Due Diligence & Reparability
By Rich Curtis
THE SCENARIO IS COMMON. A
piece of equipment (medical, manufacturing, communication) is damaged
by an external electrical trauma such
as lightning or a power anomaly. Your
insured will oftentimes provide a quotation for a replacement system. The
claims handler often performs research
to determine if the claimed replacement
is of a like kind and quality when compared to the claimed system. For this
example, let us presume the claims handler validates that damaged Equipment
A is appropriately replaced with Equipment B, updated/upgraded only as time
and technology mandate. Henceforth,
we have a well-documented file, the insured can be paid, and we’ve made a
proper adjustment, correct? Maybe…or
maybe not.
While we see these cases on a daily
basis, I wanted to share two common
cases that we also use in our CEU approved courses.
Tax Season Phone
System Failure
Accountant Jones’ office with ten em-
ployees utilizes a phone switch (aka PBX)
for interoffice and external telephone
communications. They suffer a verified
lightning strike during tax season in which
a four-port trunk card suffers direct physi-
cal damage. Their vendor supplies the
system’s age, manufacturer, model, con-
figuration, and even photographs of the
damaged trunk card (which shows visible
burn holes). They even submit a replace-
ment quotation for $16,000, which the
claims handler knows is “in the ballpark.”
The proposed lead time is 5 days, after
which Accountant Jones’ office will be
back to pre-loss operation, save for some
frustration, downtime, and possible busi-
ness interruption in the interim.
If you believe this claim has been handled properly, then this article is for you.
In a perfect world, your engineer/ex-pert advises you that damages to trunk
and line cards due to lightning is common. Good, we have nailed down cause,
but what about a return to pre-loss condition? Your expert advises you that trunk
cards for this system are readily available
for $600, and can be shipped next-day
to the loss location. Your insured could
have been returned to pre-loss condition
for less than a thousand dollars before
this claim ever came to your desk. Don’t
fret; if you step in now and share this information, you can significantly mitigate
your insured’s frustration, downtime, and
interruption to operations.
Of course, some insureds will be more
interested in purchasing a new phone
system, but by their very nature, PBXs
are built modularly such that they can be
serviced in the event of damages. As the
next case shows, repair options are not
relegated to phone systems, but most
electrical and mechanical systems.
Power-Surged Portable
Ultrasound System
Doctor Smith’s portable ultrasound
system suffered damages as a result
of a verified power surge. Other inexpensive electronics in the office were
promptly replaced for operational readiness. The insured’s ultrasound vendor
(a factory authorized partner) has troubleshot the system and found a damaged power supply. Although reparable,
