The National Institute of Restoration


Preferred Contractor Program
The Preferred Contractor Program Provides Benefits for All Parties in Insurance R
By Walter Lumpp

If a business is to stay ahead, it must look for ways to cut costs and improve products. Never has this been more true than in today's economic climate. And this trend is especially evident within the insurance industry.

One result of the ongoing attempts to save money and improve service has been the development, within the industry, of the preferred contractor program. In general terms, this program is an agreement between an insurance company and an insurance restoration contractor on standards of work and profit margins. When a policy holder files a claim with the insurance company, the company contacts the preferred contractor to make necessary repairs. The arrangement expedites the job, saving time and money in the claims process.

Not all insurance companies participate in preferred contractor programs, but the trend is growing. It is certainly worth the serious attention of restoration contractors.

Following are some general questions and answers about preferred contractor programs:

QUESTION: How are preferred contractors chosen?

Insurance companies often invite contractors whose local reputation they know to participate in the program. A contractor may also approach an insurance company to apply for preferred contractor status. The company will review the contractor's work and reputation before making a decision.

QUESTION: How can a contractor qualify?

A copy of the Certificate of Insurance, a business license, and a general contractor's license if required in that state. The insurance company may also ask for references from previous customers, banks and businesses. The company may want to inspect as many as half of the contractor's completed jobs, either through a site visit or telephone interview.

QUESTION: Who guarantees the work of a preferred contractor?

The insurance company guarantees the preferred contractor's work to the policy holder. But the contractor is still expected to handle complaints and all warranty items relating to his work for a year.

QUESTION: Does the preferred contractor automatically get the job?

The decision about who will do the restoration work still rests with the property owner. The company representative will explain the preferred contractor program to the property owner, and if the owner agrees, the restoration work will go to a preferred contractor. In that case there is no bidding, and at no time does more than one contractor visit the site of the job.

Walter Lumpp is Director of the National Institute of Restoration, Inc.

Walter Lumpp
NIR Director