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Andy Wojtowski

“Your insurance company isn’t dumb” (with Steve Kuhl)

Steve Kuhl with Kuhl’s Contracting returns to the show to share some insider dirt on insurance restoration, insurance claims, which insurance companies “pay out” and which ones don’t, and gives us a behind-the-scenes look into the world of insurance fraud.

Steve Kuhl Podcast Cover.jpg

Steve is passionate and opinionated about all of this stuff, and it’s a treat to listen to all of his insider information. We’ve been attending classes, conferences, schools, and all of that other fun stuff for a long time, but we never get to hear stuff presented quite the way Steve presents it.

Special note for this episode: the views and opinions expressed by Steve (and he has a lot) do not necessarily reflect those of Bill, Tessa, Reuben, or Structure Tech.  

TRANSCRIPTION

The following is a transcription from an audio recording. Although the transcription is largely accurate, in some cases it may be slightly incomplete or contain minor inaccuracies due to inaudible passages or transcription errors.

Steve Kuhl: Now, not all insurance restoration contractors are storm chasers, but all storm chasers are restoration contractors, if that makes sense. I’m not a big fan of the storm chasing methodology in general, because I think it relies a lot on hysteria and misinformation and fear.

[music]

Bill Oelrich: Welcome everybody, you’re listening to Structure Talk, a Structure Tech presentation. My name is Bill Oelrich alongside Tessa Murry and Reuben Saltzman, as always, the wobbly three-legged stool. And on today’s episode, we have, drum roll please, back again, Steve Kuhl, and he’s gonna be here today with us, and we’re gonna talk about storm chasing. So Steve, why don’t you go ahead and reintroduce yourself to us, tell us all about you and why you’re so familiar with storm chasing?

SK: Excellent. I’ll keep it limited to just the storm chasing, ’cause there’s too much to say, but I started my first company in 1987, which is an exteriors business that specialized in cedar roofing, so since that time, the company’s grown into a full fledged exteriors contracting company. It does a high volume of all sorts of roofing throughout the greater metro area. The focus on, of course, cedar, and synthetic systems, and metal, and asphalt as well. I also own a design build company called ‘Kuhl Design Build,’ so I tend to think more globally than a roofer, and as far as kind of how the roofer plays to the home as a system. So that’s me, and I’ve had lots of experience, been through thousands of claims over all these years, and worked with just about every insurance company under the sun, and I’ve gained some perspective on a lot of it from a stance of not being a guy who say, necessarily goes out and chase the storms, but who has to deal with storms all the time.

Reuben Saltzman: And I just gotta chime in for any of our listeners, if this voice sounds familiar, he’s been on our podcast, but in the past we had him on as the ‘Ice Dam King,’ where we did like a two-part episode or something on heat cables. And we… I mean, we dug into that deep. So, Steve knows a lot about a lot of different things.

Tessa Murry: Yeah. That was a great episode, Steve. I learned so much about heat cables from that, and I had no clue.

RS: Yeah. It sounds like such a boring topic, but weirdly fascinating the entire time.

SK: Yeah, I know. I’m like…

[chuckle]

RS: No, it was good stuff.

SK: Anything can be fun.

RS: Alright. Sorry.

BO: So this episode is on the heels of our conversation with the insurance agent last episode, and we saw the storm business from their side. So today, I thought we’d take a look at it from the contractor’s side. Steve, what can you tell me about this business of contractors coming in and chasing down work after a storm rolls through, what does that look like?

SK: First of all, storm chasers sometimes refer to themselves as restoration contractors, which is to say that they have experience dealing with the insurance process. Now, not all insurance restoration contractors are storm chasers, but all storm chasers are restoration contractors, if that makes sense. I’m not a big fan of the storm chasing methodology in general, because I think it relies a lot on hysteria and misinformation and fear that shouldn’t be there after, let’s say in this case, a hailstorm rolls through like it did on August 9th in the Minneapolis area. So, storm chasers can generally be clumped into a group of people who use what I would only describe as high pressure methods for generating business, and that includes, of course, door-knocking, incessant phone calls, and then applying pressure to neighbors out on the street, that sorta thing.

SK: So, storm chasers are in my mind and in the minds of all contractors who have been in the business a long time, exist in kind of the lower strata, they might be called bottom feeders, if I’m speaking sort of frankly. Because typically speaking, they’re not the contractors who have built up the musculature around what I consider to be the tenets of a strong business, a strong contracting business, which would include things like providing excellent value for the customer, good customer service, and of course, high quality work. So storm chasers typically don’t care a lot about that, they care about generating lots of business as quickly as possible due to a storm.

RS: Okay. That makes sense. Now, I gotta ask you, we had that big hailstorm recently and people have been out in throngs, and we discussed this a little bit on the podcast and talked about it on my blog about how just disgusted I am with the whole insurance thing about people getting almost perfectly good roofs replaced. And I’m talking the whole thing just thrown in a dumpster, and then they’d get a new asphalt shingle roof. We’ve talked about that a lot, but you also know a ton about wood roofs. If you can just educate us a little about what happens to wood roofs during hailstorms?

SK: Yeah, sure. So wood roofs are a different type of roof system than asphalt in the sense that… And I tell people this every day that when they look up at their roof, that the purpose of this material is not to keep water out of the house, in fact, this material doesn’t keep a drop of water out of the house, it’s all about protecting the underlayment which is known as tar paper or felt. And to the extent that that felt has not been compromised, and there’s a lot of it, there’s three times more felt on a cedar roof system than an asphalt system, so to the extent that it has not been compromised, you’re not going to get leaks. So, when we look at hail damage on cedar roofs, what would I have seen, I can speak to my experience in the last couple of weeks based on the August 9th storm, most of our work is Western suburbs which took the major hit.

SK: What we have found through most of our inspections is that there is a lot of superficial damage, which is often called hail splatter, and just a sidebar on that, so hail splatter is when the hail comes down with enough velocity to knock off the oxidation of the cedar and it results in, you guys have seen this, thousands of little spots on the roof where you can just see spots all over the place, so that’s called hail splatter. Insurance companies don’t care about hail splatter at all, and nor should they, it doesn’t qualify as what we call functional damage. What they care about is hail splits. So, what they are looking for are splits to the shake or the shingle that are associated directly with a hail impact mark, and that’s an insurable event for them. They look at that and they say, “Okay, this is something that we will cover.” This recent storm resulted in very, very few legitimate hail splits, and yet, depending on the insurance company that you have on your home, that really is the major variable in determining the outcome of the claim. I wish I would’ve heard your conversation with the insurance guy, because I would have liked to hear his perspective.

RS: We should’ve had you on that same show, maybe it would’ve been fun. We’ve never done an episode where we’ve had several guests…

SK: Yeah. Yeah.

RS: From different industries and professions talk about something, but I don’t know why we haven’t. I mean, there’s no reason why we couldn’t.

SK: I fall into sort of an interesting category, because we don’t… The majority of our business is not storm chasing or none of it a storm chasing, and very little of it is storm restoration. So most of our business is what we call retail, which is that customers hear we do a good job, and then they call us and then we do the job for them. We do a ton of insurance work. My perspective is I tend to be the middle guy, so I’m… And I get involved in these situations legally, where I’m called in as an expert witness, where you’ve got a storm chaser on this side, and you’ve got the insurance company on that side, and they’re arguing about what the truth is. And I tend to be just pretty objective about it, and it’s a question of fact, and is this roof functionally damaged? Does it qualify? Does it not. So, I seldom side with the storm chasers, because they… It just sort of grosses me out that so many people are getting roofs that shouldn’t be getting roofs.

RS: Good. Good. I’m glad to hear that Steve.

TM: I was gonna ask you a question about… You said something about the hail can actually split the wood shingle.

SK: Yes.

TM: Does that happen more frequently on older wood roofs then?

SK: Yeah, absolutely. So, the major variables involved in whether or not a wood roof gets damaged is, number one, it’s age. Roofs that are less than 15 years old are gonna be pretty resilient and they’re gonna require some hail hits that are golf ball or larger for a sustained period of time. And we don’t have many hail events like that. In fact, the last one that we had of that significance in the Twin City’s area was August 6th, 2013, and besides that, the storms in the metro area have not really qualified for major damage on wood roofs.

RS: Steve, you said the number 15.

SK: Yes.

RS: Is that a special number, ’cause we heard that a lot during the last podcast from our insurance guy.

SK: Is that right?

RS: Yeah.

TM: Yeah.

SK: I’ve never heard it. I’ve never heard it. I just know it to be true.

RS: Wow.

SK: I know it to be true, because I’ve been on to calculate over 4800 cedar roofs in 34 years. So, I’ve been on…

TM: Oh, my gosh.

RS: Just a couple I guess.

[chuckle]

SK: And it just… I know the material intuitively at this point, and I just know how it’s affected. The solar exposure of the roof, the more that that roof gets pounded by UV, the more likely it is to be embrittled and crispy and damaged by hail. So, what I see all day long is that east, south, and west exposures are dinged up pretty good, especially the south, where the north side of the house with the same hail storm can be virtually unaffected or just have some hail splatter on it.

RS: Okay.

BO: Is that both for asphalt and a shakes shingles? Wood shakes or shingles?

SK: Wood roof systems are more affected by UV in terms of how quickly they deteriorate and how brittle they become than asphalt, but asphalt is… I’ve been on a number in the last week where the south side was more affected, because… And it’s always about what we call granular loss and bruising, so you see more of that on the sides that get high UV than the sides that don’t. Another variable is tree coverage. So some of the roofs that we visit are enshrouded by this heavy canopy of trees, and you look up and they just got pounded and they protect the roof. So, one neighbor’s roof can be pretty trashed and then the next one over not so much.

BO: So Ruben, that’s why your old three tab roof you talked about so lovingly on the last episode, is still there not being replaced, because of those large overhang trees you have in the suburbs. Oh, that’s right, you don’t have trees in the suburbs.

RS: Shut up.

[laughter]

SK: Ruben, if you want a new roof I’ll come out there and I’ll just completely lie to the insurance company so that I make money and you get a new roof.

RS: Well, that sounds great, Steve. [laughter] Or what about, you come up there with a hammer.

SK: Yes.

RS: Can you do that? Have you ever seen that done Steve?

SK: This is some… Actually, I have. I have not… So hammers don’t work on asphalt, not really, and nor do they work well on cedar. If you’re trained, you can usually tell what intentional damage looks like. One of the main variables there is that it’s not naturally distributed across the slope. So, what these cowards do is they go up with a ball-peen hammer and some [chuckle] other things, and they will stick to the valleys and the ridge or down by the eave or up, because they’re not brave enough to go out into the field and actually risk their life to cause artificial damage.

TM: Wow.

SK: Insurance adjusters will… They’ll be up there with ladder assist and under rope and harness, and they’ll go out in the middle of a big 12 x 12 pitch and do their test square, and that’s where the honesty happens. Those storm chasers that do this damage usually focus on the areas that are easy and safe.

RS: What other clues would we pick up? And I’m just asking you this Steve, ’cause I know you’ve shared this with me a long time ago, you’ve learned so much, you probably forgotten half of it, [chuckle] but I remember you teaching us what they like to do when you have artificial damage and where you see it on the shingles too.

SK: As I mentioned it’s about… ‘Cause usually they don’t have a lot of time, they have to do it when people aren’t watching, and so, it’ll be up the valleys or up the hips, across the ridge down by the eaves. So, number one is you gotta get out in the field, and by the field, I mean, just an area that is not one of those easily accessed spots. What insurance companies wanna see is splits that are in alignment with hail impact marks. So, they don’t care if there’s a massive hit on the left side of the shake and on the right side there’s a split. That doesn’t make any sense. So sometimes unscrupulous types will actually just reach down with their hands and just crack a shake randomly, but that crack will not align with a hail impact mark, and that’s something that is a telltale sign that somebody’s doing some funny stuff. So, you wanna look at the distribution of the damage and then the nature of the damage. Does it look like a hail, like a hit actually caused it? That’s a big variable.

RS: And I remember you telling me that when people go up there with hammers to damage it, you’ll always see the impacts right in the center of [chuckle] shingle tabs.

SK: Yeah.

RS: But when it’s hail it’s never gonna be centered, it’s gonna be on this side, that side, top bottom. It’s just completely random as hail falls, so when people do it intentionally, they always hit the middle of the shingle.

RS: Yeah, that’s another thing is…

BO: What happens when that kinda damage is inflicted upon a roof by somebody mechanically, and then they’re discovered to have caused that damage?

SK: Yeah, yeah. So your use of that word is, it’s a very good word, it’s mechanical damage. And so, the insurance adjusters will go out and they will determine that the roof has been mechanically damaged, which is code for vandalized, and most homeowners are covered for vandalism, but the nature of that claim is completely different, because then it’s bordering on criminal and they need to sort of pursue whoever did that. I was involved in a case a few years ago, where this single woman probably in her 60s, in Eden Prairie, called us out to do a hail inspection. She said that a storm chaser had been up on the roof, and that called out the adjuster and she had this confusing report. And so, this is an example of what I call smarmy behavior on both sides of the equation, not only by the storm chaser but by the insurance company, it was American Family.

SK: I’m just gonna… Basically, I’m just gonna name names. When it comes to insurance companies, they’re big enough, if they wanna sue me then, so be it. It was an American Family claim. And American Family is really one of the lower tiers in as far as how easy they are to work with and how reasonable they are to work with just as a public notice. So the American Family’s adjuster came back and said, “I’m sorry, Mrs. Johnson… ” That’s not her real name. “I’m sorry, Mrs. Johnson, your claim has been denied. There is no hail damage, and your roof does need to be replaced, but it’s due to mechanical damage that are factors beyond anything that is insurable.”

SK: And when I dug into it a little bit, what I discovered is, mechanical damage was code for vandalism. And then we reviewed her policy language, and in fact, she was covered for vandalism. So she did get a new roof and it was a big story, a big drama to get to try to find this guy who did the damage, who was never found. Insurance will pay for roofs to be replaced if they’ve been vandalized enough. American Family was trying to pull a fast one, and they had Haag Engineering out who generated a 20-page report that said the roof has been mechanically damaged, but there is no hail damage. And that was, I think used at that time just to sort of confuse the homeowner and make the project go away.

RS: Yeah.

TM: Wow, so they were just hoping she didn’t read her policy closely.

SK: Yeah. Yeah.

RS: And didn’t know what mechanically damage meant.

TM: Right.

SK: What is that? Who knows that? Nobody knows what that is. They just don’t get it. Yeah, and so…

TM: Wow. Have you seen that happen with other insurance companies too?

SK: Yeah, I’ve seen it. That particular case was pretty egregious, because this guy had gone up and really physically pulled up a lot on different areas of the roof. And so, when I went into the backyard, I looked up and I thought, “Okay, something very odd is happening. That’s not wind damage and that’s not hail damage. [chuckle] What’s going on?” That doesn’t happen normally. We wanna talk about the vast majority of the claims that I would put into the BS silo. So I’m gonna say, “I’ve got a silo over here for claims that I consider to be BS that have been generated and promoted by storm chasers.” The vast majority of that just simply is that there’s just very little damage. And the storm chaser, the restoration contractor understand that their incentive is to find damage.

SK: And this is one of the things that I cannot believe that a lot of my intelligent clients have fallen for over the years. Is they get a knock on the door from a stranger who says, “Trust me on your $50,000 or $100,000 roof system. I’m gonna go up there and tell you what I see. And by the way, the vast majority of my income, maybe all of it, comes from identifying hail damage. But all of that said, I’m not gonna be biased. I’m gonna speak honestly about what I find up there.” And the fact that people believe that is astounding. So most of the claims that fall into the BS silo are just claims where the storm chasers go up and say… They come down and say, “Yeah, I definitely found damage and there’s absolutely no reason to not file a claim, Mrs. Johnson, because you’ve been paying your premiums for years and you haven’t filed a claim according to you. And we should do this ’cause it’s harmless.”

RS: Explain. I know where you’re going with this, but it’s awesome stuff.

SK: Yeah. So this is… One of the main arguments the storm chasers use is, “Why not? What do you have to lose? All we’re gonna do is throw this at the wall, and if it sticks, you might get a new roof out of it, and how great is that?” And of course, what homeowner doesn’t wanna hear that? “Geez, I’ve been paying insurance dues for so many years and I’ve never filed a claim, and that neighbor up the street got a roof, and I really feel good about this and why not?” Well, there’s a couple of reasons why not, and this varies state-by-state, and also varies company-by-company, policy-by-policy. But there are… The insurance industry uses a system called CLUE, which is a national database that tracks storm damage claims, that tracks not only homeowners, but home properties. They’re not dumb. They’re fantastic at math. They’re the best in the world, and that’s why it’s a great business to be in insurance.

SK: So they know when people are filing claims. And under certain circumstances, if you file… If you have more than three claims inside of a seven-year period, you can become essentially blacklisted or very, very difficult to insure. So you have a limit on the number of claims that you file in a given period of time before the insurance company thinks, “This is not a risk that we’re willing to take.” This being of that home or that property owner. So that’s a fact. Another fact is that… And this is a common myth, is that storm chasers say, “Hey listen, if the insurance company comes back and there is no damage and they deny the claim, so be it. No harm no foul, right?” And that feels pretty logical. The problem is that it is still a claim, it is the same claim on your record than if you had a quarter million dollar settlement. It is to say you have a claim. So, a zero claim is a claim. And one of the other downsides… And I’d sent you guys a copy of that letter, I think a day or two ago, and I have a whole stack of these on my desk from clients over the years who have been shocked and disappointed, and they come to me after the storm chaser has come and gone.

SK: And the letter goes like this: The adjuster visits your home and determines that there is no damage related to the storm event. And they submit that to the insurance mothership. They send a letter saying, “I’m sorry, but the claim’s been denied ’cause there’s not enough legitimate damage.” Well, a week or two or three later, you get a letter from the insurance company, the one that I sent you guys and that I have the stack of that says, “Hey, we’ve had the opportunity to inspect your home recently and we’ve identified the following deficiencies that we are no longer comfortable insuring, specifically, your roof because it is old and it needs to be replaced. And by the way, you have 30 days to do it or 60 days to do it, and you have to pay for it out of your pocket. And if you don’t, we’re going to drop you from coverage.” And I don’t know how they do that, insurance companies. It has to be legal ’cause they’re very good at the law. But to me, it’s just a shock every time I see that letter, and homeowners are really bummed out about the fact that they trusted a storm chaser on their home and the net result was a claim on their file, no benefit, and now, they have to replace the roof when in fact, they probably didn’t have to replace the roof before the storm chaser visited.

RS: Man!

TM: That’s so crazy! Steve, is that a problem that’s been happening for a while now?

SK: Yes, yeah. It’s at least 15 years, I’ve got these letters going way back.

RS: I can tell you it’s not unique to homeowners’ insurance either. This is just the insurance thing. And I got my own little story about this I gotta share now that you’re bringing it up. We’ve been paying some five figure a year every year as long as I can remember to workers’ comp. We’ve got workers’ comp insurance, it is a lot of money. We’ve never had a claim. We’ve been accident-free forever until the day we weren’t when one of our inspectors reached up, touched the metal ductwork for a furnace, which was in contact with a live wire, so the whole ductwork was energized. He was barefoot or he was wearing socks at a concrete floor, so he got a nasty shock.

RS: And he called me up, “What do I do? I feel a little weird.” And I’m like, “Dude, go to the emergency room. Check yourself in. We’re not messing around. And I know it can cause heart issues.” He’s like, “Well, that’s a claim on your insurance.” And I’m, “Of course,” I’m like, “Who cares? What if you died tonight ’cause your heart’s messed up? This is serious! You need to go in.” He went in, everything was fine, checked out. It was basically a check-up to the urgent care or whatever, but that was our first workers’ comp claim we ever had. And it couldn’t have been more than a week or two later, we got a letter saying, “We’re dropping your sorry butt. We’re not covering you anymore because your company uses 28-foot extension ladders and you access two-storey roofs.” It had nothing to do with our claim.

SK: Yeah.

RS: All very funny timing where they started digging into us, they saw pictures on our website. They said, “We’re cancelling you,” and…

SK: Yeah, that’s…

RS: Well, they do that.

SK: They’re good at math, like I said, and they analyze every situation and ask themselves: Is this a risk that is worth the premiums?

RS: Yeah, exactly.

BO: That’s amazing, Reuben. I didn’t know that they trolled you, basically. They must have gone through the website and…

TM: I had no idea either.

RS: They were not dishonest about it. They said right up front, “We saw pictures on your website showing that you walk these two-storey roofs, so we’re not gonna cover you. You can change your practice, your business practice, or we will cancel you.” And you know how passionate I am about getting on roofs. Well, I wasn’t about to change our policy. So we eventually found a new insurance carrier, but it was a huge headache because they gave us 30 or 60 days to where they’re canceling it.

BO: If you were looking into the future, do you think there’s a big change in this insurance game when it comes to roofs and this kind of damage?

SK: Yes, I believe that insurance companies, I just cannot believe that they replace the number of roofs they do. I just can’t believe it because they’ve become sort of a default home maintenance program. And insurance doesn’t wanna maintain your home, but people let the roofs get really, really old, and then a storm hits, and a storm chaser comes out and makes an argument that it should be replaced. And for whatever reasons, sometimes, adjusters agree to roofs that are indeed, yes, they’re trashed, but not by the hail, so they replace them. And I can’t help but believe that that’s gonna catch up with all of us. On the asphalt roof side, that hasn’t happened that much. On the cedar roof side, it certainly has because right now, there’s only a very small collection of insurance companies that are even willing to insure your home if you have a shake roof. And then even smaller segment of those companies are willing to insure it without a special rider or without sort of exceptional conditions attached to your policy. For example, there are insurance companies that now will do actual cash value policies or relative to your roof as opposed to a replacement cost. And are we familiar with that, or should I?

RS: We talked about that on the last episode, and 15 years was a huge number that kept coming up over and over again, where insurance companies are telling people, “If it’s over 15 years, your only option is to get the actual cash value. You’re no longer eligible for replacement cost.” Yet mortgage companies want the replacement cost. So when people are buying a home with a roof that’s over 15 years old, it’s starting to become a real pain to find an insurance company that does that, yeah.

SK: Yeah, and it depends. Maybe I’d like to talk briefly about insurance companies. And I offer this advice freely to everybody I meet with all the time. Your success or failure on a hail claim or a storm claim has way more to do with who you insure with than the objective reality of what’s occurred to your home. And people are confused by that. So I’d say that you’ve got two neighbors, you got Jim and John, and they have the exact same roof system, the exact same roof pitch, solar exposure, tree coverage, material, everything, same contractor, and everything is identical. And the guy on the left has State Farm and the guy on the right has Chubb. The guy on the right is about 90% likely to have his roof replaced, and the guy on the left is about 10% likely. [chuckle] So it depends mostly on who your insurance company is. That is something that nobody talks about and insurance companies don’t like to talk about it either ’cause it’s not good if you’re on the lower end, and it’s also not good if you’re on the higher end because then, Chubb doesn’t want the public to know they really are pretty generous and liberal with their policies and procedures and analysis of storm claims.

RS: But the problem is there’s no free lunch.

SK: Right, there’s no… Yeah. Well, two things. You pay a lot for Chubb Insurance, and I know ’cause I have Chubb Insurance. [chuckle] And the reason why is that I’ve been through too many claims and I know how it works. And I’m willing to pay a bit more for exceptional coverage and customer service and the benefits that I’ve seen over all these years, I’m willing to pay more. Now, some of these higher end insurance companies, frankly, won’t insure quarter million, half million, three-quarter million dollar homes. So the insurance companies set, like Chubb, and another… An exceptional one that’s come into play in the last five years is Nationwide Private Client. I’m telling all my clients, “If you can afford it, go to them ’cause they’re unbelievable.” They’re just great to work with. And they’re significantly cheaper than Chubb, but they are aggressively pursuing the Minneapolis mid-to-high-end home market, mostly in the high-end, but they’re under-pricing their product.

RS: Well, let me ask, if somebody wants to buy this insurance, how do they get in contact with you, Steve?

[chuckle]

SK: Yes. Well, I started a company called… It’s my 10th business. [chuckle] No, I have no incentive; I’m just giving the advice out. As I said, I’m in the trenches, I see it every day. I deal with the adjusters from every insurance company. And some adjusters work… If they’re independent, they’ll work for State Farm and Nationwide Private Client, and they’ll say, “Well, I know I worked with you last week on this identical claim that got denied, but this is a different set of rules. So let’s just have that roof replaced.” So that’s a thing. And people always say, they ask me, “Well, why did my neighbor get the roof replaced? Why did that happen? And why am mine not going to happen?” Lots of variables involved there. One, the most important of which is who’s your insurance company?

RS: And just one other question for you on insurance: What do you feel about what they pay out? Is it traditional? ‘Cause I know they always use the same model, all the roofers and everybody, they use Xactimate. It’s this standard software that all the roofers use all over, and I think insurance companies use it, too, to figure out, “If your roof is this size, you get this much money.” How do you feel about those numbers? How accurate is it? Is it good?

SK: Up until last year, I had a gentleman who was in the insurance business and trained Xactimate on all the adjusters for 30 years. This guy was just a genius, at the top of his game, and he taught me a lot about Xactimate. And generally speaking, it’s fair, is my answer. So Xactimate was developed in conjunction with the insurance industry to provide a nationwide standard for pricing and for scope. ‘Cause every market is different, number one, and they needed a way to sort of level the playing field and speak in terms of what we should expect prices to be. So Xactimate generates… Okay, I’m gonna put on my contractor hat. I should have a contractor hat that I slap on. Here I am, contractor, honest contractor hat. Honest contractor, it says it’s fair. It’s fair, generally speaking. It pays well. We’re able to protect our margin and make an honest living using the Xactimate pricing structure.

SK: So when we run into problems with insurance payouts, it is not normally… What’s never the prices in… Or seldom, I should say. Seldom the prices that are baked into Xactimate, it is a question of scope. So I’m working right now on a roof in Woodbury, it’s a $130,000 cedar roof, pretty big house, very complicated roof. And the American Family adjuster came in and did not include valley flashing their estimate, nor did they include ice and water membrane. And of course… [chuckle]

TM: You don’t need that, actually.

SK: That’s like installing a hole without windows. You can’t do it.

RS: Yeah.

SK: It’s against building code and it just… You can’t. So I’m fighting with the American Family adjuster saying, “Hey, I don’t know where you live, but up here, you need ice and water membrane and it’s part of building code. So they will… Insurance companies will either intentionally or unintentionally not scope out the project adequately, so you think you’re getting a generous payout, but where in fact, you’re missing essential items.

RS: Interesting.

BO: Can I ask an ice and water shield question? Because I’ve seen a lot of roofs that look like they’re completely covered with it. Is that a new thing?

SK: It’s not a new thing, and in most circumstances, not a smart thing. You all know all about this, but construction standards have… How tight homes are built, how tightly homes are built is good for some things and really not good for other things. And I’ve always been a fan of roof systems that allow a little bit of breathing. And so when we wrap entire homes in ice and water membrane, it tends to completely reduce the amount of breathing that would naturally occur through the roof deck. And I’ve seen enough cases where that can result in mildew on the underside of the roof deck. And just in the cedar roof business, cupping and curling because it changes the nature of how moisture is moving around every shake and shingle. So I’m not a huge fan of it. I wouldn’t do it on my own house.

RS: But there are cases where it’s required. If you have a low-slope roof and then you want asphalt shingles, you have to do it.

SK: Yes, yeah, yes.

RS: And I’ve also heard… I don’t think it’s a code requirement, but I’ve heard the only way you’re ever gonna do a dome roof is to do peel and stick on the whole thing, too. Is that right?

SK: Dome. You mean geodesic sort of low systems?

RS: Yeah, yup.

SK: I do not know because I think… We’ve never… Maybe we’ve done one of those in the last 34 years, so it’s pretty rare. [chuckle] We don’t see a lot of those.

RS: I’ve heard you should consider yourself lucky, then. [chuckle]

SK: Yeah. Yeah, yeah. But a note on ice and water membrane that is super important, I wrote an article for the Journal of Light Construction years ago on the topic of ice dams and some other things. And one of the most controversial things I said in there that I think tweaked some people, especially in the building industry or the building supply industry, is that ice and water membrane is largely… Provides a mythical benefit, essentially, which is to say that it’s not really doing much. And somebody got it pushed through the building code, and it’s there, and it’s not worthless. But it’s somewhere between worthless and moderately effective in terms of its intended purpose, which is to reduce the likelihood of water penetration as a result of ice and snow accumulations, usually, in the lower portions of the roof. When I’ve got empirical data, ’cause I own the ice dam company, which is one of the larger ice dam removal and prevention businesses in the United States. So we’ve been all over the country. We removed thousands and thousands of ice dams with steamers and on homes that are leaking. And the vast majority of those homes, I’m gonna say upwards of 95% of those homes that have leaks from ice dams have, guess what? Ice and water membrane. So that’s, to me, speaks pretty strongly about how effective that product actually is.

RS: Manufacturers don’t even claim that it’s gonna prevent leakage. They just say it’s a first line of defense against leakage. If they can’t say that, then what are we doing?

SK: Yeah. We still install it every day and it’s fine. People with ice dam issues that we deal with on the retail contracting side say, “Oh, oh, and by the way, make sure you put that stuff up because I got awful ice dams, and I just don’t wanna deal with that anymore, so put the stuff up.” And I’m like, “Okay, let’s talk about this stuff. Let’s talk about the reality of that stuff.”

TM: Yeah. Unintended consequences, like you said, Steve, I was just thinking, reducing drying potential and changing the dynamics in the house with drying capacity and tolerance of moisture and all of that. I’ve seen it create some problems in houses that they didn’t used to have issues with moisture and mold and frost in their attic and now, that they do.

SK: Yeah. On that topic, this is interesting and nobody ever talks about this, but we actually… This occurs enough in our residential in the roofing industry or my segment, so we put this in our contract. It has to be in there, which is that if you’re moving from a cedar roof system to an asphalt roof system, there is a much higher likelihood of attic, of condensation and ice dams. You increase the likelihood of having problems with winter-related or cold-related issues on your home if you move from a wood roof system to an asphalt roof system, and that’s primarily due to two factors. One is that the asphalt systems have essentially no R-value. So for whatever reason, it seems that the fact that cedar has four to five times the R-value of an asphalt shingle has an effect, and this is a super esoteric building science topic that Reuben, you probably are all over.

RS: Tessa’s the building science geek.

SK: Oh, okay, then… I just read your stuff and I’m like, “Wow! That guy knows more than I do about this.” But Tessa, I gotta catch up ’cause it sounds like you’re the one. But so yeah, so that’s a thing, R-value…

TM: We dabble. We dabble, though, all of us.

SK: Oh, good. All the more than I do about that. But the other factor is that cedar roofs breathe and they’re typically not wrapped in full ice and water membrane. And asphalt roof systems don’t breathe much, so I can only speculate, but I believe that that’s part of why these issues occur.

TM: Definitely, yup. Wow! So you actually educate your client about the changes they’re gonna see when they switch to different roof covering.

SK: Yes.

TM: A plus plus. [chuckle]

SK: Well, no, it’s… I’d love to say that there were noble reasons, but what it is as a guy, a veteran in the industry is that every time I run into somebody who has a problem that was unanticipated and quite honestly, not my fault, there’s a line added in our contract. And it has to be because…

TM: That’s so smart.

SK: Because as a smart business owner, am I honestly responsible for the fact that you have ice damage now after we put a roof on that you didn’t before? We all in this room know I’m not. And most people understand that, but if it’s not your contract, then you can really end up in a bad situation. So I do go out of my way to say, “Homeowner, understand we’re changing the dynamic of how heat and moisture move through your house and through your attic system, and this is a small possibility.”

TM: Yeah. Yeah, exactly.

BO: Well, lookie there, and we’ve stumbled on to our next podcast with Steve. [chuckle] We’re gonna talk about changing and unintended consequences in roof systems.

SK: Yeah, yeah.

BO: I love it!

SK: I hope, I’d love to get back ’cause I have a little something that I mentioned about storm chasers, and if we could… Do you mind if we dive back into that for a second?

BO: Let’s hear it.

SK: And that is what I believe to be common mistakes that homeowners make in dealing… After a storm. First of all, I do believe in my heart that it is a mistake, just a mistake to work with storm chasers. And I define storm chasers as companies who generate the vast majority of their revenue through storms. And we can talk more about that at some point, but I’ve seen too many negative outcomes. And in my mind, you wanna work with a company who has been around a long time and is gonna be around a long time. And most storm-chasing outfits don’t fall into that category. So I wouldn’t want a storm chaser working on my mom’s house. And I always use the mom house standard. “Well, would I send that plumber to my mom’s house? Would I feel good about that?” And the answer is no. There’s a handful of storm chasers here in Minneapolis that are based here. And so it’s not all… Reuben, I think we talked a little bit about, “Watch out for out-of-state license plates.” And my comment there is, “Well, they don’t all have out-of-state license plates ’cause there are companies here that chase storms aggressively and apply tactics that I believe to be pretty ethically dubious.”

RS: Yeah.

SK: They’re doing things that I think are not right. So one, try not to work with a storm chaser. This is advice. Don’t rush the process because storm chasers love to create a false sense of urgency. “This is an emergency, Mrs. Johnson. Your roof is trashed, we’re here to save you. We’re gonna have your big bad insurance company pay for everything ’cause we’re awesome at this. Look at all the marketing we have. Look at the three yard signs we have up the street. There’s no reason not to, Mrs. Johnson. This is really a hurry.” And it’s not. I have, in all the thousands of roofs I have climbed, I have seen probably a dozen that needed immediate attention, and I mean a dozen… And I’m talking about damage to the field. Of course, there’s gonna be cracked skylights and busted out roof fence that might need a tarp, but the vast majority of the roof systems affected by hail, even severe hail, aren’t gonna leak. And they’re not gonna leak tomorrow, and they’re not gonna leak for a month. And insurance, the law is that we’ve got a year, we’ve got a year to identify the damage. And then, usually, a year beyond that to fix it.

SK: So don’t feel like there’s a rush. There’s no reason to feel like there’s a rush, even though the storm chaser’s saying, “There’s a huge hurry. We gotta get this thing… We gotta get this deal inked. Let me call your insurance company right now. Sign this piece of paper that allows us to talk to your insurance company.” [chuckle] You know what those are. They’re storm chasing agreements. Yeah, don’t work with a storm chaser, don’t rush it. Also, on the other side of it, don’t trust your insurance companies’ first go at it. Adjusters are imperfect. And depending on the protocol and company that you’re working with, they range from very, very competent and good at what they’re doing, to absolutely incompetent and maybe even fraudulent. Like the lady I was talking about earlier in Eden Prairie where American Family was trying to pull a fast one.

SK: So don’t trust the first adjustment. The first adjustment is just that. It’s the start of the conversation. So you’ll get a 10-30-page document generated through Xactimate from your insurance company that’s gonna be overwhelming in its complexity. And it’s gonna look very, very detailed, which leads most people to believe that it’s very accurate. And sometimes, the reports are only five pages long, but the point being that there’s a lot of data there. But unless you know how to interpret that data and to look at it, it’s very easy to miss the fact that the insurance company is light on scope, we’ll say, they just missed some stuff. Like the other claim I had referenced earlier, the giant roof where the guy didn’t include ice and water membrane or valley flashing, and other stuff.

RS: Yeah.

SK: So I’m not saying you shouldn’t work with a restoration contractor. In fact, I’m saying the opposite. You should work with a contractor very familiar with the insurance process. It doesn’t need to be a storm chaser. Any solid retail contractor or restoration contractor that has been through many, many claims can competently digest the first appraisal or the first adjustment from the insurance company and begin a respectful dialogue with the adjuster about the inadequacies of what they generated. But sometimes, homeowners bring me an adjustment and they say, “Hey, we’ve got $22,000 to replace our shingle roof. State Farm was out here. And so, please replace our roof.” And I say… Or, “Please give me an estimate to replace the roof ’cause our insurance company has said they’ll replace it.”

SK: And my advice there is: Don’t trust the first adjustment. Work with a contractor you trust. Give the contractor the trust and the ability to speak with the insurance company to hammer out the details, basically. And integrity and honesty and reputation are the number one assets you should be looking for in who you trust as a partner in that conversation. It shouldn’t be the marketing materials. It shouldn’t be yard signs. It shouldn’t be a sense of urgency because you should do it now. So that’s another really important thing. I don’t wanna suggest that you shouldn’t work with contractors in the conversation with your insurance company ’cause you absolutely should.

BO: Well, yeah, and you have to, eventually. They’re gonna be the ones that put your roof on.

SK: Yeah.

TM: That’s really right.

SK: Yeah, yeah, and that’s something I say all the time. Listen, if you don’t trust your contractor, if you don’t pick a good contractor who you trust to basically grab the claim and run with it, then why on earth would you trust that company on your house? That’s crazy. So find somebody you trust who has good integrity, work with them through the process. It’s a team effort.

BO: I think we’re gonna jump in there and leave it at that. I think that’s great advice. And that voice you just heard was Steve Kuhl, and he is the godfather of roofs, wood roofs, for sure, in the Twin Cities market, and all things insurance claims. So thanks, Steve. We really appreciate your time today. You’ve been listening to Structure Talk, a Structure Tech presentation. We will catch you next time. Thanks for listening.