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SOUTHEAST APPRAISAL 3350 Riverwood Parkway,Suite 1900-19077,Atlanta,Georgia 30339 Phone: (770)883-6987; Fax:(866)839-7887 E-Mail: seappraiserr�,aol.com; Webpage:www.seannvaLcom Prepared by Alex Ruden,ASA(MTS&ARM,CG/GA,Business Valuer) INSURANCE PLACEMENT VALUATIONS AND LOSS PREPAREDNESS An insurance appraisal fulfills three needs: these are independence, placement value data, and proof of loss preparedness. Differing levels and types of insurance appraisals fulfill each of these needs to differing degrees. Addressing each need in turn below: Independence: the insurance company would like to see an appraisal from an outside firm. This is somewhat obvious so that there is not fraud perpetrated by the assured. Yes some insurance companies now have their own appraisers but nasty loss situations may still occur. Placement: an independent valuation will inform the assured about the amount of insurance to carry. Such an analysis may be completed in great detail with say a+/-10%possible variance or in an overview manner with a+i-20% or greater variance. Be wary,just because the insurance carrier does an insurance placement value analysis,as stated before a very nasty loss situation may occur.with the insurance company denying the proper amount of insurance is carried. It does not good to carry excess amounts of insurance, by design or based upon incorrect value analysis. Discussions should be held with the insurance broker/carrier concerning what is covered relating to both the buildings(underground piping,foundations,architect's fees,etc.)and contents (software, engineering and design fees, property of others, etc.) Relating to both buildings and contents one does not want to be a co-insurer,that is,the assured sharing in the cost of the lost due to being underinsured or worse,being the subject of the co-insurance clause of the contract. Proof of Loss: along with having the appropriate amount of insurance, this is the most important element of an insurance appraisal. Directly stated, if one is not prepared to prove one's loss instantly 10% of a fair settlement is gone. If not prepared this lost amount may be 25%. The strategy is to get a balanced"fair/equitable and timely"settlement. These thoughts are directly linked. Yes one can get a fair settlement say 5 years hence,but it is not timely. Or one can get a quick timely settlement if one accepts 75 cents on the dollar. Again,not good. One wants the fair settlement at full value in say 6-12 months or whatever time is appropriate for the loss situation, balancing the wishes of"fair"and"timely"is the critical concept. - 121 -