Air Date: 8-9-2013| Episode: 295
A ruling published by the Supreme Court of Florida earlier this month held that general contractors are entitled to overhead and profit charges under a replacement cost homeowner’s policy…
A ruling published by the Supreme Court of Florida earlier this month held that general contractors are entitled to overhead and profit charges under a replacement cost homeowner’s policy. Attorney Paul T. Zeniewicz joins us this week to discuss the implications of this decision. Mr. Zeniewicz is an attorney with Cohen and Battista in Winter Park, Florida and the focus of his practice is first-party property insurance claims.
According to Attorney Zeniewicz “the opinion affirms that overhead and profit are included in a covered loss when the homeowner is reasonably likely to need a general contractor for repairs. The impact of this decision negates the prevailing opinion that incorrectly implied that overhead and profit were only recoverable when a general contractor employed three separate and distinct trades. In short, the decision simply reinforces what we already knew… that contractors and vendors should be able to recover for overhead and profit costs under a replacement value policy. We look forward to using the Trinidad opinion to bolster our position moving forward.”
Mythbusters, 10% & 10%
Attorney Paul Zeniewicz, along with his colleagues at the Florida law firm of Cohen & Battisti spend a significant amount of their professional time battling to protect the financial interests of insurance repair contractors.
Nuggets mined from today’s broadcast:
· Many collection problems can be avoided by Avoid collection proper preparation: use professionally drafted contracts, assignment/direction of benefits authorization forms, use photos and technology to document work and communicate with insurance adjusters.
· In the legal case of Trinidad versus Florida Peninsula Insurance Company, the Florida Supreme Court ruled that policyholder was entitled to receive the proceeds necessary to restore their property to pre-loss condition, including profit and overhead.
· If you can’t show me where it is written in the insurance policy or in the law that contractors must use 3 sub-trades in order to be entitled to receive 10% overhead and 10% profit on a project, then it is a myth.
· If you can’t show me where it is written in the insurance policy or in the law that contractors are restricted to 10% overhead and 10% profit, then it is a myth.
· It may be possible to use civil theft as a mechanism to rescue insurance repair proceeds that are being “held hostage”.
· Because the mortgage company has a financial interest in the property and a financial interest that may at the time be greater than the property owner’s, the mortgage company may be entitled to apply insurance proceeds to past due mortgage payments.
· Reasonable cost is what is due, so it may be a breach of contract for an insurance company to indiscriminately reduce a repair contractor’s invoice for emergency service and/or repairs.
· While the Florida case law in the Trinidad case is not binding in other states, it is probable that the ruling will be persuasive in other states. “When dominos begin falling they have to land someplace.”
From my knowledge and experience, it’s the 10% overhead component of the 10% overhead & 10% profit formula that is broken. 10% doesn’t begin to cover the overhead for an emergency service responder and/or general contractor performing insurance repair services.
It’s sad that the bottom line is when the insurance industry will not permit emergency service and/or insurance repair contractors to make a fair profit transparently, contractors will adapt and do what is necessary to make the money they need covertly.
I opine the poster boy for the myth of 10% and 10% is Michael Griggs, a disaster restoration contractor from the Denver, CO area who is currently serving 50 months in federal prison for mail fraud. While the devil didn’t make Michael do it, I contend that the insurance companies did have something to do with his breaking the law. I wonder what motivated the U.S. Attorney’s Office, District of Colorado to prosecute Griggs? Perhaps making a big example out of one prominent insurance repair contractor was a way to cut costs by getting the rest of the industry to toe the line?
Today’s Music- Perry Mason Theme
Z-man signing off