The National Institute of Restoration

BUSINESS ISSUES

Guarantee

So you guarantee your work?
Warranties and guarantees are golden words to consumers. But when you are making written pledges about the quality of your work, the value of your service, or the performance of your product, you should include these points recommended by the Federal Trade Commission:

Disclosure: A warranty can be full, limited or partial, and you must let the consumer know which it is in a statement that is separate from the rest of the warranty.

Coverage: Explain what the warranty covers; otherwise, you'll be held responsible for any type of malfunction whether or not it is something you can control. Clearly state time limitation and restrictions.

Remedy: Let the customer know specifically what you will do if the product or service fails to conform to the standards of the warranty.

Service: Be sure you include the address and telephone number for the customer to contact in case problems arise.

State law: Localities vary, but be sure you include this FTC generic language: "This warranty gives you specific legal rights, and you also may have other rights which vary from state to state."

Fascinating facts
Hitting insurers for non-renewals
New York is clamping down on insurance companies that refuse renewals to residents in coastal regions. Legislation before the state legislature would extend policy periods from three to five years, and prohibit insurers from refusing to renew policies simply because of a property's proximity to the shore. The legislation would permit insurers to discontinue only two percent of their business in any given territory, but would allow multiple rates so insurers could offer coverage for a wider range of risks.

Flood program saves tax dollars
Recent floods in Louisiana prove that National Flood Insurance can save taxpayers money. FEMA officials estimate that the payout of $194 million for flood damage produced a savings of $200-$263 million to the taxpayers since only 12 percent of the aid to Louisiana victims had to be financed by the U.S. government. The remaining damaged properties were covered by flood insurance.

Bonuses for shutters and bolts
A New York law mandates rate discounts for homeowners who install hurricane or storm shutters on their property. The provision follows earlier legislation that requires insurers to give property owners a break for installing smoke detectors, fire extinguishers and dead bolt locks in residences.

Construction theft on increase
Equipment theft in the construction industry is estimated at $200 million with highest losses in California, Florida and Texas. The overall recovery rate of stolen equipment is less than 50 percent.
 
The governor of California has signed legislation that allows insurers to satisfy the mandatory offer of earthquake coverage with a mini-policy. Provisions include full dwelling coverage subject to a 15 percent deductible, no coverage for appurtenant structures, and content coverage equal to ten percent of the structure loss.

Between 1988 and 1993, the value of insured residential property in the most hurricane-prone counties in the country increased by 166 percent. According to the Insurance Research Council, the value of insured commercial property in that same area increase by 193 percent.

The Insurance Research Council reports that the country's most hurricane-prone counties have increased in population by 15 percent between 1980 and 1993. By 2010, population in those counties is expected to double, to 73 million.

Insurers in Missouri are having to change tactics because of a conclusion by the Missouri Department of Insurance that some qualification practices amount to underwriting discrimination. Among the questionable practices: 

► considering geographic locations in deciding whether to renew or cancel policies

► refusal to renew homes in neighborhoods where there had been a theft claim in the preceding year

► using the age of a home in underwriting decisions since the result was discrimination against homeowners in urban areas

► denial of coverage based on the marital status of the homeowners.

The Foremost Insurance group announced it would stop writing new policies for mobile homes in Florida. The move was in protest to state regulatory agencies that the insurers believe set the premiums at a third of the realistic rates to cover exposure.

There are wide variations in calculating replacement value according to a study with the 10 largest insurers in California. Dollar estimates of the replacement cost of a model home varies by 67% between the highest and lowest figure.

Texas ranks first nationally in the number of tornadoes - a statistic that has drawn the attention of underwriters in that state.

Relatively more arsonists work in Hawaii than in any other state. In 1992, 43% of all fires in the island state were arson-related. Other contenders for this ignominious distinction included Washington, D.C. (35%), California (30%), Colorado (28%) and Connecticut (25%). According to that study, Vermont is the safest state for property owners. Arson caused only four percent of the fires there.

Pollution coverage
Protection from pollution liability is vital for restoration contractors

General contractors have not taken seriously their pollution exposures according to Mark Elgin, a construction underwriter for ECS Underwriting, Inc. General contractors normally do not purchase pollution coverage for their day-to-day activities. Since commercial liability coverage specifically excludes pollution exposures, failure to acquire the additional coverage can have devastating consequences.

Elgin cited these instances where contractors suffered the consequences of being without pollution coverage even though their exposure was incidental:

► An excavator unknowingly removed soil contaminated with dioxin and stockpiled it on adjacent property. The EPA forced him to acquire the property and construct a containment system costing a total of $250,000.

► A mechanical contractor who incorrectly installed a HVAC system in a new office building that produced toxic mold and mildew faced claims in excess of $100,000.

► A contractor etching the exterior of a commercial building using muriatic acid allowed fumes to enter the structure. Chrome fixtures were ruined resulting in $75,000 damage.

► A major thunderstorm caused the tack coat of an asphalt parking lot to wash off into a nearby stream. Cleanup costs, which the contractor had to pay, exceeded $200,000.

► A flooring contractor reconditioning a tile floor had to pay $25,000 in defense costs and bodily injury claims because of toxic vapor inhalation by a third party who breathed in fumes from sealants.

► A bridge construction contractor was liable for a $300,000 property damage claim for lead paint chips and dust generated by a subcontractor performing abrasive sandblasting of a bridge in a residential area.
Great pictures
Show off your work in pictures

Good photography has a dramatic impact on potential clients in illustrating your services. Before and after photos are particularly effective, so you should always have a camera close by to record your work. Good photos don't just happen. They require some skills. Remember these tips from professionals as you look for the best way to showcase the services of your business:

► Decide what you want to show and focus on that. Avoid the tendency to show a little of everything, and leave out what is actually visual clutter.

►Be creative with angles. Looking down from overhead or up from below offers an unexpected but eye-catching vantage point.

►Don't be neutral. Have your pictures express a point of view so that they will be visually interesting.
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