Experience Files

I hear this too commonly: "The insurance adjuster just unilaterally cut us out of the project.. This keeps happening.. what do I do to stop this?"

Well, there's a few things to unpack here.

First, let's discuss the act of the insurance representative coercing the client use "their" preferred contractor. This is generally referred to as tortious interference of a signed contract.

According to Cornell university: Tortious interference is a common law tort allowing a claim for damages against a defendant who wrongfully interferes with the plaintiff's contractual or business relationships. - See also intentional interference with contractual relations.

How should this be handled once it's happened? First thing you should do is contact your attorney & have a discussion with your legal council. Generally, they'll send out a cease & desist letter alerting the perpetrator of their error.

What normally happens after an attorney gets involved? Well 1 of 2 things normally. Either, they back off and you're brought back into the project, or they fight & the case goes to court.

What happens if they fight it and it goes to court? As I can tell, the plaintiffs attorney will attempt to prove that;

1: There was a valid contract (or a reasonably certain business prospect) with another person or business;

2: A third-party knew of the contract or business relationship existed between the two parties;

3: The third-party intentionally and improperly interfered with the contractual or business relationship; and

4: The interference caused harm to the contractual or business relationship.

If these criteria are proven, the courts will generally rule on behalf of the plaintiff and financial compensation will be awarded. Many times the courts will award payment in the amount of the expected profit percentage. If these criteria can't be proven, you'll end up with court costs associated with the proceedings.

Either way, it'll set a precedence that you'll not continue to go quietly when treaded upon.

"Will this get me black listed in the industry?"

Maybe, but it's unlikely that it would even go to court, However, even if it does, odds are that you would not end up villainized. After all, restoration contractors commonly end up taking clients to court over unpaid invoices, and that's not terribly frowned upon.

When any other construction trade is wronged by a 3rd party, that's interfering with their livelihood, they end up in court over it. Why is it different when it involves an insurance company?

I referenced a bit of info from these websites:

https://www.law.cornell.edu/wex/tortious_interference

https://www.levelset.com/blog/tortious-interference/