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Since you posted this under "residential", I would be in agreement with you on this hypothetical loss.

However, if it were a commercial loss with stated limits on business personal property, and a coinsurance issue was involved...then there may reason to disagree. 

 

William,
I do not agree with you....I think that the insurer has the salvage rights on personal property that was paid for as a "total" loss as the insured has been made "whole" on those items and the insurers now have claim to same.
I also do not believe that because the insured was not made "whole" as a result of exhausting internal limits of liability has any bearing on salvage of items that have been paid for by the carrier. The carrier has already participated in the loss by the absorption of the deductible which was as a result of the exhausting of some internal limit of liability........
I guess I could stir the pot and ask what internal limit of liability was exceeded....if it were say property that had a limit and could have been insure to 100% RCV under a personal articles floater, than why would you expect the carrier to absorb the responsibility for the excess loss when the insured had the ability to protect their belongings with a floater and not leave themselves exposed.
Another question that I ask is whether or not the insured had purchased an increase in personal property/UPP/Contents coverage??? If the amount of standard UPP coverage was insufficient to cover a total loss to the UPP, is it not the responsibility of the INSURED to request a higher limit????

It all comes back to taking responsibility for one's own actions...........and stop trying to push it over on someone else...........if you have $200,000 worth of contents/UPP and your standard HO coverage is only $150,000. THEN I BELIEVE IT IS THE RESPONSIBILITY OF THE INSURED(AN INDIVIDUAL) TO BUY THE PROPER LIMITS .......also to buy RCV coverage........

Sorry, Bill, but I am tired of the whining.............People must take responsibility for their own actions or the consequences for in-action......

Best regards,
Joe L

Thanks for weighing in Joe;

I am glad to see a heavy hitter responding.  For clarification coverage C is well beyond the damage limits.  The insurers have paid what they opined that  the personal property damage is is worth.  The insured is in disagreement but accepts the check as undisputed portions being paid.  The limiting exposure is a cap on mold that has been largely eaten away by "mold damage ALE" (all mold related ALE is confined to mold cap).  Another adjusting issue for another day.

I interpret the salvage entitlement issues as being similar to the 'Made Whole Rule Doctrine" associated with equitable subrogation recovery issues.    Since the personal property is part of the covered loss of the insured then all of the loss and damages should be considered in the entireity.  The carrier could not be considered participating in the loss by the absorption of the deductible as it is an indemnity policy for loss sufferd by an insured.  Your rant on personal responsibility is not lost on me as I agree, however it is not applicable in the instant case.

I have never considered your postings as whining and to the contrare value you knowledge and insight to our industry.  The CADO board is a great source of information sharing and that resource has been neglected for several months for lack of participation.  Thanks for responding to the original posting and I look forward to your response.

William S Cook

Public Adjuster   

I respectfully disagree with Joe . A partial with Mike ;no differance on Mikes case if UPP under HO or Household Goods under commercial, neither can be subject to a co-insurance clause.

First step must be the whole loss amount must be determined, the the limits of insurance, then the limit clauses then the ded. The Ded. can be wiped out by the limit clauses if any. Now subtract the salvage from the whole loss and if this amount is greater than the UPP limit the insuror is not entitled to the salvage.

** Work up the Statement of Loss on the UPP only. Do not apply any Ded as this was addressed in the ALE loss, and the answer will become clear.**

Next!

Ray's rule of thumb above is what I was taught also.  

So, I have a partial agreement with Ray!  Coinsurance provisions can apply to BPP, at least with the carriers I've worked for...seen it most often applied on policies for businesses who do not own the building and are carrying BPP only.  Usually had to be an obvious case of underinsurance though before an inventory service got involved.   This is a little off=track of the initial post, but could have a stake in the decision in my opinion.

This sounds elementary, but Read the policy. Read the policy that applies to the loss. Get a Certified copy and Read every word and look at the punctuation. After you Read the policy and it seems confusing to an expert then it is. Ambiguity goes in favor of the insured. This advise applies in all cases, but it particulary applies to proprietary policies. An example is that the State Farm flood exclusion is different from the ISO flood exclusion.

Okay you guys, i am totally confused.....

William.......Thanks , but i was referring to the insureds whining......

Ray, I have to agree with you ....partially......and with Mike....

William...
If the carrier's payment was for mold damage with a limit and that was eaten up mostly by ALE, then how much actually went to the UPP.......and if so, where any items paid for as "total losses"...I also disagree with your statement that the carrier is not participating i the loss by absorbing the dedutible...the reality is that they are...and as far as "co-insurance", when speaking to a residential policy, there is no co-insurance.....The residential policies require an 80% insured to value clause in order to achieve replacement cost on Building Coverage.......while on that subject, if in fact a risk does not meet the required replacement coverage, and the ACV of the loss after deductible is less than (RCV of repairs -deductible) x % of insurance carried, then the insured would be paid the greater sum....Please note that the deductible is applied to the RCV of the loss and then the % applied....the carrier actually participates in the insureds being penalized for not carrying the correct amount of coverage, whereas in a commercial coverage, the deductible is applied after the co-insurance penalty.......and in many commercial polices the amount of "co-insurance " is determined by the insured and the company and is not necessarily 80%......

Nice to have some juices flowing again......thanks for all the comments.......I thought that CADO was getting too tame!!!

"Ambiguity" seems to cause a lot of problems for some  independant adjusters , plaintiff attorneys and judges in insurance contracts. Others seem to feel justice will come out in jury trials and the appeal process.

I have always felt it cost them as much as us to find out.

I also have to agree with Ray's rule of thumb mentioned above for handling salvage on UPP. If I recall correctly, nowhere in a standard HO policy is salvage actually addressed. It is just a component of the loss and claim.

Also, think of how many times you may have given the insured an "appearance allowance" on an item and left the salvage with them.

I don't see the word "salvage" in the ISO policy, but I see "Recovered Property" under conditions.  Would I be wrong assuming "salvage"  is just another term for "Recovered Property"?

"If you or we recover any property for which we have made payment under this policy, you or we will notify the other of the recovery.  At your option, the property will be returned to or retained by you or it will become our property.  If the recovered property is returned to or retained by you, the loss payment will be adjusted based on the amount you received for the recovered property."

So long as the limits of the policy exceed the damages the insured would have the option to retain the "recovered property" less adjustment to the loss payment....or the insurer would get "salvage."

Note the words "loss payment will be adjusted based on the amount you received for the recovered property."

If policy limit is based  on  "loss payment", and that "loss payment" is reduced by "recovered property" then salvage would just keep moving the goal line of the limit in cases where unindemnified loss exists beyond the limit.  (underinsurance).

I've written that last paragraph six times, I've got a headache, and I think this is the best I can do to explain what I think I read in the policy.

Would someone with a better understanding and stronger asprin please explain it better in terms of policy language?

Thanks,

Randy

This condition states what should be done in the event of recovered property after the loss has been paid. Let's say the police recovered a TV. If the insured does not want it back, it goes to the insurance carrier to sell as salvage or dispose of how they want. If the insured wants it back, then the cost paid for the TV must be returned to the carrier. It is the insured's option.

Regardless, if the insured wants it back, you would just readjust the numbers accordingly and handle it just as explained in Ray's original post. In my opinion, if still over the limit, the item or value thereof, should go to the insured.

Well Joe

It appears we agree on one thing.  The Deductible should be applied to the RCV claim.  I don't think the deductible should be applied to the ACV loss as is always done.  This is a double whammy to the insured to deduct from the ACV payment and hold back sums until replacement options have been completed.

For some odd reason I was thinking that an RC policy required that insured keep property insured to 100 percent of value.

The insured has $160,000 UPP and only has $20,000 worth of water damages according to adjusters figures.   

The mold cap of $10,000 has about $4,000 gone to mold related ALE while we are still debating the extent of water damage to the damaged sheetrock and the cabinets and vanities matching issues.

Joe, I don't think that insurers participate in the deductible if an insured  dwellling burns to the ground with a $100,000 limit and insurers pay policy limits of $100,000.  I don't think they have participated if an insured's damages exceed the available mold  coverage as the insured is the one that suffers the loss for any damages over the available coverages.

I don't think that if someone pays a premium to fully insure their property and a policy limiting clause becomes applicable to the loss  that insurers would be entitled to recouping any portion of their loss until the insured has been made whole for his entire loss up to policy limits.  I appreciate the reponders postings whether they agree or disagree with my thoughts, it allows for diverse opinions to be aired.

William S Cook

Florida Public Adjuster

 

William,
I agree with you in spirit.........FYI, if a RCV policy is in place in Florida, There is no hold back for depreciation,so the RCV is paid up front...per Florida Statute effective 10/01/05........and this appears to also apply to contents/UPP when the RCV endorsement is attached to the policy...also remember, that if Coverage A for structure does not meet the RCV coverage requirement, that has no effect on the UPP at RCV, if the proper RCV endorsement is attached.
As far as your mold vs water claim, read the mold endorsement....MOST clearly state that the mold limit of liability does not effect that which is owed under the water damage........sometimes separating the two can be tough, but the benefit of the doubt must ALWAYS go to the insured.

Dave and Randy, many thanks for your input.......we usually abandon the salvage to the insured or if they want to keep a usable piece, then we assign a minimal amount of value and work it out with the insured.....
Remember, we are adjusters and we are to pay the insured every penny that is owed under the applicable policy, and not a penny more....yeah, I know, easier said then done........sometimes you have to adapt to survive.......and by doing so you are not doing a dis-service to the carrier or the insured...you are closing the file in a reasonable fashion.....insurance is a business and it is nothing personal, but it is , isn't it.......

Ray, you old book of knowledge, I still do not agree with you(totally) on the handling of the salvage/excess....I can only speak from the way that the carriers that I have worked for and currently work for handle it........

Great thread.....Thank you all for the great participation on this one...

Regards,
Joe Lombardo Jr.

A well educated, honest, experienced PA like yourself should have no difficulty in working that out with the adjuster...I mean that in all sincerity....and Bill, if all else fails, there is always mediation and or appraisal......

I do disagree with your thoughts/comments about the carrier not participating on a total or on a loss that exceeded the policy limits......they d, but the net effect does not put any more $ in the insureds pocket.......

Oh, I do not think that there is such a thing as a policy that will "fully insure" the property......

I just thought of something kind of interesting for William, the PA to contemplate. 

You have a John Deere Combine insured on a Farm Equipment Floater policy.  It has a stated Limit of Liability of $80,000 and a $1,000 deductible.   These policies have an 80% co-insurance clause.  This combine is pickuped up a tornado and dropped into the insured's cotton field and is an obvious total loss.  The agreed value of the combine is $98,000 so it is within the 80% co-insurance requirement.  The insured has paid the required premium for a limit of $80,000.  Payment, however, is $79,000.  On Inland Marine Floaters, the deductible comes off the loss, or the Limit of Liability, if the loss exceeds policy limits.  In other words, on this kind of policy the insured will never be paid the policy limit his premium is based on.

How much do you allow for debris removal?

OK David I agree with you, the deductible does come off the policy limit on an Inland Marine policy; therefore $79,000. on your example. Fire insurance off the loss, Inland Marine off the loss or the policy limit which ever is greater.

New wrinkle to this loss the policy was in force 1 month of 12 month term. The insured ask you to determine the unearned premium refund on the Inland Marine as he has no need for the policy.

the the machine is scheduled on the fire policy under the Farmers & Ranchers form and ask about cheating him out of $1,000. on the Ded and the return premium question.

Courts in differing states arrived to a conclusion that fails to comport with your orbservations. Indications are that they were compatable with my theories in the resolution of an appraisal award as indicated below. One case does not set a precedence for the nation but it is a start.
William S Cook


.............They are not listed in the Official Farm Equipment Guide Book, therefore an official cash value has not been established to base this machine on. Given the fact the insurance agent had sold [defendant] coverage of $148,500.00 on the machine and $16,500.00 on the header, I assume he feels the machine is worth a total of $165,000.00. That is what [defendant] has paid a premium on.
Considering these facts I made my decision to award [defendant] $148,500.00 for the Combine and $16,500.00 for the header totaling $165,000.00. This amount will almost cover the estimated cost of repair by Amadas. The Machine remains the property of [defendant]. He can have the machine repaired or do what he wishes. If the cost of repair is grreater [sic] than the estimate or this settlement, it becomes the responsibility of {defendant].

I got lost reading Bill Cooks post after mine, but I was trying to "learn" the new people some wrinkels in total losses.

In auto claims the premium is earned in the event of a total loss. In Inland Marine coverage the premium is also earned. In fire insurance (Homeowners- 3) except section II. The insured can returned the policy and ask for the return premium at any time for the short rate cancellation amount. In the event of a total loss to all real and personal property the pro/rata returned premium should be refunded by the company(agent).

I will  look at NFIP cover later.

Personal and commercial policies are different.  Co-insurance applies to commercial so both the insured and carrier share in any recovery as both are "co-insurers".  The scenario has no information as to what kind of policy, facts of the loss or damage, or anything else.  Things even get more interesting on a commercial building policy when it is written blanket at 90% co.  There is usually a sworn statement of values attached but the policy is written with a blanket limit of liability.  Oh, and appraisal awards aren't really the same as a judgement that is upheld or overturned and makes law.  I went back and re-read the first scenerio you preesented and I still can't get a handle on what the problem was.  I guess I am slow.