Keystone

The founding principals of Keystone are based on the idea that: “In order to deal with clients, employees, subcontractors, vendors, and competitors in an honorable way, transparency is essential; honorable organizations are willing to be accountable and to hold others accountable.” [Paul Gagnon]. In all aspects of business, Keystone has placed this ideal as the essential building block (or “keystone”) that holds all others in place to support the creation and development of all organizational structure. Without fail, Keystone is committed to sustaining an environment that rewards positive behaviors and curtails dishonest dealings.

 

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Welcome to the Keystone Learning Center!

Avoiding the Storm-Chaser:

Hailstorms are a breeding ground for unscrupulous companies. Shortly after a hailstorm hits, everyone with a ladder and a truck suddenly becomes a 'Restoration Expert'. Out-of-town companies and workers flood into the market to take advantage a quick payday and prey on unsuspecting consumers. Considering that local construction companies simply do not have the bandwidth to help everyone in a timely manner, the inflow of outside labor IS a necessary evil. However, when restoration companies relinquish quality controls and sales tactics to outside entities; consumers suffer. Every year the number of consumer complaints to the Better Business Bureau (BBB) and District Attorneys steadily grows and out-of-town storm-chasing companies become better at making it look like they are local. There are three common methods that they use: The 'Set', the 'Name Grab', and the 'National Company'.

The Set:

The Name Grab:

The National Company:

What Your Insurance Company Doesn't Want You to Know:

The Adjuster's Role:

There are many unscrupulous contractors out there but the biggest roadblock between you and a beautifully restored home is the Adjusting Arm of your insurance company. It was not always this way. Things have changed substantially in the last 10-15 years. Understanding why requires understanding how Casualty Insurance works. Casualty Insurance for your property is not like life insurance which pays a pre-determined or set benefit. Rather, Casualty Insurance is based on Indemnity which means that it pays as much as the policyholder needs (up to the policy limit) to restore the policy holder to the same financial position he or she was in before the casualty. To indemnify someone means to make them whole again. This means you cannot collect more money than it takes to restore your property nor should you receive less money than you need. Receiving less would mean that you did not get what you thought your premiums were paying for. You should never be worse off after a claim than you were before; except for the deductible amount that you agreed to when you purchased your policy. Historically, the average insurance company structured premiums in such a way that after paying for claims and overhead such as administration and advertising, a profit of about 5% was realized. Additional profits were made on investing premiums and surpluses that are rolled into the net operating income each year. Regardless of the insurance company's income, their fiduciary responsibility to protect premiums until such time as needed has not changed. The other thing to consider is that the insurance company is not to delay or deny payment for legitimate claims. They are to pay claims promptly because after a casualty, policy holders are vulnerable. Delay in payment or an amount less than fair to indemnify the loss would be abusive. This public trust requires insurance companies to give equal consideration to the policyholder's interests. If and when an insurance company puts its own interests ahead of the policyholder, it violates its contractual obligation and fiduciary trust. Yet, this is what has been happening over the last 10-15 years at an increasingly alarming rate. Insurance companies are using the adjusting arm of their organizations as a profit centers instead of mechanisms to indemnify. Even the largest insurance companies have restructured their claims departments, review processes and employee and executive compensation structures away from measuring customer satisfaction and toward the benefit of shareholders. Some (who we will not name in order to avoid lawsuits) made such rapid and drastic changes to turn claims departments into profit centers that in a mater of a few years they had grown net operating profits by several hundred to several thousand percent!

Like it or not, while your insurance Agent is your friend; your insurance Adjuster is not. The two are diametrically opposed as a matter of maximizing profits for the insurance company. Most of us consider our insurance agent a friend. We develop a history and rapport as our Agent becomes a familiar fixture in our lives. For those of us who have never filed a property loss claim, our view of our insurance company is shaped by our interaction with our Agent and the commercials we see on TV...

Understand that Agents are salespeople; every time an Agent tells us "yes", it puts food on his or her table. Consider the Adjuster; every time the Adjuster tells us "yes", it takes food off of his or her table. What you did not know, is that Adjusters are salespeople too. Most Adjusters are friendly and seem like they are working hard to help you restore your damaged property. Adjusters will still strive to be highly responsive which gives us the impression that they are providing good customer service. Truth be told, responsiveness is a measurement for rating insurance companies - it is a self-serving policy for maintaining the company's bottom line. Selling the illusion that your needs are being met is the Adjusters primary purpose. Many Adjusters ARE nice people but they are pawns in a game designed to line your insurance company's pockets with profits siphoned from your property's equity. Don't believe us? Read From Good Hands to Boxing Gloves: The Dark Side of Insurance It goes in-depth to explain the roadblocks that insurance companies put in front of Claimants and exposes the systems that have been created over the last 12-15 years to minimize claims specifically for the purpose of transferring funds that once went to policy holders to the pockets of shareholders. It also references the obscene amounts of money that insurance companies spend on advertising to convince us otherwise. Look at it like this: If you decided to lease a Lexus LS 460 sport for $900 per month, signed the papers, and walked out the front of the dealership to find it is really a Kia Rio, wouldn't you turn on your heel, storm back inside, and raise hell? Of course you would! You didn't get what you thought you were buying. 'Gotcha Clauses' in insurance policies and profit-driven claims centers are doing the same thing. Unfortunately, by the time you find out you were hoodwinked it is too late.

Three Bids, Right?

The insurance industry would have you believe that their Adjusters will offer a fair settlement for your property damage. At every level, the insurance industry puts forward the notion that you should have several contractors 'bid the work' before making a choice. After all, everyone knows that "if you are going to have any work done on or around the house, you should get three estimates" right? This is the conventional wisdom but consider this: If your heart went bad and your life were at risk, would your first step be to get price quotes from Cardiac surgeons? If your child needed a kidney transplant, would you allow your insurance company to dictate price controls or settle for only dialysis? Wouldn't you FIGHT for the transplant AND a surgeon that specializes in pediatric kidney transplants? Of course you would! Why exactly would your decision be made differently if the specialist you are seeking out is a Restoration Contractor? If you are in the unique position of having an insurance company 'foot the bill'; then your out-of-pocket costs should be your deductible, nothing more. You have the rare opportunity to making a choice based on merit rather than price. Your decision should be based on finding a contractor that can truly bring your property back to pre-loss condition.

The dirty secret is: If you submit three bids, the insurance company has the right to settle for the lowest amount. (After all, if you were not willing to use the contractor at the lowest price, why did you submit his bid?) Rather, consider the scope of your loss, the contractor's references, his experience and level of expertise in the area of repairs you are considering and verify that he has room in his schedule to take on your work without being overwhelmed.

Insurance companies prey on your inexperience. They know that when they suggest that you should get three bids, you will naturally infer that there is an opportunity for you to pocket the difference. In reality, Replacement Cost Insurance will cover the Actual Cash Value with a check up front (less your deductible) but only reimburse the actual amount of money you spend (documented with receipts and invoices) to restore your property. That is where the insurance policy term Replacement Cost Value comes from. In fact, intentionally profiting from an insurance claim fraudulently (customer agrees that contractor will invoice insurance company for more than customer is actually paying) is a crime! Assuming you are an honest person and plan to operate within the boundary of the law, you should focus your efforts on finding the best contractor and tell your Adjuster point blank that you will not be getting bids. If you have any doubts, demand that he or she fully explain how Replacement Cost Value works, you will usually get the honest answer and unravel the Adjusters attempt to convince you that getting three bids is somehow in your best financial interest.

A common way that Adjusters will try to convince you that getting bids is a wise choice is to sell you on the idea that his or her Scope of Work is accurate and cannot be deviated from. In our experience, an accurate scope of work from an Adjuster is akin to finding a family of Unicorns in your back yard. It simply doesn't exist. If you buy into your insurance company's 3-Bid game and follow that road, you will run into another complex problem which puts you into an even more difficult position. Here is an example:

  • Your insurance adjuster presents you with an Adjuster Summary/Scope of Work showing 13 line items for a total of $11,200 in repair costs according to Xactimate (the industry-standard 3rd party estimating software).
  • Contractor 'A' looks at your property and finds 34 line items for a total of $26, 400 in repair costs according to Xactimate.
  • Contractor 'B' looks at your property and finds 8 line items and using his own pricing, comes up with $9,800 in repair costs.
  • Contractor 'C' looks at your property and finds 81 line items for a total of $52,600 in repair costs according to Xactimate.

Who is right? This scenario plays out OVER and OVER in the restoration industry. The insurance companies do everything they can to convince you that Contractor 'B' is the best choice because the Adjuster's scope of work is the bench mark for moving forward. Think about this now... How could it be that an Adjuster would have a better understanding of the detail and processes involved with repairing your damaged property than a restoration contractor would? The simple answer is that they don't. Adjusters take a short self-study or classroom course to learn what they know about construction. If your contractor disagrees with an Adjuster, there will often be compromise but increasingly, Adjuster's are instructed to pass the buck to an engineer if they are dealing with a knowledgeable contractor. (Insurance companies keep a short list of engineers to call upon for back-up.) The engineer comes out, looks specifically at one component of the Loss (for instance your roof) and writes a rather arbitrary opinion that the insurance company then uses to justify shutting down the claims process. The first time this writer documented that backfiring was in 2000 when a letter was fired off to the "independent engineer" that the insurance company had hired demanding that he release his income records to show who his clients were for the past three years. Oddly enough, his clients were all insurance companies. The insurance company quickly settled our claim rather than allow the issue to be publicized. Engineers have expertise when it comes to calculations and rely on concrete data and mathematical equations to reach conclusions. In truth, most property loss claims are much too complex and require too much construction expertise for an engineer to apply a formula to. Contractors tend to keep it simple: If the gouges and dents in the property do not have tool marks, assume that it was caused by hailstones (like the client said) and someone should be paying to fix it.

Who Can REALLY Help You?

Damage to your property is an insurance claim first and a construction project second. Whether you hire a public adjuster, attorney, or restoration contractor; establishing an accurate scope of work to restore your property must be your first priority.

A Public Adjuster is usually licensed with your State's Department of Insurance and has demonstrated a measurable amount of experience adjusting insurance losses. Virtually ALL public adjusters get their start (and indoctrination) with an insurance company. For a percentage of your settlement (5% - 30%) they will work directly with your insurance company to agree upon a Scope of Loss and insurance allowance for performing work.

There are a couple of disadvantages to using a Public adjuster. The first is that the Insurance Allowance that was expected to indemnify the loss will be decreased by 5% - 30% to compensate the Public Adjuster for his services. This means that it is less likely that you will find a contractor who is willing to work at a discounted rate. It is reasonable to assume that a discounted rate leads to diminished quality. Also, Public Adjusters have little to lose if they do not reach a settlement that meets your needs. This is because their vested interest in the outcome is minimal. In addition, depending on how long the Public Adjuster has been in business, he or she may have been trained by an insurance company that teaches the modern-day 'profit center' claims adjusting practices.

An attorney that specializes in dealing with stubborn insurance companies can be an excellent option but timing is everything. If you involve an attorney at the wrong time, your insurance company will 'lawyer up' and the claims process will come to a grinding halt. This is because the insurance company needs time to understand your situation and identify if they are failing to perform in 'Good Faith' (based on the provisions of your policy, state regulations, and court precedents). They NEED to stall until the 'bean counters' can be brought in to weigh their liabilities. Also consider that most attorneys who specialize in this kind of litigation charge 33% of the settlement amount which leaves precious little for construction costs unless they can secure a court award for compensatory and punitive damages. If you do not have a good case for a punitive damage award, hiring an attorney could be a big mistake because it will deplete your insurance allowance to the point where you cannot afford to have the work done properly. An attorney will also need reliable information from your contractor or Public Adjuster to determine what the compensatory damages should be. Furthermore, an attorney will need excellent documentation to establish that your insurance company has not been treating you fairly. Finding a good restoration contractor should always be prerequisite to hiring an attorney.

Many insurance companies are afraid of Restoration Contractors. This is because we have an advantage that they have been unable to overcome: Claimants have a legal right to use the contractor of their choice. We pose a threat to insurance companies' profits because we undermine their ability to capitalize on their customers' ignorance and/or inexperience. Insurance companies want their Adjusters to be able to respond to a Claim by telling the Claimant what their claim is and how much it is being settled for. The last thing they want is someone pushing back who has more knowledge than their Adjuster does and the power of the law standing behind the Claimant's decision to involve a Restoration Contractor in the adjusting process. The bottom line is that insurance companies do not yet have a legal right to dictate settlements although they are definitely making inroads via changes in policy language, bullying, litigation, lobby, and legislation. Most recently, they have realized legislation in several States (Minnesota for example) to re-define a Public Adjuster in an effort to legally disqualify Restoration Contractors from helping property owners settle their insurance claims. Several Insurance Commissioners (charged with protecting the public) have been pushed into the same behavior; warning contractors that they cannot act as a Public Adjuster. At the least, this discourages some contractors from helping their clients but worse, as this trend continues it will embolden insurance companies to run roughshod over the Restoration Contractors who are fighting for fair and accurate settlements. Claimants (who are CLEARLY overmatched) in the adjusting process will soon have to make a financial decision (to hire or not hire a Public Adjuster) rather than relying on the free negotiation services of their Restoration Contractor. This is GREAT for the insurance companies who could potentially save millions of dollars every year by reducing settlement amounts which could also 'theoretically" reduce premiums. Premium reductions sound good until you consider that the insurance companies have been profiting by stealing equity out of our homes without lowering premiums (in spite of profit increases) instead of fulfilling their contractual obligation to fully restore our property. In spite of new legislation and the games being played, good Restoration Contractors will adapt and keep up the fight. We are not 'negotiating' with them; they are negotiating with us. After all, WE are the ones with the contract to do the work. THEY are asking us to decrease OUR scope and pricing to be less than an indemnification, not vice versa. The very idea that an adjuster should have a legal right to tell a Claimant what it should cost to perform repairs WITHOUT their contractor having a say is ludicrous. As long as the Restoration Contractor has a contract to restore the property in place and has been directed verbally or in writing by the Claimant to reconcile their estimate with the insurance company; there is nothing to fear from the powers that be.

Note: While many contractors claim to be 'experts' at dealing with insurance companies; the simple truth is that there are only a handful of companies in all the US that actually staff people with the kind of experience and expertise that you need. In recruited experienced Project Managers, we have found that less than 1 in 10 applicants actually have a solid understanding of the claims process and will require substantial training.