A Fire Loss Completely Changes Your Life
Fire losses are devastating. Friends and clients have lost their homes and businesses to fires. It completely changes your life. Not only are you scrambling to try to maintain a sense of “normalcy,” but you are also thrust into an insurance claim. And, your insurance company is not your friend in this instance. The insurance company does not guide you through the claim process. The adjustor owes you no duties besides not committing outright fraud. (That’s certainly their testimony at deposition.)
Rather, filing the claim is all up to you. And, you are making the claim when your life has already been immeasurably altered.
With smoke or water damage, you at least have the items available for viewing. But, when a fire or tornado consumes the items in the house or business, it becomes something different.
You may have to recreate your inventory from memory or from receipts. One business client had its contents completely consumed in a fire. It was impossible to determine what the lumps of charred metal were. Plus, all of the paper records and computer records were destroyed.
Although the insurer must act reasonably, it is the obligation of the policy holder to document the claim showing the quantity, description, actual cash value and amount of loss.
You’ll spend months trying to recreate the inventory
That client spent MONTHS trying to recreate its inventory. Personnel were assigned to contact vendors hoping to find old invoices to show what had been purchased. The insurer was requiring corroboration for every single nut and bolt in the claim for the inventory portion of the claim.
After contacting me, we were able to settle the claim – but not before a breach of contract and bad faith claim had to be filed. But, seeing what that insured went through was shameful. And, this is how you get treated when you need your insurance the most.
A prepared inventory will maximize your recovery
An inventory can help you maximize your recovery following a loss. What’s more, the inventory helps the business to know if it’s underinsured. And, an inventory provides a terrific springboard for valuing the business. This allows the company to provide full disclosure when bringing in new investors. And, it allows a valuation if you need to buy someone out. Further, it can help you uncover employee theft or misappropriation.
I highly recommend periodic inventories for a variety of reasons.
We appreciate the contribution of this article by Patrick J. Olmstead, Jr., who maintains a complex civil litigation practice. Part of his practice includes representing insureds in breach of contract and bad faith claims. He also helps small businesses get started and provides recurring business advice and also litigates shareholder disputes.
Patrick is president of the Notre Dame Class of 1990 and received his J.D., summa cum laude, from the Indiana University McKinney School of Law in 2001. He has been repeatedly designated as an Indiana Super Lawyer in the field of Professional Liability Defense. Patrick is lucky to be married to his college sweetheart, Julia. They have two children – Deborah, an M.D./Ph.D. student at the Indiana University School of Medicine, and Jessica, who graduated with a degree in Management from IUPUI. For more information about Mr. Olmstead, visit his website at Patrick Olmstead Law LLC or contact him at 317-884-8524 or via email.