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Illegal and unethical forced use of Serve Pro / Service Master and other Preferred Vendors

Posted by Ned Stephens 
My name is Edward Stephens. I own and operate a water and fire damage restoration business in Grand Junction Colorado. Last week (02.2009) my home flooded after a sewer line backed up, and I called my agent immediately. My agent then contacted an adjuster who in turn contacted me and informed me that I was not allowed to perform any of the restoration work in my own home myself, and that it was a conflict of interest.

Well, as you can imagine, I was very angry at the notion that this would be a conflict of interest. First of all, it is my home and who else would better service this problem than me? After all, it is my home, where I live with my wife and children!! Second, I am a water and fire damage restoration EXPERT!! And this lady tells me that it is a conflict and that I HAVE to call Serve Pro - this is a national company, who can for the most part serve all of Farmers clients and who is retained based on their market presence and fixed pricing, not quality of workmanship. I have also heard that Farmers requires a 2% kickback from these companies.

If your a doctor, and your child gets sick, does the insurance company tell you that you have to take your child to another doctor because it is a conflict of interest?

Anyway, I know the law in Colorado, and the law says specifically that ANY HOMEOWNER can choose ANY CONTRACTOR to make repairs to their home as long as the charges are reasonable. So what I would like to know is where does this adjuster get off DEMANDING that I use a contractor of FARMERS choice and not my own?

Next, this adjuster tells me that a rep from the local Carpet One (Again, this is a national company, who can for the most part serve all of Farmers clients and who is retained based on their market presence and fixed pricing, not quality of workmanship. I have also heard that Farmers requires a 2% kickback from these companies) franchise will be over to get an estimate together for the replacement of flooring, and I tell her I have a small, locally owned company that I deal with all of the time here in town and I would rather use them. She says "well, we still have to have Carpet One out there to get some numbers together"

I guess what I want to know, is how many other Farmers Insurance customers are being forced to use a certain vendor when the law CLEARLY STATES that the homeowner can use any contractor they would like.

I will be organizing some sort of forum in the future with regards to this matter, as I am not happy with the way this claim was handled. Also, Farmers is taking money out of the pockets of small business owners everywhere by not allowing homeowners with restoration needs a choice. Instead they take money from the pockets of "mom & pop" businesses all across America by demanding that their customers use a "national franchise" type of business based strictly on national presence and arranged (low ball) pricing, and not quality. I know this because I have tried unsuccesfully for years to build rapport with larger insurance companies, only to be denied time and time again.

This practice is unethical, and in this case ILLEGAL and I would like to see it come to an end. If you have had a similar experience with Farmers or any other insurance company, please feel free to contact me directly using any of the contact information below.

Thank you,

Ned Stephens
A Kinder Carpet / United Fire & Water

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I worked as a property CR for Farmers for the last 2 years, and I can tell you that if you were told you could not use anyone but SM then you were given the wrong info. It is most likely the case of a new CR who did not understand Farmers guidelines. In fact if you, as a proffesional, use your business licence to clean up your home, Farmers will actually pay you for your time at the proffesional rate vs. the homeowners rate. This means that you can make money to clean up your own house.
In addition, there is no kick back from any of the vendors. The vendors get into the direct vendor program by offering a discounted rate, which is how Farmers is able to keep their premiums a little lower. If you were told that Carpet One needed to come out to run some numbers, in spite of saying that you wanted to use someone else, the CR was probably not very confident in their ability to estimate the job themselves and wanted someone to measure the house. This further supports my idea that you got a more inexperienced CR.
It is unfortunate that you didn't get everything explained to you in detail. I would suggest next time you talk to a supervisor. They are usually very good about following up and making sure the customer is happy. I am in the Colorado office, so if you want I could even look into it for you. Let me know.

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The day after our house fire, Farmers Insurance sent Servicemaster to remove our contents. We stayed in a hotel for a week & by the time we were in a rental house, Servicemaster started returning our furniture. After a month, Farmers sent us a check to pay Servicemaster, who had stopped returning our stuff. Over 2/3 of the items they cleaned were ruined not by the fire, but by Servicemaster, so I was hesitant to pay the full $35,000 up front. I offered to pay 1/2 of it now, and the other half after delivery, but they said no. Their policy requires full payment.

Now we paid the full amount, but they don't "have time" to return our stuff.

I am ready to sue them.

Not impressed with Farmers for sending them. They may not be getting kickbacks, but they are definitely in bed together. Otherwise, why would they do business with such incompetence?

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RE: Jeff Wallace
We had a similar problem with Farmers and Servicemaster. Farmers told us SM was doing our clean up, never asked if we wanted to use them or not. SM didn't clean everything (we found lots of items uncleaned later), ruined some things and even went so far as to give my son a sponge and instructions on how to clean the posters on his wall while they got paid for it! You should check into a class action suit as I am sure there are plenty of people like you and I that have been ripped in the cleanup department by Farmers and Servicemaster!
Good luck!

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I worked for both Farmers and ServiceMaster. When you call in the claim through the 800 number, your agent, or via the website for Farmers it gets routed to 1-800-RESPOND. This company will only send out ServiceMaster to handle the claim. As an independent you cannot be added to the vendor program for Farmers. Therefore, the customers who are experiencing a flood, are not told they can use the vendor of their choice. This choice is being made FOR them by Farmers and ServiceMaster. ServiceMaster does not view the customer as their client-they work for Farmers. This means they don't care about quality or service as long as they get the check from Farmers.

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Dear Mr. Ned,

The law wants you to know your right to choose your own company to make repairs in your own home as long as the charges are reasonable; and what could be more reasonable than DIY. But the agent wants to get a contractor that performs substandard work at a price that seems reasonable and then up the price for illegitimate reasons. Reading between the lines, the agent may be in cahoots with the contractor to do a little of the work while denying some repairs as being excluded under the policy, even though an exorbitant amount is going to be subrogated against the original contractor who caused the damage to begin with. Then the contractor may hire subcontractors to be able to deny completing the repairs based on the work being outside the contractor's scope of work. The agent may be provided with the contractor's estimates that are billed higher than it actually costs, and the agent keeps the difference. To get our repairs completed--the mainline repaired and the joist replaced so we will have a working shower--we had to go up the chain of command to get the baseless denials investigated; but even then, the western zone manager just sends the claim back to the original adjuster who then says there is no guarantee that the claim will be approved and the repairs completed. Farmers needs an appeals department to handle mishandled claims for repairs that were not completed to the homeowner's satisfaction and are still a health hazard even if the contractor assures us that the home is safe and dry and we can return to our home again. This is a breach of contract, failure to complete a duty required under the contract, which causes more damages and places the homeowner in a worse condition than when Farmers decided to choose the contractor to perform all the repairs. We are back to taking orders from the agent to provide detailed estimates from local contractors, licensed and insured plumbers, and licensed and insured carpenters who will pull permits. Why? The agent wants to discuss the issues with the contractors before choosing one if it fits within the budget. Farmers wants to control the financial dealings before even considering the policyholder's need to have repairs made in a timely fashion. Our Category III wastewater damages began in 2015, through the incompetent workmanship of KDesigner's subcontractor; in 2016, Farmers chose a contractor who misrepresented that we were not exposed to asbestos and quit when confronted with the test results so Farmers chose another contractor who claimed all repairs were made and the home was safe, dry and secure so we could move back in; and in 2017, we still do not have a working shower, the structural integrity of our joist under the shower has been made worse, and the main drain in the crawl space still leaks Category III wastewater. The agent claimed this repair was denied because it had been ongoing, but his supervisor added that the shower only leaked when it was turned on. And even though we have pictures that the main drain leaks when all of the water in the house is turned on, since it was discovered in early 2016 due to the incompetent workmanship of KDesigners in 2015, the contractor's denial for completing repairs trumps the truth as being "outside their scope of work". How? Simple, the agent subrogates against the company for the incomplete repairs for the maximum budgeted amount and returns the homeowner to an unsafe condition. We have been exposed to asbestos and growing mold since 2007, and Category III wastewater since 2015, but Farmers cannot guarantee anything will be done about it.


Concerned Homeowners

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Have you contacted a PA or an attorney or filed a liability claim with carrier that covers the original contractor that caused the damage?
This is a sticky situation, I can tell you that I have worked for many TPA's (preferred vendor programs) and carriers often utilize network contractors, preferred vendors to do inspections and provide inspection reports in favor of the insurance carrier which leads to denied claims or partial denials or partially denied scopes of work, if the threat of the insurance commissioner in your state or the threat of engagement with an attorney does not or has not resolved your issue you will defiantly need to hire an independent 3rd party inspector who will provide you with a comprehensive fair non-corrupt cause of loss and origin report. The fees are rather small when compared to the over all net cost of the claim and there are many nationwide 3rd party inspection vendors - once you hire the independent inspector and if that inspector agrees with your stance send the report tot he supervising claims manager with a threat that they will either pay the full amount of the claim or they will suffer the consequences of the state insurance commissioner as well as a Judge - i do not know what state you live in but a network of 3rd party inspectors link is www.forensichomeinspections.com - never higher or trust ANYONE that works for the carriers or their vendor programs/TPA's, they all pay the carriers for business so the carriers best interest is all they have in mind

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