Talking Through Reconstruction

In an article in Canadian Underwriter (‘It’s Not in the Textbook,’ September 2011), Keith Edwards, senior vice president of training and development for SCM Adjusters, wrote an excellent piece on how the basics of adjusting remain as vital today as they were in his grandfather’s time. The means by which adjusters communicate may be evolving, but the content of the communications and service requirements remain constant. The ability to ask the right questions and to convey the answers faithfully — all while making recommendations — is still the ultimate measure of a good adjuster.

“An adjuster is in the communication business,” Edwards wrote. “He or she collects, analyzes and reports information. Despite great changes in communications technology… nothing has changed.”

Similarly, restoration contractors need to ask all the right questions and provide the right answers to be contributors to the claims-handling process. Whether they work in emergency services, reconstruction or contents restoration, these contractors are well aware that their work could generate many potential outcomes — and even more options for achieving their project goals.

Like the adjuster, the restoration contractor should be defining requirements and options, and should offer alternatives for the adjuster’s consideration. The more comprehensive the options, the easier it will be for the adjuster to expend available policy funds judiciously or save them appropriately.

In emergency services, options might include top-down drying of carpet to avoid disruption of occupancy, thereby reducing or eliminating additional living expenses (ALE). Large water losses might be better handled by installing large thermal dryers instead of conventional dehumidifiers. Manipulating contents from room to room to facilitate work might be more economical than removing them and storing them

elsewhere. A little overtime might be better than multiple trips. These kinds of considerations should be discussed at the outset of the claim, to ensure that tasks are not simply completed in the way they always have been without exploring potentially more efficient options.

Similarly, reconstruction can take many forms. If time is of the essence, as it is when ALE or business interruption is running at a high daily cost, it might be preferable to proceed on a cost-plus basis — either on an agreed price schedule, or with all subtrades double or triple bid. The most frustrating part of a claim for insureds and insurers alike is when costs are accumulating during a prolonged bidding process and no work is being done.

Other options include various engineering solutions. For example, doing accent tiling at entries instead of replacing whole floors, or relocating matching ceiling tiles from a small room to patch a large room’s ceiling and then doing a much more economical replacement in the smaller room.

Contents restoration is often required in both emergency services and reconstruction. It provides many opportunities to give the adjuster and the insured options to direct policy funds intelligently. For contents in particular, we strongly recommend a checklist. There are many opportunities to reduce costs, presuming that the adjuster has retained a restoration company with the ability and resources to do all the things that can be done.

Items on the checklist could generate discussion, which should be considered before work begins. For example:

• Laundry: The basement was wet for two days before the loss was discovered and everything smells. Is test cleaning warranted? Should you have all the laundry washed or just what was touching the water? Will your customer accept that it might have smelled musty before the loss? Good contractors can clean it, but decide early how much to clean. Returning one garment that smells will taint the insured’s perception of all the laundry, and can result in a debate about expensive replacement of clothing.

• Electronics: Contractors that can clean electronics can save the television. Will you write it off or give them back what they had? That should be decided before costs are incurred for the assessment and repair.

• Listing: Your customer has a limit on the insurance policy and sometimes it’s low. Is the cost to list the damaged contents a file expense or part of the indemnity payment? Should you pay the restoration company to list all the contents that are taken away? Should the restoration company just list the non-restorable contents? Should the adjuster list, should the customer list or should no one list? Consider the time it takes to list 25 items in a box, complete with the type of article, manufacturer and condition. Multiply that by 100 boxes and the time required is significant. Although part of a premium service offering, it comes at a cost.

• Storage: It is expensive to keep warehouse space available to store contents. Removing contents from a home means packing, travelling and binning — and then all the same steps in reverse

when the contents are returned. If the goods don’t need to be cleaned, would it not be more economical to store customers’ goods in containers on their driveways? Or perhaps at a self-service storage facility in their neighborhoods, so they can access their possessions at their convenience? Would they be agreeable to that?

PRUDENT USE

All of these considerations require decisions that have cost implications. Adjusters and contractors alike want to have a happy customer at the end of the day. The best way to do that is to make sure available resources are used prudently. Whether discussing policy limits, manpower or equipment, waste is the result of not consistently asking the right questions and making decisions that efficiently direct the resources available to where they are most needed.

Good adjusters and contractors take the time to get agreement on what is “best” for and expected of everyone, and then delivering service efficiently. Efficiency equates to saving money for the insurer (because the money didn’t need to be spent) and for the customer (because it did).

Edwards’ earlier statement is as true for contractors as it is for adjusters: “Hasty reports can lead to a lack of vision, confusion, a need for clarification and perhaps backtracking. This is not an efficient or effective way of doing business.”