For most contractors, working with insurance companies seems to be tricky, and there are a variety of opinions about whether these jobs are worth pursuing.

Garry Mack of Maxx A/C & Heating (League City, Texas) said he started doing insurance work after Hurricane Ike hit Texas in September 2008. “My experiences have been all negative,” he said. “The insurance companies want to pay half the going rate, and I have to get the remainder from the customer.”

Fellow Texan contractor Phillip Sterling of AC Today (Dallas) said he won’t work with insurance companies. “You have to deal with too many phone calls, faxes, or emails,” he said. “They ask stupid questions, like ‘Are you licensed and insured?’ My experience is those that do the work perform substandard work.”

Yet others have had positive experiences working with insurance companies. Elaine Powers of Powers Heating & Air (Peachtree City, Ga.) has good things to say about insurance work. “We have rarely had a problem with assisting a homeowner directly with their homeowner’s insurance claims relating to the HVAC,” she said. “There has been a small learning curve for many of the insurance claims adjustors relating to the refrigerant changes and the necessity to change the entire system including the refrigerant lines when the situation calls for this type of replacement.

“To be fair to the insurance companies, some less reputable contractors insist on changing the entire system and refrigerant lines even when it is possible to make component specific replacements. Most insurance adjustors are quite reputable and want to give the homeowner what the policy states that they are entitled to receive under the policy at the very least. And we wish to provide our clients with the best solution within the boundaries of their policies or offer the customer the opportunity to upgrade for a premium over the insurance company’s offer.”

The Pros of Doing Insurance Work

Some HVAC contractors have not jumped into insurance work with both feet but keep their options open, considering it as a niche market.

“Insurance work can be a good profit center if you have a niche,” said Jennifer Zipperer of Lakeshore Heating & Sheet Metal LLC (Manitowoc, Wis.). “If you have a specialty trade, you can charge what you need to keep your company profitable, and not get a lot of grief about it.

“Any work is good to have in today’s economy. Just be sure you know what you are doing and what you are talking about within your trade, so you don’t get sucked into the ignorance of the adjusters.”

David Queirolo of Queirolo’s Heating & Air Conditioning Inc. (Stockton, Calif.) does insurance work although he acknowledged that most insurance companies look for the cheapest price. “Contractors can be profitable, but only if they work out all of the details with the insurance companies beforehand and streamline the process to a workable situation for the contractor, customer, and insurance company,” he said.

Larry Sinn of TSC/The Service Company (Greer, S.C.) said insurance jobs are easy, good, clean work. He picks up work because other contractors in the area won’t touch insurance jobs. “We make above our normal rates because other providers really don’t want to deal with any paperwork,” he said. “We always use the claim amount as a bridge to upsell to better equipment. I think many contractors have a problem in that they try to sell more than the basic to the insurance company. The adjuster will reject anything more than the basic system. If we are upgrading, we do one proposal for the standard system to send to the insurance company and another for the upgrade to the homeowner.”

Sinn added, “It sometimes takes weeks to get paid but our average job is paid within three to five days.”

Pete Kiefhaber of Kiefhaber’s Heating & Air (Star City, Ark.) has mixed emotions about doing insurance work. “We have done insurance work for the last 25 years,” he said. “It ranges from lightning to wind and tornado damage and to other types of work. It did not constitute a large part of our work until two years ago. Even now it makes up about 10 percent of our work. It has been a good source of new customers and if we find the unit repairable, we usually can make the repair and the customer is very pleased.

“Insurance work in rural America will never be a profit center of any size. I think insurance work is a good add-on in our area, but I deal with the homeowner much of the time and let the homeowner deal with the insurance company.”

The Cons of Doing Insurance Work

Some HVAC contractors will not touch insurance work for several reasons, including slow payment, lack of educated adjusters, lowballing, and loss of cost control.

Stephen Scott of Accu-Therm (Pittman, N.J.) used a parable to describe his disdain. “Insurance companies remind me of that story about the man who found a chilled and nearly motionless snake lying in the road asking for help,” he said. “The man picked up the snake and took it to a warm place to recover. When the snake recovered, it bit the man. When asked by the man why he (the snake) had so freely bitten the man who had just saved his life, the snake replied, ‘How can you be surprised? It is the nature of a snake to bite, and you knew I was a snake when you picked me up on the road.’ ”

Scott further explained why he finds this applicable to working with insurance companies. “Insurance people are almost never technical people; they are strictly numbers people. They will always want you to work for the least margin possible while taking the highest degree of responsibility for the end result,” he said.

Norvin Gandolph of Enterprise Heating & Air Conditioning Inc. (Redding, Calif.) said he works with only one insurance adjuster because he has a longstanding business relationship with the adjuster. But he won’t work with any other insurance company. “They will always shop your price,” he said. “They will sometimes give you a job and then beat you up to lower your price or give you the work and then call back and tell you that they got some other contractor to do the job cheaper.

“They will do anything to keep from doing the right thing for their customer, too. Should the unit be 15 to 20 years old and has a failed compressor or heat exchanger, they will choose to do the repair rather than replace that old energy hog. At times, I have had to talk their customer into replacing the unit and garner the longer warranties and energy savings.”

“Insurance companies want the homeowner to get other bids and only want bottom dollar for the most part,” said Darrin Gador of Custom Aire’s One Hour Heating & Air (Grand Forks, N.D.). “You would have to take the time to build a relationship with the insurance company to possibly get what you need for the job and avoid the other bids. It seems the request to do an insurance-related bid is so few that it may not be worth the effort in kindling the relationship.”

Garry Mack won’t work with insurance companies and has a very candid opinion. “I believe all insurance companies are the death of the HVAC industry,” he said. “They are trying to control it just like the medical insurance, and they pay what they want and not what it cost.”

Publication date: 01/16/2012