Good Guys Win the Battle:
A Recent Property Insurance Settlement War Story
By Michael C. Perlmuter, JD, President & General Counsel
I think you will both benefit and enjoy the following war story which is a departure from my usual information-driven blog. This true story, about a recent insurance claim adjusted by the Alex N. Sill Company, accurately illustrates what a typical business owner/insured is faced with following a covered insurance event. The insured could have been in any business of any size and the insured any insurer. The important takeaway is the typical manner in which the insurer attempted to stonewall the insured into accepting its original, totally unacceptable offer based upon its unfair evaluation of the loss — after years of the insured paying its premiums as due, when due, in the amount due – and the gyrations needed to get to a satisfactory resolution.
Enough said. Let’s get to the facts (specific names have been withheld to preserve the identity of most of the players).
On January 7, 2018, a fire occurred in a building that housed a successful and highly respected mid-sized printing company in Ohio. The fire damaged a considerable section of the building, but the flames did not reach any of the printing equipment. However, both smoke and the water from the firefighters’ efforts to strike the fire did reach and affect the printing equipment.
The company’s printing operations housed two offset presses, a guillotine cutter, an imaging plate-setter, a bookmaking binder, a folder, a saddle-stitch machine and a laminator.
Sadly, as seen so often by us, the insured was meaningfully under-insured, carrying only $200,000 of replacement cost insurance on its business personal property. As a result, the insured reasonably expected that its insurer, consistent with its commercials, would be “on its side.”
The insured filed its claim with its insurer immediately following the loss. After attempting and failing to recover any payment from its insurer relative to the damaged equipment on its own, some 50 days later, the printer retained the Alex N. Sill Company to serve as its public adjuster relating to the fire claim.
Sill quickly assessed the situation and assigned a team including its top Ohio fire adjuster to immediately set in place a strategy to counter the insurer’s inactivity. Sill’s in-house contents appraisers and an expert in the printing industry also were included on the team to assist with placing a valuation on the damaged printing equipment.
Sill’s contents appraiser responded by contacting America’s leading printing equipment consultant and arranging with them to inspect the damaged equipment. Working in tandem with the printing equipment specialist, an audit damage report was provided to the insurer, detailing equipment piece by equipment piece damage and recommendations. Bottom line, the expert printing equipment consultant reported, that in their expert opinion, three of the damaged pieces of equipment could, “perhaps” be fixed, at a cost of $171,728.75 to “maybe” repair.
“Perhaps” and “maybe” are key inclusions, herein, as there were also five pieces of equipment, ranging from a guillotine paper cutter to an imaging plate-setter to a bookbinder to a folding machine to a stitching machine, that could not be repaired because parts no longer were made or available to bring each machine back to their previous life.
Sill responded, delivering this detailed report to the insurer and demanding the insurer acknowledge the business personal property policy limits damage of $200,000.
In response, the “good hands” insurer hired its own “expert,” a company with which Sill was familiar. This company specialized in the cleaning of general machinery, but had no previous experience in the operation or repair of printing equipment. That company “proclaimed” that they could just “wipe down” all the print machinery for $21,451. Take it or leave it! The end!
There was absolutely no way that wiping down the equipment would result in repairing the printing equipment to its pre-loss condition. And, as we all know, an insured is entitled to be put back in the same place and stead as it was one minute prior to the claim incident.
Printing is a science and an art that requires precise calibration of its equipment to print properly, fold in the correct place, cut along the correct line, and/or bind correctly. Without that calibration, ink is placed in the incorrect location, the folding is done along the wrong lines, the cutting is done in in the incorrect place and the binding is done cock-eyed or unbalanced. The result is a “finished” product that no print buyer would ever accept. Furthermore, unlike some other industries that have secondary markets, there is no buyer for a poorly produced specialty printed product for an individual client.
In response, Sill challenged the credentials of the insurer’s expert and its inexperience with this specific type of claim — repairing and/or identifying damages and repairs necessary to printing machinery. Additionally, Sill also pointed out to the insurer that its expert’s report failed to address any electrical or mechanical components that required inspection, testing, repair, or replacement and therefore was unacceptable as an expert counter proposal.
Ultimately, Sill got the insurer to agree, in writing, to have (1) Heidelberg, the printing press’ manufacturer, inspect the primary printing press for damage and repair, and (2) the insurer further to agree that if Heidelberg deemed the press inoperable after just a “wipe down.” the insurer would consider that all the equipment required similar repair and/or replacement.
When Heidelberg came back with an estimate of $30,000 to test the single printing press, with a statement that they could not guarantee reliability or performance even after they repaired (much less a “wipe down”) the press, the insurer succumbed and agreed to pay policy limits of $200,000 to its insured.
Another successful adjustment and another satisfied client for the Sill Company.
The insurance companies are not in the business of paying claims without a fight. Insureds are ill equipped to bring that fight, on their own, to their insurer. Insureds lack the adjusting experience and know how, the damage estimating skill and tools, the policy knowledge and the time to properly adjust anything other than the most basic small property insurance claim on their own, without the assistance of a firm such as Sill, who exclusively represent insureds on property claims.
Lesson learned: Don’t go into a gun fight with a knife! Bring your hired gun with you – Sill!
Contact a Sill public adjuster near you for assistance in such matters.