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Do I Have to Use a Contractor an Insurance Company Referred to Me?

On the surface, insurance companies appear to be in the business of helping people. They provide financial benefits to policyholders in need after traumatic accidents. In reality, insurance companies are in the business of making money. They will do what they can to increase profits whenever possible – including referring subpar or biased contractors to save money. If you’re on the fence about using a contractor your insurance company referred for repairs to your property or treatment for injuries, you may need advice from an attorney.

Why You Shouldn’t Trust Company-Referred Contractors

It’s perfectly reasonable to be suspicious about a roofer, builder, auto mechanic, or doctor your insurance company refers you to see after an accident. If the contractor comes as a referral, that means the odds are high that the two parties are working together. The insurance company might be controlling the contractor and encouraging it to cut corners when providing your services. Logic says an insurer won’t recommend a contractor who’s going to go beyond minimums to help you – not if that means the insurance company would be the one footing the bill.

Your gut instincts are correct if you think referred contractors and insurance companies have relationships. It is entirely true that many insurers have a tight rein on what the contractor can and cannot do. For example, some insurers make sure contractors don’t provide certain services they can’t bill to the insurer. Others work with contractors with the understanding that the contractor won’t provide any extras to the client. Whatever the case, know that it’s you, the policyholder, who is caught in the middle.

Insurance Company’s “Right to Repair”

Luckily, the law in Arizona does not obligate insurance policyholders to use contractors the company refers to them. In most cases, property owners have the final say in who they hire to work on their vehicles or homes. Since the claimant owns the property, it is up to him or her how to handle repairs – including who to hire. The same is true for health insurance claimants. As the patient receiving care, the claimant has the power to choose his or her own health care provider. The rule has some exceptions, however.

In the rare event that you signed a policy giving the insurance company the “right to repair,” you might have given up your right to choose a different contractor than the one your insurer recommends. Always check an insurance contract for this language before signing. Most insurance companies no longer reserve this right, as it is a controversial clause. However, in these cases, your policy might require you to cooperate with the contractor your insurance company chooses – or else lose your right to benefits.

Contact your insurance company and ask about your policy directly. Review your policy to see if you signed an agreement giving the insurer the right to repair. Otherwise, you still retain the power to choose your contractor. No matter how adamant your insurance company is about going with its contractor of choice, don’t give in to the pressure. Instead, do your research and choose the best person for the job in your area, even if it’s not the same company your insurer recommends.