What seems like only a couple of years ago—but in realitymay have been a decade or two—a claims adjuster could get his orher hands on a computer estimating program, prepare a detailedestimate in a matter of minutes, settle a property loss assignment,and move on to the next one. An adjuster's life was made easier bythe 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 prettygood.

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

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

It goes without saying that a poorly trained adjuster who doesnot know all of the functions of his or her laptop or tabletcomputer, digital camera, GPS navigator, laser measuring device,moisture meter, and other tools, is at a great disadvantage. At theend of the day, such adjusters cost their companies precious timeand money—and that's only the hardware side of the equation.

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

Software developers provide sophisticated estimatingapplications for virtually all knowledge levels, but they are notthe eyes and ears at the loss site. Insurance carriers need to knowthat estimating software in the hands of untrained adjusters hascaused more problems than handguns and tequila combined.

Using the data analysis tools on the million or so estimates inSimsol's data warehouse and with the help of Gene Hensley,executive director of Vale National Training Center Inc., anestimating education provider, we have compiled a list of the mostcommon estimating errors made by adjusters handling propertyclaims.

Overscoping RepairItems
Double and triple overscoping of repair items occur for a couple ofreasons. The first is a lack of thought during the estimatingprocess. Adjusters will remove drywall from the walls of an areaand then pay (again) to remove wallpaper or texture from the samewalls. 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 dothe same for the adjacent room.

The second reason is somewhat software-related. All of the majorestimating platforms publish written specifications or explanationsof what is (and what is not) included in the repair line items intheir respective databases. In some applications, thesespecifications are located on the same screen the user sees when heor she is selecting line items for the estimate. In otherapplications, the specifications may be a couple of clicks away,requiring the user to do a little searching. In either case, manyadjusters fail to read all of the specifications and end up payingfor items twice. When replacing a door, for example, thespecifications for that door may include a jamb and trim moldingfor one or two sides of the door. If the adjuster doesn't knowthis, then he or she will select these items, thus unnecessarilyincreasing the estimate. Replacement of wall drywall may includesealing and/or texturing, whereas painting may include surfaceprep, removal of outlet and switch plates, and/or protection ofadjacent areas. Adjusters using computers must read and understandall of the specifications for each item in their estimates.

(Right) is an example of a "line item spec" for walldrywall from one software product. It displays for the adjusterwhat is included (and not included by default) in therepair item as well as how the software program is calculating theunit cost.

Overscoping using computers is, by far, the single biggestoffense that costs the insurance industry countless dollars inunnecessary claim overpayments. These types of errors can beminimized, if not entirely avoided, when adjusters receive trainingfor the databases they are using.

Some common examples of overscoping of whendealing with property losses are listed in the sidebar on the nextpage. Below is a screen grab of a software product that contains anestimate audit feature. This functionality allows adjusters toself-check their estimates for many of the common overscopingerrors. In this specific instance, the section of the software'sself-audit report clearly shows an overlap item. Why is theadjuster paying to remove wallpaper when also paying to remove thedrywall?

Incorrect Measurements
Another common mistake found among adjusters is inaccuracy of theirmeasuring knowledge when it comes to restoration construction. Hereare 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 doesnot 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, therebyover scoping the quantity by at least 2 feet.
• Measuring the linear feet of upper cabinet equal to the linearfeet of the base cabinet when it should be less if there is nocabinet above the sink base cabinet.

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

Overscoping Property Losses

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

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

• Ceiling and wall insulation not adjusted to the correctR-value.
• Not adding waste to required manual entry items such asroofing.
• Not rounding up when it is necessary for items such ascountertops.
• Replacing a breaker panel box and not including thebreakers.
• Forgetting range and dryer outlets and breakers are 220V.
• Accurately estimating the number of circuits required in abreaker box by leaving out wall switches and lightingfixtures.
• Forgetting rough-in costs when estimating plumbingfixtures
• Forgetting toilet seats when not included with the toiletfixture.
• Replacing a single plumbing line when replacing a sink and tubwhen two lines are actually needed.
• Replacing sinks and tubs and forgetting to add the accessoriessuch as faucet sets, shower heads, soap dishes and towelracks.
• Forgetting to seal new drywall before painting.
• Not adding additional money for contents manipulation and/orprotection of undamaged areas of the structure
• Not taking into account additional removal and dump fees forhazardous materials such as asbestos or home heating oil.

Remembering some of the items above, adjusters can avoidpreparing estimates, which at first glance, can be considerablylower than a properly scoped estimate. They can also avoidadditional conflict with a correct scope of repair.