By Kevin Lahey and Dan Turpin | Published October 3, 2022
As originally published in Restoration & Remediation Magazine
Processing claims and completing renovations in a timely fashion that keeps all parties satisfied and financially
whole is the goal of every improvement-minded person. However, many projects experience delays — from
unforeseen human error to unavoidable or seemingly random events that unfold — leading to frustration from
all parties involved.
Below are seven of the most common insurance claim delays during a renovation or reconstruction project:
1. Negotiation and Scope
The project’s final scope stands as the first potential roadblock to a claim valuation. Disagreements on the final
cost, value of items, work needed, and budget limitations can all sideline a claim and stall projects.
Without a determined scope of work, plans can’t be accurately drawn and permits can’t be secured. Once there
is an undisputed scope of work, the project can begin.
2. Coverage Disputes
Coverage disputes between the insurance company and the insured typically boil down to misunderstandings
and disagreements on the extent of coverage. However, both sides should remember that an insurance policy
is nothing more than a contract, and the terms and limitations of the contract are thus the terms and
limitations of the policy. Disputes can range from policy limits to policy interpretations, and a host of different
coverages or sub-coverages.
3. Contractor Commitment
Once an undisputed scope of work is determined and all parties are satisfied with the plan as it relates to the
policy, the insured needs to select and enter into a formal agreement with the contractor so the project can
move forward. Contractors cannot commit funds or time to order materials, recruiting or assigning skilled labor
to the project and determining lead times until there is a signed contract.
Sometimes, the insured will not move quickly to secure a contractor, which increases the overall time to
complete the work and close the claim.
4. Skilled Labor and Materials Availability
Labor and supply-chain disruptions can easily hold up a project in today’s macroeconomic climate. Yet, delays
aren’t limited to the effects of global inputs; contractors must deal with local market conditions as well.
This happens when a project is one of many because of a regional catastrophe, such as a hurricane or wildfire.
Resources are in high demand and become scarce in such instances.
Similarly, an unforeseen shortage of a geographically specific natural resource used (i.e., natural stone from a
specific quarry) for the replacement materials can delay a project. True claims story: A North Carolina nursing
home needed Buckingham slate for its 100,000-square-foot roof replacement, which comes from only one
quarry in the world. Originally the contractor estimated 12 weeks to get the materials. However, the quarry hit a
bad vein of slate and increased its estimate to two to three years, in order to cut through the bad rock in the
quarry.
5. Plans and Permits
At times, it’s possible to get a permit directly from the scope of work, but it doesn’t always happen. Getting
plans drawn correctly, approved, and processed through permitting can become roadblocks if there aren’t clear,
complete details from the start. If the architect or engineer doesn’t have the correct scope of work in mind,
plans could include more code-related items than necessary prior to the permitting processWhen the plans are ready to submit, the permitting body may be overtaxed and experiencing delayed permit
times. Some agencies will allow payment of a premium fee to use a third-party plan check company and
bypass their plan check process.
Also, insurers can hire expeditors to accelerate plans through the permitting process. Investment in these
solutions typically is worth every dollar, especially in certain municipalities, as they are proven ways to
minimize or avoid delays. Include your building consultant or expert in the plans and permitting processes up
front to ensure the drawings match the scope of work as originally intended.
6. Advance Funding
If a contractor needs to order materials or manufactured items with long lead times and cannot access enough
advanced funding to do so, a project can grind to a halt until those items can be ordered without threatening
the investments of all parties involved.
Even in a situation where the estimated final payment is agreed upon by all parties, insurance companies
should provide adequate funding for the order of long lead-time materials, possibly entering a provisional
contract (which can be altered later) with the contractor to order equipment. Creating a Notice of Intent signed
by both parties to help protect the capital investments of the contractor also can help prevent funding
roadblocks from delaying the process.
7. Supplements
Supplements are sudden changes to the original scope of work amended during the project because they are
discovered while the work is happening. The scope of the project might have been agreed upon, but a job can
pause if the contractor finds conditions or issues previously unknown to address.
For example, the contractor may find a need for methane abatement under a concrete slab during a
demolition project or the inspector discovers the entire building needs re-wiring after they gained access to
the electrical system. These supplemental issues cause plenty of delays and financial headaches.
Communication and Flexibility are Crucial
The above project delays by no means represent the only roadblocks to a claim. There are seemingly millions of
issues that can slow a project. However, these are the issues that seem to occur most frequently, and insurance
companies should work to avoid.Clear, concise, and early communication across all stakeholders can help
overcome many of these roadblocks. Flexibility and innovation to find solutions that work for everyone involved
can help get claims processed and projects completed efficiently and on time.
This information is intended for informational purposes only. Each restoration project has unique properties and must be evaluated individually by knowledgeable consultants. RMC Group is not liable for any loss or damage arising out of or in connection with the use of this information.