When a policyholder files an insurance claim, his or her adjuster starts the claim settlement negotiation with a statement along this line:
Now we (meaning whatever company the adjuster works for) only pay repair prices that are "fair and reasonable".
What this really means in insurance speak is:
Our company has this program that we ALLOW vendors to join
IF they will agree to accept LESS than what all other vendors charge. And we call this price "fair and reasonable".
Let's explore "fair and reasonable" by applying it to insurance companies and insurance policies. Would it "fair and reasonable" to charge every customer the same rate for a residential policy? I think so. Well, you need to understand how insurance companies determine the rate they will charge you for a homeowner's insurance policy?
1. An insurance company checks your credit score. A better score with qualify you for a better rate.
As a water damage restoration company, we don't care what your credit score is, whether it is 560 or 820. We charge every customer the same rate for our services.
2. An insurance company checks your CLUE (Comprehensive Loss Underwriting Exchange) score. The score can range from a low of 200 to a high of 997. Above 770 is good, below 500 is bad. This score is determined by the number and type of insurance claims you have filed in the past. This may sound reasonable, however, the insurance company may also use your home's CLUE score. This score reflects the number and types of claims the have been filed concerning your home itself. You may not have owned the home when the claims were filed, but they still can affect rate you are charged for your policy.
We are not concerned with what happened in your past concerning claims filed. In fact, we don't care about anyone's past history of filing claims. We charge every customer the same rate for our services.
3. Insurance companies charged people different rates based on their education, or lack thereof, and their income level. Radio personality and author Clark Howard, nicknamed "The Consumer Warrior", reported on insurance company pricing practices and how unfair they can be. Clark reported that for a woman with a college degree and a good paying job, the rate that she would pay for auto insurance would be one-third of what a woman with the same driving record, but only a high school diploma and an average paying job would pay, for the same coverage. How ridiculous is that?
We don't care if you have a PHD, a GED, or if you didn't finish the 6th grade. We don't care if you make $1,000 per year or $1 million. We charge every customer the same rate for our services.
Insurance companies all have their own unique scoring system. That means that no two insurance companies determine rates the same way. And yet each insurance company will attempt to convince you, their policyholder, that ALL repair contractors should charge the same rates for their services.
"Wake up America!"