So here we are at the first stage of hiring workmen to replace the air conditioner and reroof the house. The insurance company ponied up about $11,100 for a new AC, a new roof, and repairs to the CoolDeck. That amount will cover the air conditioner and the roof, just barely.
I joined up Angie’s List by way of getting names of contractors who have at least not driven SOME people into fits of rage. The result was a little mixed, but I did find a roofer who’s supposedly OK. And, having become disenchanted with my own AC guy after the company changed hands, I’d already learned of one air-conditioning contractor from my neighbor Sally; the other new neighbors, who moved in to Dave’s (former) Used Car Lot, Marina, and Weed Arboretum, recommended a second one based in Sunnyslope, right around the corner from us.
M’hijito and I have used a roofer—both houses needed to be reroofed shortly after we purchased them—who did a good job and seemed to be honest. I called him and found him strangely reluctant, but he showed up and produced a bid of $7,200: almost $2,000 more than he bid five years ago to roof the same house, when he had to replace rotted plywood to the tune of $48.50 per sheet.
The Sunnyslope roofer wanted $5,400 to install a 14-seer Goodman air conditioner, the smallest SEER for which the government will disgorge a $1,500 tax kickback on a high-efficiency unit.
$5,400 + $7,200 = $12600
$12,600 – $11,100 = $1,500
Unfortunately, it’s highly unlikely that I’ll ever see any tax refund from that federal offer, because it’s unlikely that I will pay any taxes at all this year. Thanks to the costs of Medicare B, Medicare D, Medigap, and long-term care insurance, my medical costs—before the $700 pair of glasses—far exceed 7.5% of my income. Social Security, the main source of my 2010 income, is taxed under some strange and incomprehensible system that keeps the cost fairly low, and I’ve hardly drawn down any of my savings this year. Income from teaching is even more minuscule than Social Security benefits. And the S-corporation will shelter almost all my freelance income, which was more minuscule still.
So…I’m going to have to land the best deal I can on the least cheesy product anyone will offer me.
The Sunnyslope air-conditioning guy came in with a bid of $5,400, and he proposed to defraud my insurance company by emanating a bid for a 14-SEER unit but calling it 13-SEER, since he claimed that the insurance company would pay for nothing better than 13-SEER—once again proving that crime doesn’t pay. Sally’s guy issued a bid for $5,200 for 14-SEER, hold the bullshit.
Two hundred dollars isn’t a big difference, but he didn’t propose to lie to the insurer. In my experience, if a person will cheat someone else, sooner or later he’ll cheat you, too.
Now about that $7,200 roof… The guy whose name I got from Angie’s list gave me a bid of $6,100, eleven hundred bucks better than my old roofer’s proposal. Same job, same quality of shingling (different brand, though), a little higher on replacing plywood, decking, molding, and fascia.
That’s getting down into the almost reasonable range.
$6,100 + $5,200 = $11,300
Only a couple hundred bucks more than the insurance has paid.
However, here is a very interesting site, where various kinds of contractors go online and talk shop. Get into the roofers’ forum, explore around, and eventually you’ll come to a thread where the men are chatting about a practice in which the outfits that descend on a town after a storm offer to pay a homeowner’s deductible to get their business. Well, there is an outfit in the neighborhood just now that doesn’t appear to be altogether fly-by-night. It’s a little suspicious that the company’s A+ rating with the Better Business Bureau dates from November of 2010 (and, one might note, that when one looks into how you apply for an A+ rating, one is not left with much confidence in that), but the Registrar of Contractors shows that they’ve been in business for 20 years. They’re flying through with crews of six or eight men and reroofing each house in a day or two. I could ask for a bid and find out if they’ll come down the amount of the $2,000 deductible.
The forum-going roofing guys think this practice is unethical. Some of them think it’s illegal—they think it’s insurance fraud. However, it’s hard to see how it would be fraudulent if the insurance company has already paid out and has seen bids from legitimate companies that are not basing their bids on any such schemes. Once the insurance company has paid what its representatives think is fair, it’s up to the homeowner to find the best price within the confines of the amount she has to work with.
What fun! I can hardly wait to get started on the construction.
Built into the quotes is a “do I want/need this job” factor. The less the worker wants the job the higher the quote. So, as you said before, it might be wise to wait till the glut of hail-related work is over.
@ frugalscholar: Yeah, you’re right: probably there’s no big hurry.
On the other hand, one thing you see on the ContractorTalk forums is a sense of competitive pressure among the legit contractors when swarms of parasites move in after a storm. These fly-by-nighters underprice local contractors, partly with strategies like using low-quality materials and hiring undocumented workers and partly through a variety of underhanded tricks.
Once this flurry is over, the not-a-depression will still be with us. If all your potential customers promptly used their insurance payments to reroof their houses, then there won’t be any customers left. And in fact, people who were thinking about reroofing before the storm — like the beloved new residents across the street, who soon realized that the roof on Dave’s Used Car Lot left something to be desired (like, oh, say protection from rain…) — will have taken the opportunity to reroof.
Interestingly, many of these companies have responded to the recession not by lowering their prices but by increasing them. When they can’t get enough work to support their businesses, their instinct is to raise rates to take up the slack. While you’d think it should be the other way around — i.e., less demand, lower prices — in their panic they don’t think that way at all. Quite a few companies have raised prices in response to falling business; the pool guys jump to mind, but they’re not alone.
Having at one time in my life purchased an ancient wooden house, I am very familiar with the contractor’s waltz.
So this ongoing tale is fascinating to me. Please let us know how it continues to play out.
@ E. Murphy: LOL! It’ll provide blog post fodder for weeks, if not months! 😀
I’m not sure exactly how the tax credit works, but I think it may apply even if your actual tax is less than the amount of the credit. It’s definitely worth checking out.
As for whether it’s OK for a contractor to “eat” the deductible and accept whatever the insurance company’s net claim payment is, you’re right, it’s OK. It’s only fraud if the contractor provides an inflated quote for insurance purposes, and then does the work for the lesser amount.
@ Pat: Well, I went to the EnergyStar site and that’s where it said if you’re not paying tax, you’re not getting any tax credit. Ohhh well.
It’ll be worth having the more efficient unit, though, if in fact it saves any money. Our power company just announced it’s installing Smartmeters in our neighborhood. Those things drove up customers’ bills in California — some people saw their power bills double! So I don’t expect my summer bills will go down. If they just don’t go up an awful lot, I’ll be happy.
I’ve had the deductible game work in my favor a few times. Both cases were for my car, when there was larger damage coupled with minor. I just didn’t have the body shop fix the minor things, so my bill ended up smaller.
Best of luck to you as you piece it all together.