Fire can devastate a pallet plant, but the real disaster can occur after the flames are put out if the insurance claim process yields a result that is much less than what it will truly cost to rebuild or leads to business disruption. Knowing what to do and say in the claims process is crucial if you want the best payout possible. John Swenby learned this truth after his company was impacted by a fire at its Ozark, Missouri plant in 2014.
John Swenby is president of Paltech Enterprises, which owns pallet facilities throughout the Midwest. The blaze resulted in the destruction of the main production, office and storage buildings causing $2.4 million in damages. When it comes to submitting insurance claims, what you don’t know can really hurt you. That is why it is important to solicit the help of a public adjuster who will advocate for you – be your professional representative.
Swenby commented “I think they probably got me $750,000 in insurance claims that I would have probably lost if I had done all the claims paperwork myself. It was that massive.”
The problem is that many company owners tend to be too general and leave out a ton of specific items. Swenby explained, “Instead of simply writing down air hoses, the consultant detailed the hoses, the disconnects every 20 feet and all the other little aspects that we had missed.” He added that the consultant saved them hundreds of thousands of dollars in knowing how to file the claim correctly and getting what they really needed to replace what was lost in the fire.
Paltech worked with Fields Loss Consultants LLC (www.fieldsinsuranceservices.com) which came in and drove the process of working with the insurance company. Swenby praised, “These guys were life savers and came recommended from our insurance broker… I didn’t’ have accurate, updated information on all of our assets. They helped us fully realize and properly document our losses.”
Documentation Is Key
Without proper documentation you don’t have proof of what you had and lost. It is important to document everything at the moment of purchase or a financial transaction. You need to capture the right information and ensure it is stored off-site where you can recover the records if a fire or other incident occurs. You may need to know the name and model number of products, the serial number, the date of purchase and the cost at purchase.
Companies should develop and keep updated a company profile that covers the types of assets that can be lost in a fire. This inventory then drives the insurance coverage process to ensure adequate replacement coverage is obtained for all items in a plant. A company profile should include the following:
• Building and Structures
• Personal Property (Office furniture, computers, tools)
• Machinery & Equipment
• Vehicles
• Contents (Finished goods)
• Raw Materials (Lumber and used pallet inventories)
• Property of Others (Pallets, nail guns, etc.)
• Income/Lost Business/Business Disruption
While this list may seem obvious, it is amazing how many pallet companies have no idea the number of tools in a tool room or nail guns on the floor at any one time. When you go to replace these items, you end up selling yourself short without proper documentation. In addition to copies of purchase orders, receipts, etc. you may also want to take videos or pictures of your facility a few times per year to document the facility and assets in use. Swenby admitted, “It was several hundred thousand dollars in tools and equipment that we didn’t have documented.”
Paltech was able to recreate all of its records thanks to good computer backups and off-site storage of records. After this experience, Paltech instituted a policy to directly record purchases in a central database as quickly as possible. Twice a year, management goes through and compares the database with the real-world situation to ensure accuracy.
Steve Fields of Fields Loss Consultants LLC commented, “The pallet company needs to establish its insurance information, procedures and policies. That is the first thing that must be undertaken. They need to make sure that all areas of their business are adequately insured.”
Why Use an Outside Expert?
After a fire or other loss incident, a public adjuster can serve as the liaison between the policy holder and the insurance company to accurately assess the situation and negotiate for full replacement costs. Fields said, “The adjuster becomes the focal point between the insurance company and your claim. Any information that is required goes through the adjuster.”
This takes pressure off the company that just experienced a fire. Public adjusters have expertise in organizing and determining losses for maximum benefit because each policy is different in terms of what it will pay out. Most entrepreneurs don’t know the nuances of the policies and insurance procedures. If they go against the insurance company on their own, they may negotiate a poor settlement. Fields explained, “The deficit between what we come up with and an insurance company offers may be 25% or greater. It can be a considerable amount of money, and we intervene on every facet of coverage that is available through the owners’ policy.”
Fields joked, “Most people like to hear themselves talk, but don’t know when to stop. The same is true when dealing with insurance claims.”
Insurance companies may push you to submit replacement bids quickly. If you do this before considering your policy and all the various areas of loss, you already set the maximum payout bar lower. Honesty and transparency are important. Understanding honesty and transparency is the public adjuster’s expertise to get all items covered at the maximum.
Fields stated, “Our belief is if you have a fire and nobody is hurt, there is no reason why you can’t take advantage to better your facility using their money without doing anything illegal.”
Your policy may have coverage for items that you don’t realize such as, debris removal, additional expenses or code upgrades up to a certain threshold. The insurance company may hire its own consultants and experts. Why should you go into the discussion with less than your best defense?
Swenby said, “Steve was just tenacious about how we documented stuff.” Having the right software can make all the difference when it comes to getting back up and running as soon as possible. Swenby added, “Mill Manager software from Innovative Data Systems helped us out a lot because we had all the customer data saved, and it was backed up offsite.” This included customer profiles, pricing, delivery instructions, addresses, etc.
Working with a quality public adjuster can mean the difference between full recovery or limping along with much less than what you deserve. Remember, the insurance company is seeking to pay out only what it has to according to the policy and may work to present a situation that downplays certain costs.
See the sidebar for a list of action steps to take after a fire.
Action Steps after a Fire or Storm
1.) Call the fire and rescue authorities. Ensure that everyone is safe and evacuate the building/property. Maintain a safe distance.
2.) Make necessary temporary repairs to keep the company running and prevent further damage.
3.) Take pictures and video of everything right after the fire or storm because you want to preserve the condition for insurance purposes immediately after the loss. For example, water damage may not be visible a few days later.
4.) Call a public adjuster or consultant to intervene on the behalf of the property owner. This ensures everything is done right to protect the property and insurance coverage and improve the likelihood of a maximum payout. Don’t throw away any damaged items until the claims adjuster has visited.
5.) Work with the adjuster to update the company profile.
6.) Once all losses have been cataloged, obtain bids from contractors.
7.) Call insurance broker or agent to report the insurance claim.
8.) Take a deep breath and let your public adjuster handle the issues.
Fields Loss Consultants LLC
Contact: Sam or Steve Fields
www.fieldsinsuranceservices.com
Based in Chicago, Illinois, will travel
or serve clients anywhere.
847-420-1686
