Case Studies

Hurricane Katrina Causes Severe Devastation

On August 29, 2005, Hurricane Katrina struck the southern coast of the United States, ultimately resulting in becoming the costliest natural disaster in the history of the United States. The damage was widespread, far beyond the common perception of New Orleans, Louisiana.

An internationally acclaimed shipbuilder, noted for being the largest designer and shipbuilder of medium sized ocean going vessels in the United States, experienced severe damage to its shipbuilding facilities in Mississippi. By the time Katrina passed, eleven feet of water had swept over one of the boatyards causing catastrophic damage.

The shipbuilding company quickly retained the Alex N. Sill Company to represent them and expedite the claim for both physical damages to their building and property, and to calculate the challenging claims for loss of income and extra expense.

Sill immediately assigned its in-house building and contents professionals, adjusters and accountants to assess the physical damages and measure the economic impact. The insurance company, Lloyds of London, sent surveyors and a team of forensic accountants from the United Kingdom for their own assessment and to represent Lloyd’s interests.

There were significant valuation issues that were contested by the insurance company regarding the business income and interruption component of the loss, including the valuation of valuable papers lost in the damage. As a result of its speedy and diligent field adjusting work, as well as its in-depth research and analysis, Sill engineered a successful multi-million dollar recovery for both property damage and the loss of income due to production delays, increased cost of production, and valuable paper losses. The settlement proceeds enabled the shipbuilder to resume normal operations quickly and meet its critical production schedule.

Manufacturing Plant Suffers Major Fire

On February 8, 2008, the Champion Homes manufacturing plant in Henry, TN, suffered a major fire that destroyed the entire plant. With 27 manufacturing facilities located throughout North America and Europe, and having produced over 1.7 million factory-built homes, Champion Homes is acknowledged as a leader in the manufactured housing industry and one of the largest modular homebuilders in North America.

After interviewing several public adjusting firms, Champion Homes elected to retain the Sill Adjustment Company to represent its interests in the adjustment of its fire loss. Sill’s team of professionals, including building damage appraisers, equipment appraisers, and forensic accountants, performed a thorough detailed assessment of the damages to the Champion Homes facility.

In regards to the building claim, Sill had to perform a detailed reconstruction analysis, inasmuch as the facility was completed destroyed, including the structures, mechanical and electrical services, foundations and slabs, resulting in a multi-million dollar payment on the building claim.

On the contents end, a complete inventory of the remains of the furniture and fixtures was performed by Sill. Further, a reconstruction of the furniture and fixtures for those items that were burned beyond recognition was performed both through interviews with Champion employees and through examination of similar plants operated by Champion Homes. Sill researched both the replacement cost of like kind equipment and the actual cash value of the equipment, furniture, and fixtures evaluating the market values and reviewing the acquisition costs and maintenance records of the plant to verify their values. Costs of custom produced equipment, custom overhead cranes, and freight and installation costs were also professionally valued by Sill. Following a thorough and detailed review by the insurance carrier’s consultants, Sill’s estimate was approved resulting in another multi-million payment on the contents claim.

The vast majority of stock was destroyed in the fire, and Sill’s team of forensic accountants and contents appraisers obtained and adjusted Champion’s inventory records, updating the inventory from the last physical inspection for purchases and sales, and deducting salvaged inventory from outbuildings and the yard that was undamaged by the fire. Sill then worked with carrier’s salvage company to dispose of the remaining inventory to the highest bidder. Sill’s efforts resulted in settlement on the stock inventory in excess of a million dollars, and also supported a meaningful reimbursement of the salvage proceeds.

Sill’s forensic accounting team had the difficult task of assembling a loss of income and extra expense claim in a declining market with plant consolidation occurring shortly before the loss, and no history of the combined operations. A temporary location was negotiated, including improvements to a rented facility and extra costs for installation of equipment, allowing Champion Homes to get back into production. Sill was successful in negotiating settlement of a multi-million dollar loss of income and extra expense claim.

All of these claim activities were performed by Sill in a professional manner, working amicably with the carrier’s representatives, resulting in a favorable settlement and continued good relationship with the carrier and its professional consultants.

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