When did it happen? Somewhere along the line, the duties of the salvor became somewhat oversimplified. Newer adjusters would probably tell you that the primary role of a salvor is to preserve and recover any remaining value in partially damaged merchandise. While much of the salvors' duties do apply to this definition, the actual services that they provide are of a far greater scope. Unfortunately, most adjusters and claim handlers hear the word "salvor" and immediately assume that their losses need to involve salvage in order for them to benefit from their services. The many duties that salvors have been performing for so many years have somehow gotten lost as newer adjusters move up the ranks.
Maybe it was the dot-com boom of the late '90s, which made its mark on the salvage industry, as well. Online auction sites claimed to be able to increase salvage recoveries for insurance companies, and suddenly the focus was on the sale of damaged merchandise. The fact that traditional salvors provide much more than a vehicle for moving damaged merchandise was overlooked. Selling the salvage is the easy part. In fact, on most losses, the accurate inventory and valuation of the stock is actually more helpful to the adjuster than being able to sell it. Many times, the amount of money a salvor saves an insurance company client is not even reflected in the sale of salvage.
For instance, take the manufacturer of lint rollers who submits a claim of $350,000 to the insurance company for water damage to a warehouse full of merchandise. By having a professional salvor sort through this merchandise and complete a separation of damaged and undamaged product, the insured can reach an agreement whereby the heavily water damaged product is dumped and the balance is retained to be re-packaged as necessary. This scenario, which ends up reducing the claim by at least $200,000, is something that does not show up as a salvage recovery, but is just as valuable to the insurance company.
A traditional salvor is not necessarily interested in pulling a stock for salvage on every loss. They realize that all losses are different and, in many cases, a damaged stock is better left with an insured on a percentage basis. A professional salvor has the knowledge and experience to make accurate recommendations as to the amount of the loss. Adjusters should realize the difference between the professional salvors and the salvage buyers or online auctioneers. These companies make their money when they sell the stock, so the interests of the insurance company and the insured are not always a priority to them when determining the disposition.
When does an adjuster need a professional salvor? Think of your salvor as your "contents expert." On virtually every building loss that an adjuster has, an expert is hired to evaluate the structure. Why should contents be any different? When you have a loss involving any type of content, you need a contents expert. Whether it is a commercial loss or a large residential loss, it all starts with accurate documentation of the loss and a professional inventory. Your contents expert knows what it takes to complete a thorough inventory, one with which both the insured and the adjuster will be happy.
An important thing to remember when faced with a contents loss is to get them involved early. On larger losses, it is very helpful to have them with you during the initial inspection so that they can assist in determining the best course of action to gain control of the loss. Most salvors will offer free telephone advice and would welcome the opportunity to listen and answer questions. A salvor can warn of any potential problems that you could encounter, and they are experienced in dealing with many of the local, state, and federal agencies that may be involved in a loss.
If a salvor is involved from day one, they can arrange for any necessary first aid to the stock, such as covering it with tarps or oiling down water-damaged machinery. At the same time, they can begin working with the insured to conduct an inventory and valuation of the stock and arrange for its sale and removal. The salvor's creed is "always treat the stock as if it were your own." They will do whatever is necessary to preserve the stock until it can be sold and moved from the site. The sooner your salvor can get the process started, the more accurate an inventory will be and the higher the salvage recovery will be. Having a salvor involved early also will light a fire under an insured, getting them to move more quickly to complete the necessary inventory and separation of damaged stock.
One of the most important services a salvor performs for an adjuster is the inventory. Payment of the claim is based on an accurate description, count, and value of the property, and the inventory methods vary depending on the type of loss. A salvor can conduct a full, descriptive inventory complete with replacement cost and actual cash values or they can just give you a dollar figure with a piece count and a total value. Salvors have a broad knowledge of replacement values, market values, depreciation, and the ability to check invoices, books, and records. Their expertise in these areas qualifies them to assist the adjuster in establishing the value of damaged contents and calculating the extent of the loss.
In the case of a partial loss, it is imperative that a salvor work along with an insured to complete a separation of damaged and undamaged stock. The line between damaged goods and undamaged goods is not always clear. Leaving it to the insured to do the separation will, more often than not, lead to inflated claims. An insurance claim is the perfect opportunity for a business owner to get rid of their buying mistakes of the past. Obsolete items, damaged items, and returns often find their way onto the insured's claim — at full replacement value! An experienced salvor will be able to spot these items and will keep them from showing up on the inventory if they are not damaged. If they are damaged, a salvor will make sure that they are valued correctly.
In addition, salvors are helpful in conducting post-theft inventories, as in the case of the jewelry store that has a portion of its inventory taken in a burglary. A post-loss inventory of the remaining merchandise along with invoices and other documentation would be helpful to the adjuster and the accountants in helping to qualify the amount of a loss. In a co-insurance situation, a salvor can conduct an inventory of an insured's entire premises to determine the value of contents on hand to be sure that the insured is holding up its end of the bargain.
Many salvors also will do residential inventories, especially when they involve homes with high- end contents. Having a salvor go into a home with a cleaning company is helpful as they can agree on which items can be cleaned and which items are a total loss while the salvor prepares a detailed inventory of each item. When it comes to personal property, the more detail the inventory has, the better. Simply writing down "sofa" or "TV" leaves a lot of room for interpretation when it comes time to price. An accurate inventory with proper pricing can potentially save a company thousands of dollars, and will make their subrogation case down the road much easier to present.
Here is a hypothetical situation. A meat packing plant suffers refrigeration loss for several days as a result of a hurricane. The USDA inspectors have ordered that all meat products in the affected building be dumped and the insured has a covered loss. There is obviously no salvage, so why call a salvor? Because leaving an "inventory and dump" project to the insured is a risky proposition. Having a salvor there to work with the insured to keep track of the raw materials, work in process, and finished product being dumped is a very good idea, especially if you will be pursuing a subrogation case later.
Another scenario might be a large beachfront resort that sustains heavy damage as a result of a hurricane. The resort consists of several guest room buildings, restaurants, retail shops, condos, a marina, a golf course, a gym, maintenance buildings, and numerous other structures. Add into the mix a very aggressive public adjuster who wants to replace everything in the resort, and an adjuster will have his hands full to say the least. Of course, the adjuster would hire building experts, structural engineers, and drying companies to handle the structures, but what about the contents? There are the retail shops for the salvor to handle, but how could a salvor assist with the hotels and restaurants?
A salvor will work along with the public adjuster to identify and separate the damaged contents from the undamaged and to conduct a detailed inventory of the involved items in every building on site. Having someone work with the public adjuster throughout the process will eliminate any surprises later on. The salvor and the public adjuster can work together to assess the damage to the contents of each building prior to it being moved into storage or being dumped.
A salvor also will coordinate any cleaning with your restoration contractor and arrange for any temporary warehousing of undamaged contents that need to be protected. The salvor will work with the public adjuster to determine replacement values for all of the contents, including specialty items like food service equipment and hotel furniture. They are familiar with the costs involved in replacing these types of items, including freight charges and design charges as well as volume discounts that are offered by many suppliers.
Busy adjusters have better things to do than track down experts in food service equipment, office equipment, banquet furniture, store fixtures, hotel furniture, maintenance equipment, and all of the other experts they will need to consult. Salvors have contacts with these professionals and can coordinate the evaluation and pricing of all of the different types of contents encountered on a loss. They are complete contents experts.
Many salvors also make themselves available to the company law firms that are pursuing subrogation cases or defending themselves against questionable claims. They can be qualified as expert witnesses for inventory and contents in cases involving commercial and residential property claims, and have the ability to review content claims and comment on their accuracy.
The scope of a salvor's services go way beyond just selling salvage. Unfortunately, many newer adjusters are missing the opportunity to benefit from these services mainly because they do not know that they are available. A good carpenter always says that a job goes much smoother if you have the right tools. Actually knowing what tools you have in your toolbox and what they can do for you makes all the difference in the world.
Edward Flanagan, a salvor in the Northeast for 20 years, is president of Allied Salvors, Inc., a national salvage and appraisal firm based in Philadelphia. He can be reached at 800-428-0299, eflanagan@alliedsalvors.com.
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