Sentry Salvage Decision Making Process – Loss at a Retail Store
Sentry received a call from an independent adjuster for an inner city ladies clothing stock loss from an burst apartment sink pipe. As a result, spraying water from the pipe directly wet a good portion, but not all, of the insured’s stock in the retail area. The basement area, which served as backup storage, or “back stock” also took on water as you can see in the pictures (water beads on plastic). The store and basement had a high humidity level that commonly cause the fabrics to pucker, usually resulting in decision to “total loss” the stock and obtain a salvage recovery.
When we arrived at the loss site we met with the insured and explained our role and inventory and appraisal specialists. Our discussions continued and we were told that at a previous loss here the salvage company “pulled all the stock”. From our years of training and handling of many types and categories of stocks, we realized that removing all the stock at this loss at this time would not benefit our client or the policyholder. A full stock removal would have created a higher net loss to our client and essentially shut down the store for a period of time, exposing the insured to an increased business loss.
We formulated our opinion of how the insured may “recover” from either a full salvage removal or taking the option of retaining the stock. This was fully explained to the adjuster and store owner by Sentry and was based on analysis of the current salvage market conditions through a review or the product brand and quality mix.
So to start off the claim process, we mapped the areas of the store by extent of damage, explaining along the way what our thoughts were on the salvage potential. Some of the items were near a total loss, soaking wet or with water spots and staining. However, much of the stock was responding to the drying process that was going on in the store (air movers and dehumidifiers).
We created a tiered salvage and damage approach that was not only accepted by the policyholder but he was grateful that he did not have to reorder all new stock in mid-season at higher prices and long lead times. A total loss stock pull at this location would have resulted in a claim over $125,000.
Our quick thinking common sense approach to the loss enabled the claim to settle in less than a week for about half the cost ($70,000) of a full claim with little or no business interruption. In addition, the verification process to get to actual invoice cost was streamlined through sample analysis this reducing claim cost and cycle time to closing. Our small appraisal fee was happily paid by the insurer who ended up saving over $50,000 and the policy holder has now been added to our buyer database for a “tough move” stock category.