Recently I was at a site inspection centered on business personal property. Items were skewed about in piles, where they had been placed in the aftermath of a storm. The building was damaged, as well as the contents inside of it. Upon review of the item catalogue, I remarked that such is akin to a scavenger hunt, where children hunt for items on a list and take a picture as proof of its existence. To which opposing counsel replied that this exercise of reviewing the catalogue was better simply because each proof of existence resulted in a monetary reward. He was right.
Creating this catalogue has a direct correlation to any insurance award for a business personal property claim. A catalogue creates a showing of proof of the contents and personal property needed to establish the loss to the insurance carrier. However, creating this catalogue after an event has occurred can be difficult, especially under the stress of the situation. A major issue that insureds regularly face after suffering some type of loss is the documentation of their contents or business personal property claim. Businesses may keep a record of their business receipts and contents, but this may be long out of date or even lost with the damaged property. Therefore, it is wise for policyholders to create this catalogue as a regular part of business and to take that list with you in the event of an evacuation.
Most business owners know to have a list of all their business personal property that includes when bought and for how much. But Ramona Gallagher, an expert in personal property evaluations and owner of Great Estates Inventory, LLC, states that despite this list, many business owners and managers do not have a full understanding of their business personal property, and this misunderstanding often results in an underestimation of the value of their claim.1 Even United Policyholders recommends that an insured “may decide you want to hire professional help to take over the time-consuming details of documenting a major or total loss and negotiating on your behalf with the insurer to recover your full-contents benefits.”2
Ms. Gallagher notes that though creating an item catalogue of business personal property is time consuming, insurance companies are responsible for like kind and like quality, which goes to the valuation of specific items as determined by their condition. She used the example of an industrial sewing machine, as such items are relatively unique in the market and usually limited to a highly specialized industry. These types of items are difficult for the insurance company to value absent additional input by the insured or some expert.3
Another mistake many insureds make, is waiting to claim the business personal property loss. Business owners, understandably, fix the hole in the roof before looking at what is inside the building, but compartmentalizing building coverage over contents or business personal property may hinder the later claim. The Insurance Information Institute places “[p]repare an inventory [item catalogue]” before providing a proof of loss to the insurance company in directing the filing a business insurance claim.4 Insureds should negotiate these claims at the same time as other losses.
Don’t leave money on the table for business personal property losses. Help in evaluating the value of a business personal property catalogue may be beneficial where difficulties arise. And engage in the scavenger hunt early.
1 Ramona Gallagher, Great Estates Inventory, LLC, http://www.greatestatesinventory.com/
(visited March 9, 2021).
2 Home Inventory and Contents Claim Tips, United Policyholders, https://uphelp.org/claim-guidance-publications/home-inventory-and-contents-claim-tips/
3 Interview with Ramona Gallagher, Owner of Great Estates Inventory, LLC (March 9, 2021).
4 Filing a Business Insurance Claim, Insurance Information Institute, https://www.iii.org/article/filing-a-business-insurance-claim