Jansen International - Public Insurance Adjusters

Articles Of Interest

When Tragedy Strikes, Professional Consultation Yeilds Better Results In Insurance Claims
By Charles Dale, Vice Pres. of Operations for Jansen & Company

November, 1997

When it comes to hotel/motel ownership and operating your business properly (and profitably), a major factor in determining your success or failure can be attributed to your property. In other words, your location, the property condition and it’s appeal to your paying customer must be analyzed and constantly evaluated to ensure that your investment will be a positive experience. Unfortunately, owning a hotel comes with the risk that perhaps the property will be damaged or destroyed by fire, flood, windstorm, vandalism or other type tragedy which can greatly impact, if not cease the operation of your hotel.

Most owners protect their financial interest in their property by maintaining insurance coverage for common perils to property. In some cases, owners maintain insurance coverage to cover business interruption caused by a covered peril. Through the purchase of insurance, the owner is selling the risk to the insurance company. But in the event of a disaster, what should the owner do to assure that the insurance coverage he or she has will actually pay for damages and allow the owner to re-establish the hotel as it was before the event?

To those hotel owners who have suffered a major property loss, most will attest to the frustration of handling the claims process and unfortunately, some will attribute the procedure to actually being the reason for their hotel business failing. But why? If your insurance broker has advised you of your property risks, associated liability and business interruption exposure properly, and you have paid for the recommended coverages, why should your business suffer if you experience a loss? Besides, this is why you have maintained your insurance coverage, and now is time to put the policy in effect and recover what is rightfully due to you and your business.

As a business person, you understand that the insurance policy you hold is like most forms of contractual arrangements you may be party to. The contract is often times subject to scrutiny and can be interpreted a variety of ways when actualized in different scenarios. The insurance carrier who holds the contract in force at a time of loss covers or "indemnifies" the insured for named perils as described within the contract. The key to protecting your interests and securing a full indemnification for your loss is simply a matter of how you approach the loss and how you handle the claims process.

Upon notifying your insurance company of a loss, the company will typically assign the claim a number and dispatch a "staff" or "independent" adjuster who will represent the insurance company in settling the claim. The adjuster will arrive on scene the day of the event or shortly thereafter and begin to take control of the process by assigning contractors or restoration companies to begin clean up or other procedures. The adjuster will typically initiate a "cause and origin" investigation in the case of fire and advise you of your responsibilities and duties after a loss as a policy holder. An astute owner will understand that the relationship between the adjuster and his selected contractors may appear too friendly and take more control of the situation himself. By taking the time to assess the situation and consult with others who have experienced the situation, a clearer picture of the process can be achieved. It may be that restoration is not possible or desired by the insured, and thousands of coverage dollars could be exhausted doing work which would otherwise not be performed if the damage is assessed in a different way. Without question, when property damage occurs, there a many different ways to interpret the damage. Is the property restorable or must it be replaced? Does the policy cover replacement cost or actual cash value for items affected by the incident? What is the proper way to restore or replace affected property and are the values and measurements accurate? It is simple to see where thousands of dollars are at risk if the process is mismanaged or performed incorrectly. For instance, a simple calculation of replacing carpet at $ 15.00/square yard versus $20.00/square yard for an entire hotel can be tens of thousands of dollars difference. Imagine the difference if the calculation was based on cleaning versus replacing the carpet.

After a loss, the insurance company can do the following to settle a claim:

1. Repair the damage

2. Replace the damage

3. Clean the damage

4. Paint the damage

5. Reset the damage

The question at hand is what is the best method to take regarding the damage and will the method agreed upon provide a full indemnification for the loss. Many items can be cleaned or painted; however, in the instance of fire and water damage, the property might need to be replaced to eliminate lingering smoke and mildew traces. Insurance is a business and it is understandable that the insurance carrier would prefer minimizing the costs associated with a claim; therefore, many claims presented by the insurance company adjuster present the smaller side of settlement.

Presenting the proper and most complete side of a claim is a matter of control and experience. Most policyholders who file a claim have never done so before and are unfamiliar with policy language, coverages available and the inspection and mitigation of damages. A third type of adjuster is available to policyholders who seek assistance in resolving their claim with their best interests in mind. Public insurance adjusters are accredited and licensed adjusters who represent only the policy holder in the claims process. Many public adjusters have "jumped the fence" and are former insurance company adjusters. They are typically retained soon after the loss and are compensated based on a percentage of the total settlement dollars. Their fee is usually ten percent of the recovery amount and the structure of the relationship creates a partnership which motivates the public adjuster to collect as much as possible within the policy scope. Fees are paid after the insured collects his settlement funds; therefore the public adjuster is motivated to settle the claim as quickly as possible.

Once retained, the public adjuster sits down with the policy holder and determines coverages available and the end results desired by the policy holder. Does the owner want to rebuild or walk away from the property, will he or she rebuild with like kind and quality or replace with a different structure? Are there endorsements in the policy which provide for code upgrades or extraordinary expenses associated with loss? Is there business interruption coverage available and how should the calculation be presented? Most policy holders do not know that the above tasks are their responsibility as defined in the insurance policy. The insurance company adjuster is there to inspect and audit the loss for payment. Allowing the insurance company adjuster to perform this task is much like allowing the IRS to calculate your taxes.

Most public adjusting firms maintain structural estimators, contents accountants and licensed adjusters on staff. The three divisions work together in properly measuring and documenting damages, assessing values, determining depreciation factors and presenting the claim. The public insurance adjusting team will handle all aspects of the claim, including countless meetings with the insurance company and act as consultant for the insured until final settlement is achieved.

Considering the amount of expertise, effort and time associated with the process, the service of an outside firm can greatly impact the end result of an unfortunate incident. While the claim process is mitigated, the hotel owner is free to begin effort on restoring the business and/or maintaining the operation which can minimize the impact of the loss and shorten the recovery period.

Should any AAHOA member suffer a loss and seek the assistance of a public adjuster, they should seek a firm which maintains good standing with the National Association of Public Insurance Adjusters (NAPIA) and be licensed in the state which they operate. NAPIA accredits it’s members with Certified Professional Public Adjuster (CPPA) or Senior Professional Public Adjuster (SPPA) status which indicates successful completion of rigorous testing and 5 or 10 years in the practice respectively. NAPIA maintains a WEB site at WWW.NAPIA.COM and there are many links to members throughout the United States for more regional information and assistance.

When unfortunate incidents occur such as fires, floods or tornadoes, you should rely on your insurance coverage to protect your financial interests in your hotel property. The final results of your settlement and how you survive the following storm associated with the adjustment of the loss is directly related to how you approach the situation.

BIO

Charles Dale is Vice President of Operations with Jansen International. Jansen International is the largest public adjusting firm in the Southwest United States and is a charter member of AAHOA. The company has been in business for 20 years and maintains offices in Austin, San Antonio, Dallas and it’s headquarters in Houston, Texas. It’s service network and associations allow for claim preparation throughout the United States. For more information or questions regarding your insurance claim, Jansen International can be reached at 1-800-779-8714 or at http://www.jansenco.com

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