The many exciting facets of property loss adjustingArticle added by Henrietta Nye on January 7, 2009

Henrietta Nye

Joined: August 21, 2010

This AIC 35, course, Property Loss Adjusting, has to be my favorite by far! It probably is because I have always had a love of tools and construction. When I was 12, my grandmother gave me an electric sander for Christmas. A rather unusual gift for a girl! Well, it was the perfect gift because earlier that same year she had given me a family heirloom -- a five-foot-long antique hope chest. The chest was painted with at least five coats of paint. Today it is a gorgeous piece of furniture -- it's probably lost its antique value, but I love it.

AIC 35 is a comprehensive course. In order to prepare a completely accurate loss adjustment report, a claims person must understand the policy and know what is covered and what not covered. Although this is not the first course in the claims sequence, AIC 35 provides very comprehensive treatment of the basic terminology of the insurance industry and the policies. In chapter two, the author has included the "Guiding Principles." What are the Guiding Principles, and who must follow them? The Guiding Principles were written and adopted by the major insurance associations, and is an agreement between insurance companies as to the equitable distribution of insurance proceeds when there is an overlap or dispute in the payment of a claim. These principles help the claims person to see which insurance is primary and when the coverage becomes secondary. Under the Guiding Principles, policies that more specifically describe property are primary over policies that are more general. Policies that have the same priority level use proration according to the amounts payable method for determining the payment. The Guiding Principles are only binding on the insurance companies that are signatories to the agreement. Apart from the Guiding Principles, compromise and arbitration are ways that coverage disputes among insurance companies can be resolved.

In September 2008, many people in the state of Ohio got lessons on the importance of reading policies carefully. It amazes me that a tremendous disaster hit our state, and the news was never reported on the national news stations. On September 14th, as the remainder of Hurricane Ike was traveling north, it met a cold front coming down from Canada. The ensuing winds were greater than 75 miles an hour. Trees were breaking like toothpicks, flying through the air, and taking out electric lines left and right. There were 2 million people without electricity and almost no one heard of it. Fortunately, there was no rain, so home sump pumps were not needed. And, it was a very comfortable 70-degree week, so heat and air conditioning were not needed. What was needed was ice! There were more barbeques that week than we have seen in a long time. With all the meat defrosted in home freezers, block parties were not uncommon.

Before the catastrophe, I have never before heard so many people discussing their insurance policies. We were all learning that week about the fine print on home freezer coverage, tree removal coverage -- only if it hit the house -- and landscape coverage. This was probably the best advertising a company could ask for. People were comparing coverage and talking about possibly changing companies. Claims agents were very busy that week. The situation was made more difficult because we had sent our electrical teams and equipment to Houston. It took days to get the electricity back on. It was also difficult to secure some roofs due to a shortage of tarps. Our town still has many "blue roofs." Apparently, this AIC 35 course does not cover hurricane damage in Ohio!

A friend was out of town for two weeks during the storm and returned to find that his refrigerator had defrosted all over the kitchen floor and into the dining room carpet. This had also caused damage to the kitchen cupboards beside the refrigerator. When the floor was taken up for repair, it became evident that the ice maker had been leaking for quite some time and the subfloor was damaged. This is good experience for the claims adjuster! He or she would need to know the proper way to lay the linoleum floor and how to distinguish the causes of damage.

With my interest in real estate, I really enjoyed learning in AIC 35 about building techniques. Over the years, I have learned a small amount about this issue with the various homes I have owned. For instance, for a few years I owned a small rental home that was at least 60 years old. When it was empty, I had the bad fortune of having an arsonist set the house on fire. From that experience, I learned a little about the evidence collected when fires are set. The evidence showed there was a very obvious stream of fluid across the bedroom floor. I learned that the house was built of balloon construction. I suppose this was common in that era. With balloon construction (Chapter 9), the studs are continuous from the foundation to the second floor. In this situation the fire damaged the upper areas and weakened the balloon construction so the claims adjuster set the house at a total loss. I had never heard of this type of construction prior to the incident.

When I rented houses to tenants, I always encouraged the tenants to hold renter's insurance. Our coverage was only going to cover our building; they had to cover their personal property. On a personal note regarding contents, this is an appropriate time of year to mention documenting your personal property. I make it a point on New Year's Day every year to take digital pictures of all of our belongings. I open all the closets and cabinets so I can see all the possessions. I then burn a cd of the pictures and take it out of the house. In case anything ever happens, I will be able to make a fairly complete inventory from my pictures. Of course, a written inventory along with the pictures would be even better. Just in case you have nothing to do during the half-time sessions of the football games, go take some pictures.

I have mentioned only a few of the many topics covered in the AIC 35 Property Loss Adjusting course from the American Institute for CPCU/IIA. Besides being a wonderful introduction to personal property insurance policies, commercial policies, auto coverage and the loss adjusting process, the course provides a fundamental education of typical construction and the estimating of the losses. This is a business that takes experience to get the feel for the numbers and to understand the fine points of the process, but it is a business to be respected!

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