How to Avoid a Disaster When Asked to Take on Disaster-Driven Business

Seven tips to avoid becoming the next victim

5 MIN READ


Disasters of all sorts are in the news. Harvey dumps unimaginable amounts of rain. Irma brings wind and storm surges. In the Northwest, the smoke from many fires creates unbreathable air while trees and buildings burn.

You may have potential or previous clients calling you for help with their damaged or destroyed property. As a full-line remodeler, I’ll bet you have no experience dealing with disaster-created business.

Truth is, working with insurance companies if one never has is going to be a “learning experience,” to put it nicely. So, how to limit those lessons, help people, and still not lose money?

Screen the Inquiries Carefully
You likely have limited capacity and don’t want to have restoration work become the focus of your business. As a full-line remodeler charging decent margins, you want to work with folks who are not going to try to prevent you from earning anything.

Deliberately screen the inquiries you get. If someone expects instant service, you need to free up their future. Why? Their expectations are simply not realistic.

Mitigation by Experts
If a house is damaged and needs to have discreet parts of it removed, or if it needs to be dried out, let the pros do it. The skills and equipment needed are not in your toolbox, and they don’t need to be unless you are going to work in restoration going forward.

Once that work is done, you’ll have an easier time knowing what the resulting existing conditions are, making it more likely that you will estimated the work needed accurately.

Get a Settlement First
I am not sure if many of you remember, but in October 1991 the Oakland-Berkeley fire happened in California. About 2,500 homes were destroyed in several days of wind-driven fire. The area looked like a war zone.

As a way of helping people, I did about 30 scopes of work with associated costs for people who had lost their homes. I charged $2,000 to do this. In most of those cases I negotiated settlements with the clients’ insurance company adjusters.

Why did I do this?

  • At the time, we had very little work. The West Coast was still dealing with a recession. This was a way of potentially getting some work, at least in the distant future.
  • We had very few leads. Everyone was waiting for the economy to change for the better. By doing the scopes of work I met potential clients and architects, some of whom we worked with doing rebuilds and more as time went by.
  • We needed cash, and for this work I was paid upfront. Overall, not a lot of money was generated, but every little bit helped.
  • If we had a lot of work and/or a lot of good leads I don’t think I would have done the scopes of work for the rebuilds or the negotiating. Doing so took a lot of my time for much of the next year.
  • Unlike many remodelers, we had experience building custom homes. If we were to get a rebuild or two, I knew we would make money.

We ended up building four custom homes and doing a whole house remodel for a client who did not want to rebuild and had bought a large house that needed work. In most cases, it took several years before the homes could be built. However, the clients could pay us, having collected what they could from their insurance companies and often getting bank loans for the needed balance.

Be Specific and Be Prepared
Many insurance companies use a pricing tool called Xactimate. This is a cost per unit pricing software program. It does room by room scopes of work, all estimated by measurements of each room, to create a total price.

Many full-line remodelers’ scopes of work are by trade. Rough framing, plumbing, plumbing fixtures and so on is how such scopes are laid out.

Be prepared to have to reformulate your method of pricing to be comparable to that of the adjusters.

Price What Was Lost
Most of the homes I was dealing with were built in the early 20th century. The materials that were used were of higher quality than those that are standard now. For example, random-width quarter-sawn oak flooring that 3/4 of an inch thick, running in lengths up to 14 feet, is not available now.

The adjusters would suggest 5/16 of an inch thick by 2-1/4 inches wide oak flooring as a replacement. Yes, they are both “oak,”but they couldn’t be more different.

The homes also had lathe and plaster, often with unique finishes. Adjusters would price drywall, typically not with a high-level finish. You get the picture.

The more specific you are and the more solid pricing you bring to the table, the better the settlement will be.

Beware: Adjusters Come and Go
I would work closely with an adjuster and actually develop a good relationship with that person, only to have the adjuster be reassigned to a different disaster before we had reached a settlement.

When that happened, I had to build a relationship with a new adjuster, who often brought a different idea of what was and wasn’t important.

Talk about one step forward and two steps back. It is just part of doing this kind of business.

Have Your Priorities Straight
Take the long view when deciding who to help.

You have limited capacity. Respect that. I mentioned before only work with those potential clients who understand you need to make money.

Helping others is a good thing to do. But you can’t help everyone. If you try to do that, who loses? You.


Remember your core business, that one that you are successful at. Pay attention to your good clients from that business. You will need them after the business from the disaster has gone away.

Follow the advice that I laid out and your business will more likely to exist going forward instead of becoming a disaster itself.

About the Author

Paul Winans

Paul Winans, a veteran remodeler, who worked as a consultant to remodeling business owners, and a facilitator for Remodelers Advantage, is now enjoying retirement. Paul's book, "The Remodeling Life: A Journey from Laggard to Leader" is available on Amazon. Paul can be reached at plwinans@gmail.com

No recommended contents to display.