Insurance companies could save millions with one change

For years I have been talking about how insurance companies could save a lot of money.  Usually they try to do this at the cost of contractors out there trying to make a living but there are other fundamental shifts in thinking that could save them a lot of money.  Today I want to talk about one of them, mitigation company vs. reconstruction company.

In the restoration industry there are a lot of people in the industry that own companies that do water restoration and reconstruction.  In my opinion, this is a huge problem and the cause of many needless cost overruns.  Here's two scenarios to illustrate my point.

#1 fresh water leak occurs and the insured calls a general contractor they know who also does water restoration. The contractor comes in and convinces the insured that everything that is wet needs to be removed.  So they proceed to remove drywall 2 feet high, baseboards, carpet and pad, cabinets, door jambs, etc.  So when they start to dry all they have left to dry is studs.

#2 fresh water leak occurs and the insured calls a company that specializes in mitigation only.  They come in and see solid wood baseboards, plywood cabinets, carpet and pad that has only been wet a few hours and they tell the insured that while they may have to remove some toe kicks under the kitchen cabinets that they will be able to dry the rest of the structure in tact. This can be done through the use of quality water extraction tools, axial air movers, and highly advanced low-grain refrigerant dehumidifiers.

Which scenario is going to cost less to get back to pre-loss condition?  Of course #2 is, however there are so many construction companies that can not make a decent living without getting water restoration jobs to fuel their construction company that drying is becoming a dying art.  There is no incentive to dry an item in a home if you make money off of pulling it out and replacing it.  Most of these companies have crews they need to keep busy and drying a whole house intact doesn't help keep the crews busy.

What I think needs to happen is the industry needs to have only mitigation companies and only reconstruction companies.  Both are needed, the problem comes in when one company does both.  It's a conflict of interest and should not be allowed to occur.  Implementing this would be difficult and hard to police and enforce but if it did occur it would save insurance companies millions which would lower all our premiums.  I also understand that this is America and you shouldn't be able to tell companies that you can or can not do stuff like that so it will probably never happen.

However, with today's advancements in drying equipment, training, and industry standards drying structures completely intact has been possible for over 10 years now and we still have a large portion of the restoration industry that refuses to do it.  Change will continue to be slow until more insurance companies start looking for companies that can dry an entire structure intact rather than reconstruct it.