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What to do with $7K?

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Shadowbunny

Queen of the Not-Rights
@adjusterjack I"m tagging you as our resident expert. Here's the situation.

Last year's monsoon damaged the roof of one of our rental homes. Local contractor (bonded, insured) put in the quote to our insurance company, Safeco. The quote to repair the damage included replacing the decking. In fact, the quote stated that it had to be replaced to bring it up to code. Got the initial payment from Safeco; paid it to the contractor.

Our tenants let us know when the job was done so we could go check it out. Not only did the contractor fail to remove a truckload of debris, but he also failed to install 2 whirlybirds AND, most importantly, he failed to replace the sheathing. 4 months later he asked us for payment. I contacted Safeco, and they stated he hadn't submitted the final invoice. Let contractor know that he needs to submit the invoice to the insurance company. We also told him that his crew didn't replace the sheathing or install whirlybirds as per the original quote. We let our Safeco rep know all of this.

Here we are now, almost a year after the original damage, and contractor contacts us again. He still hadn't submitted an invoice to Safeco, and still hadn't responded to our inquiries about his failure to replace the sheathing. Again, we tell him to submit the invoices that Safeco is asking for.

Today, we're notified that Safeco has cut us a check for $11k. That is the amount for his original quote that includes replacing sheathing and installing whirlybirds. Contact the claims agent, explain AGAIN that he didn't complete all the work that was on the original quote, and that he has charged them for work he didn't complete. Claims agent tells us to pay him for what he did (about $4k worth). Ask her what to do with the rest -- and she won't answer.

We're at a loss. Seriously -- why does Safeco want to overpay him? Or us? Keeping the $$ doesn't seem right; neither does paying a contractor who didn't do the work he claimed he did. Any suggestions?
 


adjusterjack

Senior Member
I have to be blunt here because you made a few mistakes.

Got the initial payment from Safeco; paid it to the contractor.
That was the first mistake. NEVER pay a contractor up front. Not a dime until he actually works. If you have to buy the materials and have them delivered to the site, do it. I realize that this is a tough thing for the average homeowner to do but if you don't learn how to do it, especially, with rentals, history is destined to repeat itself and you will lose a ton of money for shoddy work.

Our tenants let us know when the job was done
Second mistake. You should have been there every day making sure the contractor was doing what he was supposed to do.

We also told him
Third mistake. Should have put everything in writing with photos of his shoddy work and laid a proper paper trail in case you end up in court.

Again, we tell him to submit the invoices that Safeco is asking for.
Again, should have been in writing.

Claims agent tells us to pay him for what he did (about $4k worth).
That's up to you. You gave him the initial payment. If the additional $4000 is undisputed then it's always a good idea to pay the undisputed amount with a letter explaining that you are paying the undisputed amount and holding back the rest until he resolves the remaining issues.

Ask her what to do with the rest -- and she won't answer.
Hold on to it. Put it aside and don't touch it until you resolve the remaining issues with the contractor. If he comes through and gets it right, you'll owe it to him.

Seriously -- why does Safeco want to overpay him?
Safeco isn't overpaying him. Safeco is paying you the estimated cost of repairs. You get to decide how you want to disburse the money. Sometimes you spend less, sometimes you spend more and get a supplement. Sometimes a contractor does the work for exactly the estimated amount.

I've had several claims of my own where my insurance company paid me based on their adjuster's estimate and got the job done for less and kept the rest. The claim rep doesn't care once the money is out the door. Neither did I when I paid my policyholders.

Keeping the $$ doesn't seem right
You're not actually keeping it at the moment. You're kind of holding it in escrow until you can resolve your issues with the contractor. Keep in mind that you might end up in court over this.

neither does paying a contractor who didn't do the work he claimed he did. Any suggestions?
All of the above. The important one is start laying the paper trail with written notices to the contractor and if he is licensed (I hope so) file a complaint with the state licensing agency.

Let me know if you need any more discussion.
 

Shadowbunny

Queen of the Not-Rights
Thanks, Jack.

It never crossed our mind to not pay him the initial payment for the materials -- didn't really know it was an option to buy our own materials. Lesson learned.

The good news is that ALL communication has been via email. Several times he's tried to move it to the phone, which we've refused to do. Have told him that ALL communication will be in writing. So there's that. And he is licensed; we checked with the ROC before hiring him.

It's just so hard to wrap my mind around that Safeco is paying for him to complete a job based on his estimate, yet they don't seem to care that it wasn't done. I told my husband that we need to pay him for the work he did as soon as we get the check, with a copy of the estimate (with the items he didn't do lined through) so he knows EXACTLY what we're paying him for. Is there a better way to do this?

Your help is greatly appreciated -- kicking myself for not asking for your advice at the beginning.
 

adjusterjack

Senior Member
It's just so hard to wrap my mind around that Safeco is paying for him to complete a job based on his estimate
Safeco is paying you, not him. Keep repeating that to yourself. :giggle:

yet they don't seem to care that it wasn't done.
Whether it's done or not is between you and the contractor. Safeco complied with your policy provisions by evaluating the loss and sending you the check.

I told my husband that we need to pay him for the work he did as soon as we get the check, with a copy of the estimate (with the items he didn't do lined through) so he knows EXACTLY what we're paying him for. Is there a better way to do this?
I think your idea is on the right track.

Keep in mind, however, that if he doesn't fix what he messed up you may end up with additional cost to redo his mess, especially if you have to take up shingles to replace decking.

And he is licensed; we checked with the ROC before hiring him.
Good. File a complaint. He deserves to have the state come down on him. Might convince him to do right without you having to go to court.

It never crossed our mind to not pay him the initial payment for the materials -- didn't really know it was an option to buy our own materials. Lesson learned.
It's always an option. Some contractors will do it and some won't. I always tell them up front that I'll buy the materials, they give me a price on the labor, and I also explain that I don't pay up front, I pay on completion of the work or sometimes in increments if the work takes longer than a couple of days. If they don't want to work that way, that's fine, down the road they go and I move on to the next contractor. Doesn't take me long to find who would work on my terms rather than not work.
 

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