Paying for Water Damage Mitigation: When Are You Getting Gouged?

1/4/2017 (Permalink)

After a water damage, the last thing people want to realize is that they're getting gouged on mitigation prices.

When it comes to pricing, we probably get the same types of responses most businesses get. Some customers will (do) say we are expensive.  Some will (do) say we are less than average.  Others will (do) say we are fair and just right.

The truth is, it is hard for typical customers entering the water damage industry to know if they are getting treated fairly. Most people have never had a water damage. Nor have they needed a mold remediation, and are even less likely to have purchased fire/smoke/soot cleanup services. Most people have no idea what to expect. 

The situation gets especially stressful for the consumer who doesn't have insurance. If they don't have insurance the cost for cleanup and mitigation, it's a double-whammy. Not only are they going to have to pay out-of-pocket, but they encounter the stress of wondering if they're getting treated fairly or not. That stinks. 

The rules we've established for ourselves at SERVPRO of Miami Beach when performing water damage mitigation services is to charge standard and customized rates. The reason for this is simple.  We want our staff and customers to focus on the job at hand -- getting residents and business owners back into their property. We find that once people know they will be paying from a juried price list, the fear goes away, and the comfort level rises. 

What are standard and customary rates? What exactly does that mean? 

There are two answers to this question, and they go hand-in-hand. We feel they are critically important for the customer to know so that they get treated fairly and that they have a sense of comfort that they are being treated fairly. 

The first answer has to do with the pricing system called "Xactimate." Xactimate is an estimating software of national influence that features a price list with standard and customary prices. The pricelist in this software is updated monthly for local market conditions. The prices are juried, meaning they are not made up by us.  The prices are deemed standard and customary.  Generally speaking, they are high enough to pay for competent service providers. Xactimate is the single most dominant and widely used software and price list employed by insurance carriers to pay contractors for the type of work we do.  

The second answer has to do with adhering to standards that are established by standards-setting authorities. The most prominent of these organizations is called the IICRC, the Institute of Inspection, Cleaning and Restoration Certification. This is, in our view, even more important than the individual rates we charge for services. We see and hear of so much abuse by contractors in this area.  It is disturbing.

For example the IICRC established standards that govern how much equipment mitigation contractors should reasonably place on a job.  This is critical because it is how many abusive mitigation contractors over charge and in some cases double or triple a bill versus what it really should be. The IICRC has set standards in terms of how many air movers and dehumidifiers should be placed on a water damage job. They use cubic footage, square footage, and linear footage to set the standards. For example a space with a certain amount of cubic footage may justify only one dehumidifier of a particular capacity. Many contractors will place two or three dehumidifiers in the same space even though only one is justified.

Why would the contractor place two or three times as much equipment in a space as the standards call for? Are they doing an extra good job? Truthfully, in this hypothetical case the additional dehumidifiers provide no additional benefit. If one dehumidifier bills out at $110 a day and it takes three days to dry the space, the final bill for that dehumidifier will be $330. But if the contractor places three dehumidifiers when only one was needed, we all can do the math. The bill will be $990 instead of $330. In this case the mitigation contractor violated the standards set by the IICRC as a way to squeeze more blood out of the insurance company's rock -- or your wallet, if you don't have insurance. Most times they'll get away with it because the homeowner signed a contract before the job because they were so stressed out about the inch of water on their floor. After the job, the last thing they want to do is get a lawyer and fight their mitigation contractor. They just want to get back into their business or home. The insurance carrier is experienced enough to know they're getting gouged. But they too simply want to move on and get the file off their desks. Unless it's egregious to a substantially material degree, they will probably pay the bill and move on to the next one.

There are exceptions to the rule of using Xactimate to bill out water damage jobs. For example, on larger jobs we tend to use a pricing system called "Time and Materials" (T&M). This system, too, is widely expected ad understood by adjusters who tend to work on these larger jobs. The adjusters prefer this type of system because it makes their lives easier and the bills typically come out lower.

At the end of the day, our biggest advice to consumers is to find a contractor to work on your water damage that will have an established pricing system that is fair, standard and customary.  That's what we offer at SERVPRO of Miami Beach!