With another winter season underway, there is an increased potential for water damage to structures and their contents. Whatever the cause of the water intrusion, whether storm-related, a burst pipe, or firefighting efforts, it’s likely that the services of a water damage extraction service provider will be involved. Early and comprehensive attention to detail when hiring and managing an emergency mitigation service (EMS) contractor can significantly impact loss costs. This blog will explore some key considerations when negotiating, contracting, overseeing, and managing EMS charges in water intrusion losses.

Engaging an EMS Contractor and Negotiating Terms of Service

Every effort should be made to engage an EMS contractor as soon as possible. A full copy of any service agreement should be requested along with the contractor’s rate sheets and job/labor classifications. From the beginning, ensure that the scope of work is clearly defined – and the insurer and the contractor are using the same definitions for terms. Even familiar terms such as “emergency services,” “mitigation,” “remediation,” and “restoration” should be classified in the same way. Since each category of services has different price tags, and sometimes the terminology is used interchangeably, a misunderstanding about which services fall into which category can often lead to surprises in the invoices. These terms represent four separate project phases, as defined below.

Establishing Rates and Scope of Work

Services needed in each phase differ, which should require a change in rates charged by the EMS contractor. Once the emergency is over – the water flow has been stopped, and the building is secured – there should be an opportunity to plan the mitigation, remediation, and restoration phases.

Meet with the EMS contractor as soon as possible to go over the plan and the contract. Keep in mind while creating the plan that, depending on the size and complexity of the loss, there could be additional considerations. For example, is there a need for a “clerk of the works” to assist in monitoring? Is there a need for an industrial hygienist? Are there special circumstances that will drive loss remediation/restoration (i.e., historical landmark)?

As services are being provided in the later phases of the loss adjustment, consider the following additional areas of focus:

• Ask the EMS contractor for labor rates and confirm that job titles and labor classes match the rates. The EMS contractor should have distinct levels of skilled workers charged out at different rates. Ask for certifications to match the labor classes for the employees. Day laborers doing demo work should have a different rate than a certified technician, for example.
• Ask that all workers for the contractor check in and check out with their job titles/labor class each day. Include supervisors in the check in/check out process.
• Count equipment. If dryers, desiccants, and dehumidifiers are unplugged or sitting idle, ask why they are there. If they are not being used, you should not be charged for them. The cost of equipment should not be a percentage of the labor charges.
• Be careful when using estimating tools/programs. As noted above, there are many variables and the costs should not be simply broken down according to square feet. Estimating tools assume a single task; workers typically do several tasks such as mopping, demo, and so forth. An eight-hour day can quickly become a 16‑hour day in an estimating software. Think in terms of what one worker can do in a single day.
• Keep detailed notes and follow up in writing after conversations with the EMS contractor. Confirm what has been agreed to already, as well as those items that remain open for further conversation.
• Pay careful attention to potential markups for equipment, overhead, profit, office, administration, supplies, and travel and meals by the EMS contractor.
• Even with good communication, you may still find the EMS contractor’s final bill to be a surprise. Pay for the services/rates that were agreed to and work with the contractor to adjust the disputed amount.

Don’t miss the opportunity to discuss the scope of work and to review the EMS contract with your insured up front. Water-related damages can be unfamiliar for them. Let the insured know that they have the right to limit costs by setting a “not-to-exceed amount.” A good EMS contractor will understand and, though they may not like it, should start the project knowing that the insurance company will be in contact with them to discuss costs.

Your Gen Re claim executive is available to assist you before, during and after a water intrusion loss, so please reach out to learn more.