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f I <br /> insurance Valuations and Loss Preparedness <br /> An insurance appraisal fulfills three needs: these are independence, placement value data, and <br /> proof of loss preparedness. Differing levels and types of insurance appraisals fulfill each of these <br /> needs to differing degrees. Addressing each need in turn below: <br /> Independence: the insurance company would like to see an appraisal from an outside firm. This <br /> is somewhat obvious so that there is not fraud perpetrated by the assured. Yes some insurance <br /> companies now have their own appraisers but nasty loss situations may still occur. <br /> Pjacement: an independent valuation will inform the assured about the amount of insurance to <br /> carry. Such an analysis may be completed in great detail with say a+/-10%possible variance or <br /> in an overview manner with a +/-20% or greater variance. Be wary,just because the insurance <br /> carrier does an insurance placement value analysis,as stated before a very nasty loss situation may <br /> occur,with the insurance company denying the proper amount of insurance is carried. <br /> Proof of Loss: along with having the appropriate amount of insurance, this is the most important <br /> element of an insurance appraisal. Directly stated, if one is not prepared to prove one's loss <br /> instantly 10% of a fair settlement is.gone. If not prepared this lost amount may be 25%. The <br /> strategy is to get a balanced"fair/equitable and timely"settlement. These thoughts arc directly <br /> linked. Yes one can get a fair settlement say 5 years hence,but it is not timely. Or one can get a <br /> quick timely settlement if one accepts 75 cents on the dollar. Again,not good. One wants the fair <br /> settlement at full value in say 6-12 months or whatever time is appropriate for the loss situation, <br /> balancing the wishes of"fair"and"timely"is the critical concept. <br /> So let's address what is adequate Proof of Loss. <br /> The fixed asset accounting record most often is grossly inadequate for a loss situation. Without <br /> going into a long explanation, many fixed asset accounting systems contain data that includes <br /> intangibles in the values, non-value entries, allocated values from acquisitions, "ghost" assets, <br /> transfers in at net book,values net of trade-ins,%value upgrades,and on and on. Flow diagrams <br /> help to prove ones loss. Photographs and movies / videos of specific assets and systems help. <br /> Files that have original purchase costs and descriptive detail are wonderful (but rarely are <br /> available). Engineering records may help. Sorry,but in the instance of most facilities/operations <br /> the assured is not prepared. Oversight in this regard is strongly suggested. Why do I say that? <br /> Because I worked for the pre-eminent"insurance loss machinery expert" firms(my family three <br /> generations). No we were not "mean", yes helping assureds as professionally f sensitively <br /> possible, but ultimately to reasonably prove one's loss is the aQsured's responsibility. Repeating, <br /> it is the assured's responsibility to prove the loss,that is,the assets that are/were inplace and"in <br /> use"and the values of the assets. <br /> Yes,for those facilities where the appraiser has had the opportunity to prepare a detailed valuation <br /> for fair value accounting the information may be very good, at that instant. This assumes that <br /> - 128- ___ . _., <br />