|Posted on Tuesday, June 27, 2000 - 12:22 pm: |
Thanks for the input
|Posted on Sunday, June 25, 2000 - 12:48 pm: |
My comments concern Building Items. Contents betterment can only be taken against the replacement value of the item (unless you are only repairing the item).
|Posted on Saturday, June 24, 2000 - 9:47 pm: |
I understand and respect your opinion regarding only depreciating the material potion of the estimate. However, I disagree.
How would you approach the depreciation of a television?? Would you attempt to ascertain the material vs labor cost and only depreciate labor??
|Posted on Saturday, June 24, 2000 - 9:58 am: |
Item-by-Item depreciation will and should always be a judgement call made by the adjuster based on their experience and expertise. Carriers (and software vendors) have no business to set depreciation rates. If they did you could see the plainiff's legal beagles start lining up at the ATM machines. Depreciation amounts, for the most part, can be agreed upon, in good faith, between adjusters and insureds (or P.A.'s) through the negotiation process. If a claim ever does get to court over depreciation issues, an attorney will first attack the adjuster's credibility before he would go after the percentages or amounts that were used in an estimate (so be careful and always think through you depreciation decisions).
In my experience, depreciation should only be applied to items where a DEPRECIABLE MATERIAL is being REPLACED. FYI, many states are beginning to question depreciation applied to the full unit cost. They say only the MATERIAL PORTION of that unit cost should be applicable to depreciation. I believe this is correct. If your computer estimating system only allows you to depreciate full unit costs, remember to keep-in-mind that you should only be depreciating the material of that item. For example, if you have a 15-year old(20 year shingle)roof in very bad shape it is much more accurate to apply 75% depreciation to the shingles and NOT depreciate the labor RATHER THAN applying 50% to the entire repair. In terms of money paid to the insured the amounts may be close but a good lawyer could chew you up over the way a total unit cost method of depreciation was applied. Just some food for thought...
|Posted on Friday, June 23, 2000 - 9:19 pm: |
NFIP flood claims require that all building and contents line items must be depreciated. The only exceptions are cleaning and repairs that do not involve a betterment or improvement (ie finsih on a dining room table has wear & tear & is subject to depreciation, however, repair to wood is not) & yes depreciation is applied to structural repairs as well.
Most carriers on regular ISO form policies will inform you if depreciation should be applied to building & contents & how they want it applied. Depending on how the policy is written & if your carrier is affected by recent court cases, concerning depreciation, the guide lines should be followed that are furnished by the carrier.
Should the carrier & or vendor offer no depreciation guidelines I would suggest applying depreciation to all building & contents line items (except for repairs & cleaning). Make sure to show the RCV & ACV of each item. The carrier after seeing your report will either agree of disagree with your depreciation of each line item. This will allow them to advise you if a change is required in how you are to apply depreciation. Don't worry you can always add back easier than you can take away.
If you do not have any feedback from the carrier then you will know you are doing it the way they require you to. As a word of caution follow your first files through the review process before doing a lot of files to make sure you are applying depreciation correctly. It is easier to change a few files as opposed to fifty or one hundred. Remember the company file reviewer who is supposed to know more than you many times does not. Therefore, depreciation as well as any other coverage questions is subject to just about as many interpretations as there are people making those interpretations.
In other words it is quite possible that you could be told by two different file examiners with the same carrier two different ways that wish to see depreciation applied to a lost. Obviously this problem can even be greater between how different carriers handle the same question.
Remember don't be afraid to ask questions when in doubt and when in doubt CYA.
|Posted on Friday, June 23, 2000 - 8:29 pm: |
Think before you write, Smith. There are no studs
in the original construction of these 700 year old homes. Most all of them are masonry, and not veneer.
But they do have beams, joists, rafters, and hardwood floors that are standing tall.
|Posted on Friday, June 23, 2000 - 7:46 pm: |
I recently visited my son who lives in a small village outside of London. I was amazed when the locals informed me that many of the houses in the village were 600, 700 and 800 years old. The original beams, joists, studs, etc. were in place
doing their job, and these houses are sought after by the yuppies and Xers. Just an example of how long well cared for structures last.
My experience in adjusting, I am sure, is similar to yours. It is uusally surface items that are depreciated: paint, floor coverings wallpaper, roof covering. Water heaters wear out in a few years. Usually the deteriorated condition is visible to the eye.
There are cases where though neglect, defective materials, rot, etc. the items you mention may have a short llfe span but this is not typical and I would certainly challange your adjuster on this. Let him prove to you that a betterment is achieved by the replacement.
|Posted on Friday, June 23, 2000 - 5:03 pm: |
I just reviewed an estimate prepared by an Allstate catastrophe adjuster. in determining the loss under the policy, the adjuster prepared an itemized estimate. I was somewhat surprised to see that depreciation was applied to each item of repair except where the operation was for removal only. I worked as an adjuster for over 20 years (now I pracrtice law)and it was my experience that depreciation was not applied unless the item being replaced was one that was subject to wear. Is it now industry practice to depreciate structial members such as rafters, ceiling joists, floor joists, wall studs, plates and hardwood flooring where the structure has been well maintained and there are no defects in the structural members prior to the loss?