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Insurance Law/Bill from mitigation company



We had a pipe burst this winter. We first contacted the insurance company for the loss. They gave us a name for water mitigation. However, that company were very busy at that time and would not be available a week later. So we contacted the insurance company and asked them if we could find one from yellowpage because delayed mitigation may cause further damage. The insurance company agreed with it. We found one company to come for the mitigation on the day of the call.
In the middle of the claims process, we had to hire a public adjust to help us get the repair cost, because the insurance company adjuster's estimate is way below a contractor's estimate. At that time, the mitigation company has not submitted the claims to the insurance yet.
After the insurance company paid us the repair cost via the public adjuster, the mitigation company was complaining that they did not get paid by the insurance company. Since we have a public adjuster, although we did not sign contract with the public adjuster on  mitigation, only he can represent us to talk with insurance company. So he helped them get paid by the insurance company.
After the mitigation company got the check from the insurance company, we thought we could close this case. However, we received a bill from the mitigation company saying that we signed the contracts of being obligated of the remaining balance that was not paid by the insurance company, which is more than $3000. The mitigation company told us because the insurance company already paid the floor replacement and therefore they are not paying floor drying bill. However, we did tell the mitigation company that the floor was bumpy and chirped and it needed replacement. It was under the help from our public adjuster that we got the floor replacement paid by the insurance company.
So I went back to the public adjuster and he told us to ignore the mitigation company. He said he told them that their charges are inflated. I am a little concerned because the mitigation company threatened that they would send that to a debt collection company. The public adjuster assured us that the debt collection would not impact our credit. If they decided to go to small claims court, our insurance company had to back us up. If the go to small claims court, I think that would be fine. What I am afraid is that they might go to debt collection first. After reading the stories from internet, it seems to me that it does impact the credit score. Plus, I don't want to be harassed by a debt collection company.  I don't know what I should do next.
Can you please give us some suggestions?


First of all - do NOT believe the public adjuster! He cannot give legal advice and should be reported to the state insurance department. This could very well affect multiple areas of your credit it goes to small claims court.

If the work done by the mitigation company was proper and done in an attempt to mitigate the damages, their costs are part of the claim costs and should be covered under the policy. Carefully read the contract terms to see if there is a mention of anything having to do with their agreement to work with the insurance company in determining the scope of work needed.

If they did work over and above their scope of agreement with you, then you might not be responsible for those charges as they exceeded the contract terms without permission. Your adjuster should work with you on this as they have the experience in dealing with these companies on a daily basis. If you submit an invoice from a company for the repairs, the insurance company has the burden of proof in determining why they will not pay that amount ... not you.

Hope this helps.

Kevin Hromas

---------- FOLLOW-UP ----------

Many thanks for your advice.
Attached is the contract. It looks to me that there is no agreement with the insurance company.
The credit card information was provided to them and they charged $1000 for the deduction on the day of service.

In their letter to us they said "
Your insurance company did not provide payment for drying out your hardwood floors, however, the service was performed and payment is now due. We are also attaching a current statement of accounts as well as a copy of the signed work authorization contract for your reference. By signing the work authorization contract, you agreed that any and all charges for work performed by the company are your personal responsibility and liability (please, refer to the attached copy)"

Does that mean we are obligated for the amount?
Thanks again


I am afraid that you would have little success in fighting this agreement in court but you may want to talk to a local attorney before you do.

The reality is that your insurance company is the one on the hook for these costs over and above your deductible. I would let them know that if you are sued because they refuse to pay these amounts, even after they gave you permission to use the company of your choice, then you may have to bring a bad faith action against them.

The insurance company is trying to say that because they had to replace the wood floors anyway, there should never have been an attempt to dry them out. That is an erroneous assumption. Even if the floors were damaged beyond repair, the presence of trapped water within and under the wood would have possibly allowed for the creation of mold and other problems. Drying that out did in fact prevent additional covered damages, therefore they are responsible for covering this. Do not just accept their position on that but be firm in your demands.

While I do not think Elite is acting professionally in this matter (you may want to file a complaint with the BBB), this is one of the dangers in using someone you just find in the YellowPages.

Hope this helps.

---------- FOLLOW-UP ----------

After some information exchange with the insurance company, we knew that Elite actually revised their  claims amount because they did not have proof for some of the service they listed in the original claims. The difference between the 2 estimates were the amount they are charging us. Below is details log from the insurance company:
4/23/2014 10:13:08 AM   Mitigation Review      
         Spoke with Mike from Elite and discussed the loss.  I explained I'm getting one story from our IA and one from them on the amount of equipment.  Unfortunately Elite's camera card broke so they have no pictures to prove their side.  The amount of equipment in some of the rooms is excessive.  We paid for the floors, but also for the floor mats. We are being charged from the PA for painting, drywall, baseboards, etc that the mitigation vendor states were saved.  He is going to review his estimate and follow up with me today.  958am

Spoke with Mike from Elite again from xxx-xxx-xxxx and he removed all injectidry, all drymats, and anything else that he thought may have been been able to dry with less equipment.  He got the bill down to 13912 so it would be 12912 for us.  He is going to send revised estimate.

It is clear now that they used the revised estimate to get agreement with the insurance company and mailed us the original estimate charging us for the difference. Not mentioning the agreement with insurance, they just lied us about what was not paid by the insurance company.

Do you think Elite have a winning case if they go to small claims court?

Thanks again


Sorry for the delay in responding.

It appears that Elite is trying to stick you with paying for stuff that wasn't done still. If they told the insurance company one thing and then are trying to charge you based on higher numbers, you should be able to use that in court if they sue ... and then counter-sue them for attempted fraud.

You might let them know that you intend to do that - counter-sue - if they want to proceed. See if that gets them to back off.


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Kevin Hromas


I am a licensed, executive general adjuster currently holding a Texas resident P&C license (614250), New Mexico non-resident all lines license (248774), Oklahoma non-resident P/F/M license (A299561), Florida non-resident P&C license (E117051) and a National Flood Insurance Program certification (06040100). My areas of expertise involve property and casualty issues in both residential and commercial policies with regards to claims practices and issues. I deal extensively with Lloyd's of London commercial policies and various domestic carriers for residential policies.


After a 20 year career as a General Contractor, I was employed by Allstate Insurance as an adjuster in Texas, holding various postitions within the property claims department. After leaving Allstate, I specialized in handling losses associated with major catastrophes through-out the country. (Hurricanes Isabel, Charlie, Wilma, Katrina, Ike, etc., hail storms, floods.) I am currently retained as an expert by multiple insurance defense firms in Texas for issues in litigation. I am also a certified Umpire for formal appraisals.

Member - Society of Registered Professional Adjusters Fellow - Council on Litigation Management Member - Property and Casualty Association Member - Texas Independent Insurances Adjusters Association Member - National Association of independent Insurance Adjusters Member - Houston Claims Association

Claims Magazine ( and then search 'Kevin Hromas' for a full listing of articles and quotes.),,

JD - University of Houston Law Center - 1992 BA - Southwest Texas State University - 1980 AA - South Plains College - 1977 PLCS - Personal Lines Coverage Specialist

Past/Present Clients
Certain Underwriters at Lloyd's, London, Fulbright & Jaworski (Law Firm), Bracket & Ellis (Law Firm) Thamm & O'Briant (Law Firm) Sheehy, Ware & Pappas (Law Firm) Walker, Wilcox and Matousek (Law Firm) Financial Guarantee Underwriters

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