How Public Adjusters Deal with Difficult Inventory Insurance Claims

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Many insurance companies have changed their procedures regarding Personal Property (contents) claims in homes and condos. The objective, in part, is to save money to offset losses due to the downturn in the economy.

Years ago, it was customary for us to prepare a list of damaged items with prices for the adjuster to review. Now, inventory services have come into existence to do the work directly on behalf of the insurance companies. This follows the trend in insurance claim departments to control the claim at the management level instead of trusting and relying on their own field adjusters.

On the surface, this seems like a good idea. After all, why not hire an inventory specialist who will do the dirty work of itemizing personal property? Presumably, this person will save the insurance company money by working at a lower hourly rate than an adjuster. However, the actual results are not beneficial to the policyholder for a number of reasons.

The inventory companies claim to price items by comparing them to published prices on the Internet. Unfortunately, in our experience, they often compare an item purchased at a high-end store with an item purchased at a discount store, even when it is apparent that the home was full of expensive furnishings. Here are a few examples:

  • If the insured bought a jacket at Neiman Marcus, the inventory service would use a discounted price from TJ Maxx. Yet there is likely a significant difference in quality and price between garments sold in those stores.

  • In one recent fire loss, the inventory service tried to price a Thomasville bedroom set by using prices for a low-end bedroom set available at Target. The Target furniture was of inferior quality and was priced at less than half the cost of the genuine item.

  • Oftentimes, inventory companies will use a clearance price—yet there is no guarantee that the sale price or the item will be available when the policyholder is ready to buy. One inventory firm wanted to ship all the damaged contents to their warehouse in the Midwest to complete the inventory. We refused for a number of reasons:
    1. We had prepared our own inventory on a room-by-room basis. Moving the items would scramble them and make it impossible to compare our list with their list.
    2. There would have been no way to determine if anything was lost. It would have been our word against theirs.
    3. The policyholders would have had a great deal of difficulty working with us and the insurance company to prove their loss if they had to make multiple trips to the Midwest. Who would pay the travel and lodging costs to go onsite to examine the items in dispute?

  • A few large insurance companies provide their own inventory service. Again, it sounds like a major benefit for the insured. Unfortunately, in a few losses with one company, we have experienced the the company counted only one-third the number of items that we did.

  • In addition, they underpriced many items by utilizing pricing of inferior products at discount stores. This was particularly true with items such as mattresses and other furniture that may not have clearly identifiable labels or markings.

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Another large insurance company hired an inventory service to come to the loss site to list all the items. We worked with this service to ensure that all the items were included and agreed on prices as we went along. The insurance company then sent the list to their in-house service in the Midwest to price it. In other words, the items are being evaluated by someone who has not physically viewed them. Seldom do they even see photos. If I told you to price a blue shirt, what figure would you use? Likely not the one the insurer’s “expert” is using. Furthermore, the in-house service took an outrageous 70% depreciation for items in good condition prior to the loss. Multiply these issues by 1,500+ items and you can imagine how they could amount to a sizable sum.

This leads us to our method of preparing an inventory estimate, since our objective is to provide the most complete and accurate inventory possible.

  • We list each item separately on a spreadsheet.

  • We document the contents with an extensive set of photographs (and sometimes video) for reference and proof of ownership by the insured.

  • We often provide documentation from Internet sources for high-end items.

  • If the insurance company wants to use a pricing service, we insist on working alongside them to ensure that all items are counted and that the lists correspond with each other.

  • We do not allow any items to be thrown away until their values are accepted by the insurance company.

  • We present our inventory to our clients for their review so they can make changes before we submit it to the insurance company.

  • We negotiate the settlement with the insurance company’s adjuster.

Preparing and negotiating an insurance claim is a complicated, time-consuming and frustrating experience. Those who have experienced a severe loss should not do it alone, especially since their immediate needs are getting their lives back in order. Clearly, spending 100+ hours doing an inventory is not part of anyone’s normal schedule. Our commitment to excellence shows in the results we produce for our clients. It takes hard work and perseverance. However, the result—a fair settlement—is definitely worth it.


Leonard Theran, SPPA

Len earned a Bachelor of Science degree in Mechanical Engineering from the Massachusetts Institute of Technology and an MBA from Stanford University. He has more than 35 years of adjusting experience and also earned the SPPA designation. Because he has also been involved in the management of several high-tech companies, Len has a unique perspective when adjusting industrial losses. He is a past-President of the Massachusetts Association of Public Insurance Adjusters (MAPIA) and is on the Board of Directors of the National Association of Public Insurance Adjusters (NAPIA) and CAI-New Hampshire. He has also qualified as an Expert Witness and has been a featured speaker before several organizations including the Risk and Insurance Management Society, the Institute of Real Estate Management and Lorman Education Services.

Len is licensed in Massachusetts, Connecticut, Maine, New Hampshire, New Jersey, Rhode Island, Vermont, Georgia, North Carolina, South Carolina, Texas, West Virginia, Virginia, Oklahoma, Florida, and the U.S. Virgin Islands.