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Last Post 08/05/2010 3:40 PM by  Ray Hall
Fire Damaged Tools
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marty
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08/02/2010 11:40 AM
    How do you handle hand tools (craftsman brand) with lifetime warranty, damaged by a fire?  How do you dep, these items?  It seems to me that in theroy that they never ware out.
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    mtsuka73
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    08/02/2010 11:53 AM
    In 30 years I never took depr on Craftsman tools. I took photos of all tools (showing the print) put it in the file and paid the claim. Any receipts or manuals were also copied and put in the file.
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    ChuckDeaton
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    08/02/2010 2:06 PM
    Depreciation is based on age and condition.
    "Prattling on and on about being an ass with experience doesn't make someone experienced. It just makes you an ass." Rod Buvens, Pilot grunt
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    Ray Hall
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    08/02/2010 3:36 PM
    condition before the loss is they only fair way to both sides. Nothing reallu last a life time if it is used hundreds of hours per year.This means bring the tool back to Sears and get a new one. Warrenty.... means bring it back for replacement to Sears as per Mr. Craftsman.
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    DIGITORY
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    08/03/2010 6:34 PM
    I feel that there should be depreciation applied to Craftsmen handtools, however, depreciation whould be determined by use of the Broad Evidence Rule, and NOT the age of the item. Furthermore, when determining the ACV, the fact that the item(s) has a lifetime warranty would have a great influence on the Actual Cash Value.

    www.digitorysolutions.net
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    Tim Johnson
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    08/03/2010 7:05 PM
    Depreciate Craftsman tools by the amount of sales tax. That is about it.
    Tim Johnson
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    Leland
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    08/03/2010 7:38 PM
    just like an insurance contract, you have to know the terms of the warranty. The warranty doesn't cover damage due to fire. It mostly covers tools that are broken. This subject was discussed ad naseum on another thread I started, check the archives. I used to always think Sears would replace a fire damaged tool, after I did more research I found out it's not true, unless maybe the consumer gets lucky.

    Here is a copy of a letter from Sears that explains their official policy:



    Dear Ben P.,

    Thank you for contacting Sears regarding the policy on Craftsman hand tools.

    We appreciate that you have chosen Sears for your tool needs. Craftsman hand tools come with a life-time warranty against product defects. If a Craftsman hand tool ever fail due to a defect in the product, simply return the item to the nearest Sears store. Some exclusions does apply which would void or do not apply to the life-time warranty , which include but is not limited to:

    The item being altered in any way.
    Lost, stolen or damaged by an act of God (such as fire, flood, etc.)
    If the item is used for any other reason than its intended purpose, including neglect.
    Rust that does not prohibits the performance of the item (most rust is strictly cosmetic and does not justify being classified as broken)
    Precision hand tools that includes a mechanism (such as calipers, micrometers, most torque wrenches, etc).

    Please contact your nearest store for help resolving your merchandise question. If you would like help in finding the nearest stores, use our store locator at http://www.sears.com. The store locator button is located along the left side of the homepage.

    If the hand tool is no longer available, Sears will replace the tool with a comparable item. If no comparable item is available, Sears will provide the customer with their money back.


    Rod N.
    Sears Customer Care
    webcenter@customerservice.sears.com
    1-800-349-4358
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    RandyC
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    08/04/2010 6:50 AM
    I seldom take Craftsman tools back for replacement, but I had a $40 digital protractor / pitch gauge  go bad.  I took it back, only to find out the warranty on digital tools is  one year.
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    Ray Hall
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    08/04/2010 11:43 AM
    Some of you may handle commercial claims that have a warranty. Lots come to my mind on a fire policy. A sprinker system test on an annul basis, A burglar alarm to a centraL stsation, a back up generator on the fride system for products.One of my all time favorites is the cotton gin form, that the baled cotton must sit out side in the open 50 yards from the gin for 30 days after it is compressed. The 2nd is  the  night watchmen time clock warranty record must be kept in a seperate building. Some of the inland  marine warranty are kinda good also, like on a turkey floater on live young turkeys killed in a hail storm, or when they stamped and crush each other when the hit the fence. Its the 72 hour clause, to let the adjuster inspect (3 days in the hot sun.....agah)
     
    (siide note, I ask how many was insured for $1.75 each and what % was killed and did the math) Iask my boss how to handle.
     
    One of the most interesting I ever had was a 10000 barrel bunker 6 boiler fuel tank , that had 6 owners fuel in the tank, but one of the owners contaminaded the whole inventory but putting in some high sulpher fuel from jamacia that could not be used in the US in steam ships. I had 4 claims, the liability, the contingency cost liability, and the remediation cost of the whare house man to make the fuel usable, and our insureds loss of volume by the cleaning process.
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    DelGroves
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    08/05/2010 8:08 AM

    Introduction

    A loss professional must always adhere to the policy language applicable to coverage, loss determination and payment: LKQ, RCV, DEPR, ACV, deductible, salvage value.

    Some definition of terms is necessary, to facilitate discussion of the warranty issue (of Craftsman tools or any other item). Note: local jurisdictions affect the actual interpretation of policy language but the following definitions are generally accepted:

    Definitions

    LKQ Like, kind, & quality (the same or comparable item: design, construction, quality, use, etc)

    RCV Replacement Cost Value (of LKQ) - inc sales tax & applicable handling/delivery charges

    DEPR Depreciation (based upon age, condition, obsolescence, etc)

    ACV Actual Cash Value (Market Value or, RCV less applicable DEPR)

    SALVAGE VALUE: an actual bid from a salvor or, an appropriate value agreed with the owner. [Salvage Value will be affected by extent of damage and a perceived Market Value: more desirable item = higher salvage value; less desirable item = lower salvage value].

    Considerations

    LKQ: an included warranty has no effect on RCV (of LKQ); neither for a same (exact) replacement item nor for a comparable (non-exact) item.

    When considering an exact replacement, the term 'exact' means its value is the same as the damaged item in all respects and including warranty terms. Extended warranties originally purchased may have to be factored in order to determine the appropriate RCV (of LKQ).

    When considering a comparable item (because an exact item is no longer available), a warranty issue may be a valid consideration but affecting only DEPR and/or SALVAGE. In this instance, the non-availability of the (new) item may increase competition for used or damaged items thereby increasing its Market Value sometimes to the point the Market Value actually exceeds the RCV of an exact or comparable replacement item. [For purposes of determining RCV (of LKQ), the substitution of a comparable item would not be appropriate when an exact item is available. However, loss adjustment consideration may be given the insured in other aspects of the claim if the insured asks for substitution of an item with one of lesser RCV (of LKQ].

    Generally, if the warranty issue is raised by the claimant, one should review whether or not the item being considered is same as the lost item; that is, maybe you should consider another item which more accurately reflects the LKQ to the item lost. One should give due consideration to such an issue if raised and only include in loss settlement if it appropriately affects the loss determination.

    RCV (of LKQ): One may claim RCV is, in part, a reflection of the popularity of the item and/or the manufacturer's/retailer's reputation. Though this claim is likely true to an extent, RCV is what it is, regardless of what factors were utilized in setting the price. And, all things being equal, what is owed is the lesser retail price among valid options. Further, RCV is generally inclusive of any warranty programs offered by manufacturers or retailers (exceptions are those warranties available as a separate purchase such as to extend the warranty period beyond the basic included in the item's retail price); that is, they have to recoup enough in retail sales to cover any warranty work.

    [Note: Unlike 1st party contracts with the appropriate endorsement, RCV is generally not owed to 3rd party claimants who are limited to ACV. ]

    DEPR: The amount of applicable DEPR affects only the ACV and does not alter the RCV. Generally, applicable DEPR is determined through the consideration of the lost item's: age, condition, obsolescence, etc. (at the moment immediately preceding the loss)

    Age of an item may or may not affect the ACV of a particular item (see Market Value). Consider that the Market Value of some items actually increases with age.

    Condition of an item is probably the most variable consideration when determining the amount of applicable DEPR. Some owners use an item less than others which is typically reflected in a better-than-average condition when compared to the same or comparable items owned by others. Likewise, the care exhibited for a particular item by owners is as varied as the owners: some take exceptional care while others to lesser degrees. Insofar as a value based on age of the item, the better maintained item is comparatively more desirable and would have a higher ACV.

    Obsolescence affects many items, particularly 'high tech' devices whose design, construction and retail price changes frequently. In the majority of cases, the current available comparable hardware will be more powerful, be combined with more functionality, and cost less than the original item when purchased. Generally, the RCV (of LKQ) will be limited to comparable items simply because the same (exact) item(s) are no longer manufactured and/or available. But, the DEPR applicable to obsolete items will be a substantially higher percentage (to RCV) than a comparable non-obsolete item and, SALVAGE value may be nil or very nearly so.

    MARKET VALUE: does not necessarily equate to [RCV less applicable DEPR] because market demands may dictate a value which is less or more (than RCV less applicable DEPR). The desirability of the item being considered may increase the Market Value to a value which even exceeds the RCV (of LKQ). Contrarily, the Market Value demand may be less even than the value calculated as [RCV less applicable DEPR]; for example, an item that is considered obsolete may have a minimal (or non-existent) Market Value.

    Discussion

    The issue of a perceived no questions asked return policy on Craftsman tools arises frequently in loss adjusting. Just as frequently, in my opinion, this warranty aspect (whether actual or perceived) is ONLY germane to the proper adjustment of such personal property losses insofar as the issue may affect the determination of ACV and Salvage Value [additionally, see LKQ consideration above for non-exact replacement items].

    It is assumed that a loss professional will learn from mistakes; else, their claims career will not (or should not) continue. In terms of a good faith adjustment, a loss professional does not generally always have to be correct in his/her assessment but must have acted reasonably even when their assessment is subsequently determined to be wrong or inadequate. The more perceived 'experience' one has (actual or merely the total number of years in loss adjusting) the less incorrect assessments will be viewed as 'reasonable' and instead taken as evidence of bad faith.

    You may have noticed I use the term 'generally' quite frequently. The reason is that loss adjusting is subject to as many nuances as there are situations; and, though many situations appear to be alike, it's those small nuances which make all the difference. Avoid complancency when handling claims. Instead, approach every claim as if it's the first instance and always refer to the policy. Then, review and refine adjustment procedures to fit the claim at hand.

    As to nuances, some of you will find exceptions to the issues which I have addressed in this post. I think that is fine – I am always open to learning something new and welcome your comments. My aim always is to add to our overall professionalism.

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    Ray Hall
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    08/05/2010 11:31 AM
    This was very good, thank you very much.  This has came up thousands of times in theft claims. " I had over xxx of tapes, DVD's and blue rays stolen"
     
    just take this one bite at a time. The tapes have almost no replacement cost value. You can not take that $39.95 retail on the hottest tape on ELVIS and depreciate it 50%. Even of it has a collectors value, the song has been repoduced by a disk. This is called adjusting so be fair. Now to the DVD,s and Blue Rays, in the state of TX. we have some cases on the books, that leads the insurors to feel comfortable with checking with the local (best) pawn shop in town and asking what a hot disk is worth when it comes through the door, or even a person who owns it, but needs to hock it. Condition does matter. Its from about $1,00 to $3.00 and the store sells it reatail for about  $3.00 to $5,50. Now don.t dig in you heels, but do your work and get it settled.
     
    Remember Barry Zalma's book It,s the adjusters job to assist the insured in proving a  loss to the insurer. (Thats what all adjusters do) Assist the insured to prove the loss. If you ask the right questions, have the proper training, have the right attitude, write a good report, its nit really hard and its not cut and dried out of some estimating program either . My goodness please use your ability, don,t be lazy or half ass'd. You are getting very well paid. Justify your worth.
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    Ray Hall
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    08/05/2010 3:40 PM
    I think some one is jamming my post, I do ny have any virus on any other program ? is this possible
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