What seems like only a couple of years ago—but in reality may have been a decade or two—a claims adjuster could get his or her hands on a computer estimating program, prepare a detailed estimate in a matter of minutes, settle a property loss assignment, and move on to the next one. An adjuster's life was made easier by the software's ability to calculate floor, wall, and ceiling areas, and perform "extensions" to determine replacement cost value (RCV), depreciation, and actual cash value (ACV) amounts. Life was pretty good.

Using estimating software these days to handle property claims is not as easy.

Poor Training Yields Poor Results
Like many other technology based industries, estimating and property claims software has evolved into a more complex organism. Although the basic estimating function is the same (the quantity of material required multiplied by unit cost equals total repair cost), all of the additional tools, both software and hardware, have morphed the adjusting process into a high-tech ballet with the adjuster as the lead performer.

It goes without saying that a poorly trained adjuster who does not know all of the functions of his or her laptop or tablet computer, digital camera, GPS navigator, laser measuring device, moisture meter, and other tools, is at a great disadvantage. At the end of the day, such adjusters cost their companies precious time and money—and that's only the hardware side of the equation.

Now, let's focus on property claims technology, computer estimating software, and how it can lead to added expenses and higher-than-necessary claims payouts. The loss isn't in dollars, actually, but hundreds of thousands of the little buggers, if not millions.

Software developers provide sophisticated estimating applications for virtually all knowledge levels, but they are not the eyes and ears at the loss site. Insurance carriers need to know that estimating software in the hands of untrained adjusters has caused more problems than handguns and tequila combined.

Using the data analysis tools on the million or so estimates in Simsol's data warehouse and with the help of Gene Hensley, executive director of Vale National Training Center Inc., an estimating education provider, we have compiled a list of the most common estimating errors made by adjusters handling property claims.

Overscoping Repair Items
Double and triple overscoping of repair items occur for a couple of reasons. The first is a lack of thought during the estimating process. Adjusters will remove drywall from the walls of an area and then pay (again) to remove wallpaper or texture from the same walls. They will pay to finish pre-finished paneling or cabinetry. Forgetting to remove the common wall shared by both areas, adjusters will pay to frame an entire wall area of a room and do the same for the adjacent room.

The second reason is somewhat software-related. All of the major estimating platforms publish written specifications or explanations of what is (and what is not) included in the repair line items in their respective databases. In some applications, these specifications are located on the same screen the user sees when he or she is selecting line items for the estimate. In other applications, the specifications may be a couple of clicks away, requiring the user to do a little searching. In either case, many adjusters fail to read all of the specifications and end up paying for items twice. When replacing a door, for example, the specifications for that door may include a jamb and trim molding for one or two sides of the door. If the adjuster doesn't know this, then he or she will select these items, thus unnecessarily increasing the estimate. Replacement of wall drywall may include sealing and/or texturing, whereas painting may include surface prep, removal of outlet and switch plates, and/or protection of adjacent areas. Adjusters using computers must read and understand all of the specifications for each item in their estimates.

(Right) is an example of a "line item spec" for wall drywall from one software product. It displays for the adjuster what is included (and not included by default) in the repair item as well as how the software program is calculating the unit cost.

Overscoping using computers is, by far, the single biggest offense that costs the insurance industry countless dollars in unnecessary claim overpayments. These types of errors can be minimized, if not entirely avoided, when adjusters receive training for the databases they are using.

Some common examples of overscoping of when dealing with property losses are listed in the sidebar on the next page. Below is a screen grab of a software product that contains an estimate audit feature. This functionality allows adjusters to self-check their estimates for many of the common overscoping errors. In this specific instance, the section of the software's self-audit report clearly shows an overlap item. Why is the adjuster paying to remove wallpaper when also paying to remove the drywall?

Incorrect Measurements
Another common mistake found among adjusters is inaccuracy of their measuring knowledge when it comes to restoration construction. Here are some examples:

Assuming that all walls are eight feet. Many are not.
Replacing moldings without deduction of openings.
Not deducting all openings when wallpapering.
When calculating garage wall square footage, the adjuster does not remove the garage door opening.
Squaring off rooms when they contain closets and offsets.
Rounding up more than 6 inches.
Including Appliances when measuring base cabinets
Measuring base cabinets to the corners on both walls, thereby over scoping the quantity by at least 2 feet.
Measuring the linear feet of upper cabinet equal to the linear feet of the base cabinet when it should be less if there is no cabinet above the sink base cabinet.

Avoiding these blunders is easier than one might think. All of these measuring mistakes can be virtually eliminated with less than half a day's training in correctly using a tape measure or a laser device for claims involving damage to a structure. Be sure to share this article with your adjusters and estimating personnel to improve the quality of the estimates they prepare and therefore the quality of service you provide to policyholders.

Overscoping Property Losses

Insulating interior walls when, except on rare occasions, only exterior walls contain insulation.
Replacing blown acoustic ceilings and then painting the acoustic. No painting is necessary.
Replacing roof trusses and then replacing ceiling joists when the bottom of the truss is the ceiling joist.
Failure to measure a roof properly (or at all) because it is a two-story or partially or completely burned away.
Replacing the more expensive subflooring line item when only underlayment is required.
Replacing vinyl or other floor coverings under base cabinets when the materials only butt up to the bottoms of the cabinets.
Using one line item lump sums or square foot pricing for specialty trades like electrical, plumbing and HVAC when they should be estimated line by line.
Adding multiple minimum charges for the same trade when unit costs should be used.
Adding waste to replacement operations that already include waste in the unit cost.
Selecting a large dumpster when a smaller one will do. Ask the contractor.
Guessing at permit or dump fees. Ask the contractor.
Including fees for engineering and/or architects when one or both are not always needed. Check with building authorities. Ask the contractor.

Under-Scoping Losses
In all fairness, as much as we have talked about over paying a claim, insurance carriers want to pay what they owe, and not a penny more or a penny less. Once again, we find there are many areas where adjusters come up short in their estimates:

Ceiling and wall insulation not adjusted to the correct R-value.
Not adding waste to required manual entry items such as roofing.
Not rounding up when it is necessary for items such as countertops.
Replacing a breaker panel box and not including the breakers.
Forgetting range and dryer outlets and breakers are 220V.
Accurately estimating the number of circuits required in a breaker box by leaving out wall switches and lighting fixtures.
Forgetting rough-in costs when estimating plumbing fixtures
Forgetting toilet seats when not included with the toilet fixture.
Replacing a single plumbing line when replacing a sink and tub when two lines are actually needed.
Replacing sinks and tubs and forgetting to add the accessories such as faucet sets, shower heads, soap dishes and towel racks.
Forgetting to seal new drywall before painting.
Not adding additional money for contents manipulation and/or protection of undamaged areas of the structure
Not taking into account additional removal and dump fees for hazardous materials such as asbestos or home heating oil.

Remembering some of the items above, adjusters can avoid preparing estimates, which at first glance, can be considerably lower than a properly scoped estimate. They can also avoid additional conflict with a correct scope of repair.

Special Reports /

Technology Has Evolved; So Too Must Adjusters

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