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.
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.
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?
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.
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: