Being an insurance company’s ‘preferred vendor’. What does it mean for the policy holder? - Dry Effect Restoration of Cincinnati

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Being an insurance company’s ‘preferred vendor’. What does it mean for the policy holder?

In the past, property restoration business owners were made or broken by what is referred to as a ‘preferred vendor list’, which was created by large property insurance companies (i.e. Nationwide, Allstate, State farm, etc.). By becoming a ‘preferred vendor’, national franchise restoration businesses like Servpro and ServiceMaster are able to portray continued worth to their franchisees. Being an insurance company’s ‘preferred vendor’ means a large quantity of restoration work for the vendor. But what does it mean for the policy holder?

Typical Claim Process:

First, we need to examine a typical water damage or flood damage restoration claim situation. In the past, a homeowner/policy holder would call their insurance claim line or agent if they discovered a water damage emergency. At this point, they would typically be referred to a ‘preferred vendor’ to do the emergency water extraction and drying out of the property. The term ‘preferred vendor’ is intended to make the property owner trust, and therefore use, said vendor for the restoration work. It is also purposely left unclear that the homeowner can hire whomever they would like to perform the work in their home.

Property restoration companies work for the homeowner and not for the insurance companies. All insurance property restoration is held to an industry standard set by the Institute of Inspection Cleaning and Restoration Certification (IICRC) or Clean Trust. All related work is expected to be done in accordance to the standards set forth. All insurance restoration is also held to standardized pricing. This is to ensure that credible business are all held to the same quality standard of work and to charge the homeowners the same amount for the same services.

Becoming A ‘Preferred Vendor’

To become a ‘preferred vendor’ with one of the large insurance companies, you have to agree to work off a discounted price list or agree to set a limit to drying time in return for a large volume of work. This becomes appealing to restoration business owners who no longer need to spend as much marketing themselves. By sacrificing some of their margin for a higher quantity of work, they are now able to make more money.

Is it Ethical?

This is where the questions of ethics arise. If any restoration business owner is receiving most, if not all, of their leads from preferred vendor list calls , do they REALLY work for the homeowner? Or do they bend to the whim of the insurance company to avoid biting the hand that feeds them? If a restoration business owner is guaranteeing not to charge the insurance company after a set amount of time for drying the structure, what do they do when they reach that limit and the structure is still wet? Do they continue to work, essentially for free? Or do you leave the property wet and move on to the next job? How are they really helping the policy holder cut future costs?

One such situation just made the news recently and is getting national attention:


The public is becoming more informed and starting to see through this process that benefits the insurance company and not the homeowner. Become educated and choose a restoration company that works for YOU!

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