inventory and evaluation of contents loss sa17245

Inventory and Evaluation of Contents Losses

Contents

National Claims Assignment Center: 1-888-907-5907

3 Continuing Education Credits


A Moment of Silence

Timelines

• There is no “standard” for contents pay-out of losses without inventory. The range is from 4 – 8 months.

• Claims with pre-loss inventories can usually be closed in under 20 days.

• Claims with post loss inventories can usually be closed in under 30 days.


ACV

• Actual Cash Value: the cost to replace with new property of like kind and quality, less depreciation.

• The difference between replacement cost and actual cash value is a deduction for depreciation. However, both are based on the cost today to replace the damaged property with new property.

$29.95 $260.99


Proof

• A pre-loss inventory is defendable proof provided by a neutral third party that an item existed, it’s condition and its value.


Pre-Loss Inventory

• Identifying insurable exposures and categorizing risks.– Client retention.– Premiums.– Managed Risk exposure.– Leakage.


Provisions

• Insurable Value: Insurable Value is based on the replacement, repair and/or reproduction cost of physical items that are subject to loss from hazards. – To determine claim pay-out the three costs

must be compared and a method chosen.– Pre-loss inventory shows original value.– Post-loss inventory includes replacement

versus repair costs.


Identification of Specialty Items

• What is this?– Smoke damaged painting was purchased in

a junk shop in 2000 and sent for cleaning.


Dating from the late 1800s, and painted by the Pre-Raphaelite painter, Gabriel Max.

Would be expected to fetch over $750,000.00 at auction.


• Important features of pre & post-loss reporting methods.– Shows replace versus repair price.– Itemized pictures.– Tracks time, custody, location and condition.– Third party prices.– Multiple formats. (Xactimate, Excel, ect.)– Search capabilities.

Reporting Methods


Care, Custody and Control

• Most vulnerable step in the process.

• Labeling and Pack-out.

• Tracking procedures for transport and storage.

• Partial returns.

• Proof.


Labeling

• Multiple options must be available and on-site.– Every home, every room and every item

must be coded and labeled.– Are there options for affixing the labels?– Is a trained, certified employee involved in

the process?


Pack-out

• What issues are involved if items are repaired or stored off-site?– What are the correct handling procedures for

different materials?– What are the correct packing procedures?– Does it matter?


Packaging Options• Books – uncoated paper

– Separate with freezer paper and pack spine down in milk crates one layer only.

• Maps & Art on Paper– If flat pack in stackable trays (bread trays with cart),

PVC tubes for rolled.

• Photographs– Between plastic sheets. In most circumstances keep

wet for transport. Pack horizontal.

• Framed items– Leave in frame and pack horizontal.


Handling

• Books– Do not open.

• Maps & Art on Paper– Do not unroll or fold. Do not separate sheets. Do not

blot, wipe or rub.

• Photographs– Do not touch emulsion. Do not blot or rub. In most

cases transport wet.

• Framed items– Leave in frame for transport.


Inventory

• Every item must be inventoried.– Unaffected items that are moved for

protection.– Boxed items that are left onsite.– Items under protective tarps.– Items taken offsite for restoration.– Items sent for specialty restoration.– Unrestorable items.


Tracking

• Multiple methods and layers for tracking. The important issue is that one is chosen and that there’s continuity in the system.– Color codes.– Bar codes.– Numeric codes.– Area or proximity codes.


Partial Returns

• System must be capable of handling partial returns.– When a home owner calls and asks for a set

of keys or some particular piece of clothing, can your system handle it?

– System must be capable of tracking where the item is, in what container, on which shelf and if it has been restored/repaired.

– Sign-out documentation.


Systems

• Labels.

• Scanner.

• Bar code reader.

• Printer.

• Computer.

• Inventory sheets.

• Supervision.

Some Restoration Equipment and Methods

• Cleaning equipment.

• Drying methods.


Ultrasonic Cleaners

• Mild cleaning solution agitated with sound waves in a tank. Used to clean non-porous and/or delicate items.– Jewelry.– Ceramics.– Computer equipment.

Dry Ice Blasting

• Similar to sand, aggregate or water blasting but can be very delicate.– Furniture.– Glass.– Paper.– Structure.

Ozone Generators

• Used to remove odors. Normally items are stored in a sealed room with ozone generator.– Not safe for natural rubber.

VaporTek

• This unit uses the Vaportek patented essential oil membranes to release non-toxic, odor-neutralizing dry vapor into the air.

Thermal Foggers

• Used to cover odors in areas and on items.

Four IngredientsThe Four Ingredients of Drying

•Extraction

•Air Movement

•Dehumidification

•Temperature

All of the methods described use these four ingredients in different quantities.


Air DryAir Drying

• Oldest and most common method.• Suitable for small amounts of slightly wet

materials.• Lots of hidden costs.

– Labor intensive– Large space required– Frequent monitoring required

• High occurrence of secondary damage.– Bound materials usually require rebinding.– Mold is common during long drying operations.– Distortion is common in books.


DehumidificationDehumidification

• Most widely effective method.

• Can be used for structural, contents and most document drying.

• Can be used onsite.

• Occurrence of secondary damage is low.

• Must be monitored.


Freezer DryingFreezer Drying

• For special or emergency circumstances.

• Must be a self-defrosting blast freezer with constant temperature of -10 degrees F.

• Not recommended for coated papers.

• Works well on leather and vellum.

• Very slow, this is a passive method that may take weeks or months depending on conditions.


Cryogenic dryingCryogenic Drying

• Extremely expensive.

• Intended for rare book and manuscript collections.

• Similar to freeze drying but lower temperatures and active moisture removal.

• Safe for water soluble media and coated papers.


Vacuum Freeze DryingVacuum Freeze Drying

• Extremely sophisticated equipment.• Suitable for water-soluble and coated materials.• Vacuum is applied while under 32 degrees

causing sublimation.• Sublimation-ice crystals vaporize without melting.• No additional damage is done to materials.• Leathers and vellum may be damaged.• Low occurrence of secondary damage.


Vacuum Thermal DryingVacuum Thermal Drying

• Similar to Vacuum Freeze Drying but used at over 32 degrees.

• Ice crystals melt and then vaporize.

• Acceptable for drying records that have no long term value.

• Extensive distortion and blocking should be expected.


Policy Provisions

• Protect yourself and others.

• Notify insurance carrier.

• Protect Your Property.– This might include boarding up windows and

salvaging undamaged items.

• Prepare a List of Damaged or Lost Items.– Keep damaged items until your Claim Handler has

visited your home, and consider photographing or videotaping the damage for further documentation.

– Prepare a list of damaged or lost items and provide receipts for those items, if possible.


• Complete and Return Your Claim Forms.– After you have reported your claim, your

Claim Handler will send you important information to assist you and the claim forms that will be necessary for you to complete and return within a certain number of days.

– Read the information carefully and contact your Claim Handler as soon as possible if you have any questions or require additional information.

– Fill out and return the claim forms as soon as possible.

Standard Policy Contents Provisions

• The "contents" limit is generally around 50% of the dwelling amount; however, this is a guideline only. Home owners should take into account all personal property when calculating the contents limits. Read and understand the limited coverage amounts for specific types of personal property such as: – Jewelry – Fine arts – Silverware – Antiques – Collectibles – Firearms – Computer hardware and software – Business personal property – Money


• The limited coverage amounts for specific types of personal property are not separate limits in addition to the contents limit. These limits are included in the overall contents limit and represent the maximum paid out for that specific type of personal property. Therefore, it is very important to add an endorsement (sometimes referred to as a "rider" or a "floater") to coverage which specifically schedules and takes into account the value of personal property that may be owned above the special limits. Also, make sure to take into account commonplace household items when calculating contents limit. Often, people concern themselves only with big ticket items purchased for use in their homes and neglect to account for the many things needed to run a household such as small appliances, kitchen utensils, linens, window coverings, and sundries. Remember, personal property also includes clothing, shoes, accessories, and personal items.

Determining Replacement Value

• Inventory with receipts.– Best case scenario. No question concerning what was

in the house or it’s value.

• Post-loss third party inventory.– *80/20 rule will apply. Claim will be closed faster. Less

stressful for home owner. Improved client retention.

• Adjusters/Homeowner determination.– Long process. Subjective decisions. Higher leakage

and liability exposure.


80/20 Rule

• When working from a post-loss inventory the 80/20 rule applies. The involved parties can reasonably expect 80% of the contents to be properly identified and valued, leaving 20% to be determined by the adjuster and the homeowner.– In most circumstances the 20% consists of

specialty, sentimental or historic items.


Property Valuation

• Scheduled Property– Listing specific personal property for a stated insured

value. This is usually considered for valuable items that are subject to limited coverage.

• Appraisal– Insurance policies provide for an appraisal process after a

loss, on demand of either the insured or the company, in order to determine the amount of loss settlement in the event of a dispute regarding the actual cash value or the replacement cost. The costs are shared by both parties.


In the Past 20 Years

• U.S. Gross Domestic Productincreased more than 70%

• U.S. Population increasednearly 23%

• Personal spending more than tripled, and now accounts for more than 68% of GDP

Contents ClaimCategories

8.00%

14.00%

18.00%

18.00%

19.00%

23.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%Textiles

Electronics

Furniture

Toys/Food/Misc. HHGoods

Tools/Equipment

Luxury Items

Facts to Consider

• 95% of homeowners prefer to have their garments and household items restored and returned, rather than replaced

• An average family can accumulate wardrobes and textile items in excess of $20,000 over the course of a few years

• The cost to restore versus replace is 16%- a savings of 84%

Restoration vs.Replacement

Thank you for your time and attention!


inventory and evaluation of contents loss sa17245

Education

preloss inventory

framed items

physical items

unaffected items

boxed items

unrestorable items

postloss inventory

inventory sheets