have prevented supplemental damages if you had managed to have more oversight of a policyholder’ mitigation contractor?

 

BILLING DUPLICATION & THE USE OF EXTRANEOUS LINE ITEMS

While most of the industry has adopted the use of estimating software (Merge, Xactimate, Symbility, etc) which has positively reduced most of the billing inconsistency in unit costs for services & equipment, there continues to be substantial inefficiencies at play.

These inefficiencies are mostly due to line items written by the contractor that are either used in duplication, or incorrectly.

One example of this would be when billing for laminate flooring removal. Xactimate factors-in the removal of the underlayment of the flooring as a separate item in addition to original line item. And even though it’s clearly written in the explanation of the line item, it’s often overlooked –and an additional line item is written and billed for removing the underlayment separately.

While these types of oversights are typically small charges at the individual claim level, they stack up quickly; particularly when viewed broadly across all claims.

Quick math: As an insurance carrier, if each of your mitigation related claims had $50 of duplicate charges per affected area and you averaged 4 affected areas per claim…….how many dollars per year are getting wasted in small charges across all claims?

 

THE LACK OF UNIVERSAL STANDARDS ADHERENCE

The Institute of Inspection Cleaning and Restoration Certification (IICRC) is the de facto standard in the writing of standards for the mitigation industry.

The standards the IICRC write cover everything from equipment sizing equations to the salvageability of different building materials affected by water. And while there is always room for professional judgement on a loss, there are many occasions when standards are simply overlooked or misinterpreted.

This causes inefficient drying conditions and secondary damages to property or cross-contamination of previously unaffected areas on a loss.

Creating more user-friendly applications that adhere to standards is an area of focus that would benefit the insurance industry at scale –while also providing knowledge driven oversight to guide more strict adherence for contractors.  

To the consumer: Always ask your water damage mitigation contractor to supply you with their technicians IICRC qualifications, and make sure that only technicians carrying “WRT” certifications are in charge of your property.

To the carrier: Are there ways for you to more efficiently manage standards compliance in water damage mitigation to catch potential problem losses, BEFORE they become problems?

 

CONTRACTORS – ACTS OF OMISSION & COMMISSION

It’s easy to lump every mitigation contractor in the category of a bad apple.

The stereotype of greedy carpet cleaner comes to mind, and frankly this mindset affects the decision making processes of adjusters throughout the industry.

It is certainly true that there are some contractors who manipulate and overcharge for their services, but these are not the majority. Often overlooked is the contractor who makes mistakes of omission, due to lack of training and/or knowledge.

Even though acting in good faith, these vendors’ mistakes of omission can be equally damaging –such as improper mitigations leading to replacement costs of items that should normally be salvageable, drying times that exceed all normal expectations, and a host of other secondary issues.

It’s in the carriers best interest not only to weed out the bad apples, but to focus also on what might appear to be “cheap” vendors on the front end  –that are ultimately MORE expensive on the back end.

What are some ways that carriers and contractors can build more symbiotic relationships versus adversarial?

 

AN INDUSTRY BUILT ON SCIENCE BUT MANAGED BY NON-SCIENTISTS

Removing unwanted moisture from a building is a matter of physics.

Phase changes of matter, vapor pressure, grains per pound, relative humidity and temperature  –these are all just a few of the elements making up the juggling act that contractors are performing to get water to displace from one area to another.  

A deep knowledge of how and why a mitigation program completes its objectives is essential to finding contractors who make good decisions quickly and efficiently, particularly when drying challenges arise.

Unfortunately, these contractors are not easy to find. Most of them don’t possess the background knowledge of the science of drying. My suggestion is to thoroughly  interview them and review their past work.

Here are some question you should ask and details you should be aware of…

• Ask your water damage mitigation contractor what their drying plan is, before they start it. Many times you can sense a knowledgeable contractor by listening to them lay out their strategy.
• Pay attention to the cleanliness and/or condition of the drying equipment that a water damage mitigation contractor installs on a loss. If they don’t treat their equipment well, they won’t treat your property well.

 

CARRIERS ARE CARRYING THE COST OF IGNORANCE

It may be easy to blame mitigation contractors for any and all associated cost overages caused by water damage, but carriers are no innocent bystanders either.

Generally speaking, carriers’ attitude toward the mitigation industry default somewhere between uninterested and apathetic.

Carriers routinely pay out on inflated invoices because they don’t know how to contest them. They also underpay reputable and honest vendors causing working and relationship friction, and inevitably future invoice inflation. This cycle repeats itself from claim to claim without anyone challenging its process.

A more proactive and caring role is needed by carriers if they want a more predictable and equitable playing field when it comes to their water damage related costs.

Most water mitigation cost overruns are not only avoidable, but one hundred percent preventable.

What are some best practices you can think of for insurance carriers to be more proactive in making sure that their receiving excellent service and appropriate pricing?

Hopefully I’ve given you a few guidelines that will help you mitigate some of the hidden costs of water damage restoration services.

My hope is that you build on this, and ultimately develop your own water restoration vendor QA system!

If you would like to know how our innovative claim process can help you make effective real time decisions, maximize control and minimize costs relating to your claims. Click here to schedule a brief chat with me or David!

Would love to know your take on the topic, if you’d like to chat, once again you can set up a time right here.