Do I really Need Three Estimates? (Or four, five, or why not, say….fifty?)

Your insurance company or adjuster may say something like “You need to get me three estimates for these repairs” (this is very common in the auto collision repair world). On the surface, this sounds very reasonable. We all research prices before we make a major purchase, so why should this be any different?

The difference is that in all those other buying decisions we are the ones coming up with the money. Let’s say that you have decided to add a bedroom onto your home. You would be wise to talk to several contractors, and get proposals from all of them. But then let’s say that in doing your homework on them you found something out about the low bidder, that he doesn’t drug test his employees. The contractors that are asking more in their proposals do drug test their employees. Are the proposals equal, other than cost? Of course not, especially if having certified drug free people in and around your home and family is important to you. Since you are writing the checks for the work, you are free to throw the low bidder’s proposal in the trash and select one of the other, more costly proposals. We do this all the time. There is a grocery store in your town that you shop at all the time, because it works for you. The food quality is good, it’s clean, it’s close to you, it works for a lot of reasons. But there is also another grocery store in your town that you don’t shop at, even though the prices are lower. Sometimes a lot lower! We have all been in this grocery store, but we don’t shop there, because it is not as clean, it smells funny sometimes, it’s across town or in a bad area, for a variety of reasons we choose to shop somewhere else and pay more for our food. And that’s fine. It’s our money, and it’s our right to choose. But somehow in an insurance claim adjusters act like all contractors are equal, that any of them will do just as good a job as any other, so we have to focus on who is the cheapest.

There is an important insurance concept to grasp here; your insurance contract (policy) says that the insurance company will pay “the cost to repair or replace” your property. Nowhere in the policy does it say anything about them paying “the least cost,” or “the cheapest cost.” It says they will pay “the cost.” Anybody who has ever bought anything knows that prices vary from place to place, and most of our buying decisions do not hinge entirely on cost. It is also true that for almost anything available to purchase there is someone, somewhere, somehow, willing to sell it for less. Now, your insurance company is a business, and they are in business to make money. The less they pay for claims, the more money they make. So, with all that said, how do we establish what “the cost” is going to be? Ideally, “the cost” is what the contractor of your choice will accept for the work that you and he agreed would properly restore your home. If your adjuster asks you for more than one estimate, simply ask him where in the insurance policy it says that you will provide even one estimate, much less three! Now, since it is your responsibility to present your claim, presenting an estimate for the repairs is a good idea. Presenting more than one estimate, however, is not! Think about it: If you give your insurance adjuster three estimates, he literally has no choice but to pay the lowest one! So, unless the three estimates and contractors are exactly equal and you would be entirely satsified with any of them, only give your insurer the estimate from the contractor you prefer. I tell my clients “If you give your adjuster three estimates, be sure you like the low guy, because that’s who he’s paying!”

Your adjuster may say something like “It’s company policy for us to require three estimates.” Well, they should have written that company policy into your insurance policy! Just look at the adjuster and say “Well, it’s my policy to only get one estimate for restoration work.” And if you take the “three estimate” mentality even further, why stop at three? Why not get five, or ten, or fifty different estimates? No matter how many estimates you get, there will always be somebody, somewhere, somehow, who will do it cheaper. And that takes us right back to the insurance policy language, where the words “cheapest” or “least cost” never appear.