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David P Bennett
Registered User
Username: Whitey

Post Number: 30
Registered: 1-2001
Posted on Friday, February 15, 2002 - 5:13 pm:   

As this question is a result of a mutual discussion would like to post my thoughts and solicit comments. As John has stated, the contractor is entitled to be paid for the overhead and profit on the actual replacement cost of the repairs. My thoughts are that if the coverage provides for replacement cost but ACV on items such as carpeting, roofing or appliances, then the claim payable to the insured should include the overhead & profit on those items wherein replacement cost is provided and then the overhead and profit on the ACV value of those items for which ACV coverage is provided.
Jeff Goodman
Registered User
Username: Jgoodman

Post Number: 4
Registered: 12-2001
Posted on Wednesday, February 13, 2002 - 12:24 pm:   

My estimating system handles it this way. Each line item can be flagged as recoverable or non-recoverable, and as well as a default being set for the trade code.

Full line item repair cost is shown as the total cost of the line items. Total depreciation is subtracted from the full line item repair cost to calculate Actual Cash Value repair cost. Overhead and profit are added to those items that receive them, and this total is presented as total payable claim after deductible is taken.

The total depreciation is brought down and split into recoverable and non-recoverable amounts. The recoverable depreciation amount then has the amount of recoverable depreciation not subject to OH&P deducted, and OH&P is added to the remaining amount. The recoverable depreciation not subject to OH&P is added back in, and this is the recoverable amount.

This makes the summary hard to present in an easy to read fashion.

My attempt at it yielded the following example residing at My web hosting service was bought recently, so I do not know how long this link will work. I will re-post it if it quits and anyone cares.

Check it out and post feedback here.

There are still problems with this presentation as I am sure someone will be quick to point out.

Jeff Goodman
John Durham
Registered User
Username: Johnd

Post Number: 28
Registered: 9-2000
Posted on Wednesday, February 13, 2002 - 11:55 am:   

While I agree with you on this, these values are recoverable, I do know of two different carriers that "flip-flop" on this, therefore, I see your dilema. You may want to consider a "switch" to allow user to turn this feature ON/OFF as needed.
Having been a programmer in a previous life and owned my own software company, I can attest to the fact that end users want LARGE configuration tables to "have-it-their-way". Hope this helps !

John Durham
(623) 544-2369
John A. Postava
Posted on Wednesday, February 13, 2002 - 8:21 am:   

Please respond to the following question (your answers may affect the next update of SIMSOL):

A building qualifies for RC coverage and items in the estimate are properly depreciated but deemed NON-RECOVERABLE (for one reason or the other).

The adjuster adds contractor O and P and sales tax to the estimate. Due to the fact that depreciation was taken on all items, SIMSOL calculates “difference between the RCV and ACV totals of the estimate and displays the “difference” between the two values for O&P and Sales Tax in the Depreciation column of the Totals Recap Page.

The question is: Should the “difference” calculated for O&P and Sales Tax be considered Recoverable or Non-recoverable? We have always considered these two values recoverable unless the adjuster or carrier feels otherwise (the contractor needs to get paid and so does Uncle Sam). We are re-considering this at this time and feel these amounts should ALWAYS be Non-recoverable with regards to the insured and claim payable because the monies generated are based on non-recoverable items.

What do you think??

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