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Third-Party Administrators in Property Claims

Insurance carriers do not usually refer a contractor to an insured. However, there are third-party administrators (TPA) that are assigned, and they will assign a licensed contractor to perform the water mitigation, mold remediation, or repairs to an insured’s property. Insured also can choose their own contractor for the services needed during the claims process instead. Preferred programs (TPA’s) can be seen as a necessary evil in the industry. I don’t mean this is the overall interpretation of everyone in the industry. There are those in property claims that feel as though TPA’s have “saved” the claims industry overall.

What does a TPA really do for the insured? Well, TPA’s can offer a “workmanship guarantee” to the insured whereby the original contractor is contractually obligated to perform any warranty repairs. As an example, I was once a TPA contractor (many years ago). As such, I was requested to go to a loss for an insured to mitigate the loss and to make the necessary repairs. Well, the insureds bathtub was cracked and needed to be replaced. We spoke with the carrier regarding this as the insured was too large for us to put back a fiberglass tub (and carry a warranty). We explained to the carrier that even though the insured had this (almost) exact tub initially, we are unable to replace with the same tub. The insured understood our request as he preferred a more suitable tub for his needs.

We continued to discuss this with the insurance carrier, however we were informed (by the TPA) that we were not meeting adequate timelines on the repairs. We explained ourselves that we have been in communication with the adjuster and that it was visible through XactAnalysis (claims documentation platform). We were then informed that if we did not complete the repairs in a timely manner, that we would be out of compliance with the contractor guidelines and would be put on disciplinary action for 30 days. This was mind blowing to me. First off, you can see the conversation between our company and the insurance adjuster. Secondly, this was not a normal case where we could perform the repairs in a timely manner. We needed answers and we are not capable of producing such answers ourselves. Additionally, the tub manufacturer also stated that the warranty was only going to be upheld on the tub if in fact the weight limit was not exceeded.

We ended up installing the tub, well, because we were forced in to doing so by the TPA. Fast forward 5 years later – We get a phone call from that same insured informing us that the tub we installed 5 years ago is now leaking. The insured also has contacted the carrier and TPA to inform them as well. Now, we are literally contacted by the same TPA to change out the tub. I decided to go back to my office and pull the file to see how long ago we installed this tub.

To my surprise, we installed this tub 5 years and 7 months ago. The TPA mandates that we hold a 5-year guarantee on our work. Here’s the catch, the TPA informed us that we are to fix this issue by replacing the tub or else we will not be receiving work from them any longer. Now wait a second, we already must conform to your pricing, standards, guidelines, etc., and now you want us to dig deeper to replace this tub that we were against installing in the first place. We were informed that if we don’t replace the tub, we will face being cut off the program – possibly for good. This was all because of the guarantee and that the TPA practically owns you once you are in the system.

The moral of the story is simple – build up your restoration business organically! Do not focus to rely on a TPA to tell you how to function and operate your business. To be honest, the TPA is another company that will do whatever needs to be done to stay in business. I mean, I get it – but it doesn’t mean that I agree with what is happening. If you want to build up your restoration sales and marketing efforts, let’s talk! I’m very open and honest when it comes to scenarios like this one mentioned above.


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