Dealing with Trade Contractors: Staying Clear of Land Mines

Dwayne Hargroder

All one needs to do is talk to his or her neighbor about problems encountered with artesian contractors and you will open a dialog that you never thought existed. Everyone seems to have an unpleasant experience with little recourse other than litigation which is costly, time consuming and stressful.

Some contractors continue to fly under radar without appropriate licenses or insurance coverage and many homeowners fall victim to these predators with inferior work performance, incomplete scope of work or worse, advancing monies ahead of the time line of completion only to have the contractor walk after you refuse to advance additional dollars.

I was once informed that homeowners pulling their own permits and seeking contractors was a problem, as these individual sub-contractors would not have the dedication like their commitment to General Contractors. Unlike working for a General Contractor with a pipeline of future work assignments, these homeowners often have only one task with an inability to feed the sub-contractors appetite; therefore, the homeowner lacks leverage in the process.

Companies like Angie’s List fall short of performance evaluation as they are simply subjective reviews by others and do not tell the entire story.

What if there was an objective system for performance evaluation? A system based upon specific insurance claim reporting and loss history of an insured contractor aggregated and scored over a historical period of time and available to prospective customers in a real time format before work engagement?

This would accomplish several industry changes. First of all, to have a score and participate in the process all providers would have to seek insurance coverage and be part of the system. This participation and spreading of the risk would drive down the cost to other providers as the insurance pool becomes larger and develops more premium. Second, much like the credit score has improved credit behavior of participants, this new C.L.A.I.M. Index® would also contribute to implied behavior for improved results as insured’s will take pride in their score, protect their score by enhanced work performance and ultimately reduce claim frequency resulting in reduced insurance premiums and enhanced profitability.

Although experience rating has been around the industry for years it fails to cover small premium accounts and has never been available in an authorized real time scored format of disclosure and transparency much like the credit score.

So, the question remains “why is this critical data not available to protect consumers?”

The answer appears to be within the insurance industry itself. The insurance industry continues to lag behind the financial sector in advances in innovation and risk management applications for an improved society. Insurance companies maintain this data under lock and key in data silos and fail to share this confidential performance data in real time unlike their credit cousins.

This lack of disclosure is hurting the industry, consumers and lenders that could benefit from the advanced notification of a troubled credit customer as performance deteriorates and customer relationships are lost creating financial instability.

For more information: go to Evalscore….We’ve got your number®

Dwayne Hargroder is the owner of Hargroder Real Estate Group, Inc. of Destin Florida  and is a licensed in Florida and Louisiana. He is also a 30 year veteran of the insurance business and a previous (CIC®) Certified Insurance Counselor recipient.