Sooner or later, every new water restoration company hears about TPAs. Somebody tells you it’s the fastest way to get steady insurance work. Somebody else tells you it’s the fastest way to work for nothing. I’ve done more than 5,000 water jobs since I got into restoration in 2012, and here’s how I’d explain TPAs to anyone just starting out, so you can decide for yourself.

1. In plain words, what is a TPA?

TPA stands for third-party administrator. It’s a company that insurance carriers hire to manage claims and send the work to a network of approved contractors. Instead of the homeowner picking a restoration company off Google, the TPA assigns the job to someone in its network.

2. Why do TPAs matter to a new restoration company?

Because they can send steady work to a company that has no reviews and no marketing yet. That’s a big deal when your phone isn’t ringing. The trade-off is that you work by their rules and their prices instead of your own.

3. What does it take to get accepted into a TPA program?

Usually you’ll need IICRC certifications (WRT at minimum), proof of liability and workers’ comp insurance, background checks on your techs, estimating in Xactimate, and the ability to meet response times around the clock. If you’re still sorting out certifications, start with IICRC certifications explained.

For the big national programs, industry guides list $1 million / $2 million general liability with a mold endorsement, $1 million commercial auto, state-required workers’ comp, IICRC certifications across your crew, background checks, a review of your finances and references, and estimates written in Xactimate at the carrier’s settings. Many programs also charge an enrollment fee and a yearly renewal. Before you pay any application fee, call the program’s local vendor coordinator and ask whether they actually need another contractor in your area.

4. How does the money work on TPA jobs?

Jobs are priced with the TPA’s pricing rules, which are often below what you’d bill directly, and the TPA takes a cut on top of that. Your estimate also goes through the TPA’s reviewers before it’s approved, and they’ll cut line items they don’t think are justified. The upside is that many TPAs pay you directly, so you’re not chasing a homeowner for the check. If you want to compare that with jobs where the customer pays you directly, read cash jobs vs. insurance jobs.

Here’s what’s typical. Industry writers put the TPA’s fee at around 5% to 10% of each job, depending on the program. Some programs also charge $200 to $1,000 a year to stay in, and many require software that can run $250 to $1,500 a month. And don’t expect jobs right away. A lot of new members get little or no work for the first 6 to 12 months, because assignments go to the contractors the program already trusts. Those numbers vary by program, so get them in writing before you sign.

5. What are the rules once you’re in?

Expect response deadlines (contact the customer fast, be on site fast), photo and moisture documentation uploaded to their system, and a scorecard. Miss deadlines or let your scores slip, and you get fewer jobs.

6. What do restoration owners say about working with TPAs?

It depends on who you ask. The owners who like TPA work say it fills their schedule, pays directly, and forces them to tighten up their documentation. The owners who hate it say the margins are thin, the reviewers cut estimates without ever seeing the job, and the paperwork eats hours. One tech can spend an hour or two just documenting a single job. Both sides are right. TPA work rewards companies that already have systems, and it punishes companies that are still figuring things out.

7. When does joining a TPA make sense?

When you have crew capacity and equipment sitting idle, you can handle the paperwork, and you want volume while your own reputation grows.

8. When should a new company skip it?

When you’re one person or part-time and can’t meet the response times, or when your local referral partners already keep you busy at better margins.

9. TPAs or referral partners first?

My advice for new companies has always been to get referral partners and your Google Business Profile working first. Plumbers, AC techs, property managers and realtors send you jobs at your price, from people who already trust you. So my answer is: build your own referral jobs first, then add TPA work to fill the gaps.

10. What mistakes do new companies make with TPAs?

• Taking more jobs than they can handle. Late responses hurt your scorecard, and your scorecard decides how much work you get.
• Sloppy documentation. Missing photos and moisture readings get invoices cut.
• Depending on one program. A TPA can cut your volume at any time. If it’s your only source of jobs, your whole business rides on someone else’s decision.

11. How do TPAs connect to Xactimate and documentation?

Nearly every program expects an Xactimate estimate plus photos, moisture maps and drying logs. That’s the same skill set that gets you paid on any insurance job, TPA or not. I break it down in how to document a water damage job so you get paid.

12. What should you do this week if you’re curious about TPAs?

• Get your IICRC WRT.
• Set up proper insurance.
• Practice documenting every job like a TPA is going to audit it.
• Make a list of the TPA programs active in your area before you apply to any of them.

The bottom line

A TPA can be a useful source of volume, but it’s not a business plan. Own your relationships, get your documentation tight, and treat TPA work as one source of jobs among several, not the only one.

Keep reading: Getting water damage jobs from realtors and property managers, Cash jobs vs. insurance jobs and Documenting a job so you get paid. New to Damage to Dollars? Start on the home page.

Inside the 6-Figure Launchpad I show you how to run every job, from the first call to documentation, estimating and invoicing, built from 5,000+ water jobs. Or grab the free From Leak to Paycheck playbook to land your first water job.

Results vary. Not a promise of income. See our earnings disclaimer.