ADJUSTERSINTERNATIONAL.COM 5 extent, the following example is representative of some of the more complex endorsements. 7. “Cost of Inventory, Appraisal and Adjustment A. Coverage: In the event of a loss or claim to real or personal property, earnings and/or other property coverages included in this policy, this policy shall reimburse the insured for the following expenses incurred as the result of said loss or claim: 1. Any and all expenses incurred for the preparation of records or evidence to substantiate the amount of loss claimed. The insured shall be reimbursed for the expense of furnishing a complete inventory of destroyed, damaged or undamaged property, showing in detail, quantities, cost and providing the actual cash value. 2. In the event an appraisal is called for as set forth in the [standard policy, policy form, item X, etc.], this company shall reimburse the insured for the cost of the appraiser, the shared expenses of the appraiser, and the umpire. 3. Any expenses or fees, not to exceed 10 percent of the adjusted loss or claim, that are incurred by the insured as a result of the adjustment of the loss or claim. Coverage provided here in is not subject to any coinsurance or average clause which may be attached to this policy, but is subject to the limit of liability as set forth in [area where this information could be found in the policy would be stated]. B. Special Exclusions — Excluded or Uncovered Expenses: 1. Any and all expenses for taking inventory or preparation of any appraisal prior to any loss. 2. Attorney or legal fees, including court costs.” Comment: This endorsement provides broad coverage for loss adjustment expense, but limits the amount of insurance directly to 10 percent of the loss, however, not as an additional amount of insurance beyond the limit of liability. When a loss exceeds 91 percent of the policy limits, recovery of loss preparation costs, even if not exceeding 10 percent of the loss, could be reduced. If the loss equals or exceeds the limit of liability, no coverage is available for loss preparation costs. Note that any expenses relative to inventory or appraisals prior to the loss are not covered, nor are legal and court costs. Policies using this formmay include a deductible that limits coverage. Below is one of the more comprehensive endorsements reviewed from an excess policy developed by a surplus lines broker and it provided specific coverage for public adjuster’s fees. 8. “Pays the named insured for any reasonable expenses incurred after a loss for the preparation of inventory of damaged and undamaged goods.” (The insurance policy requires this of the insured, but expenses are not always covered.) “Reimburses the named insured for expenses incurred as a result of ‘going’ to appraisal.” (Under normal practices, the insured is expected to pay his own appraiser and 50 percent of the expenses of the umpire. These expenses are usually not recoverable under the insurance policy.) Basic Considerations and cover only outside professionals? 6. What kind of professional services are included: • Lawyers? • Accountants or CPAs? • Architects? • Engineers? • Others? Does the endorsement cover the services of Public Adjusters? If so, for what services? (Know the specifics.) 7. Is coverage for Public Adjuster services provided by the extension or by a separate endorsement? What is the approximate added cost, if any? 8. Does the coverage limit assistance to only one area of coverage, i.e., business income, or does it apply to all insured property? Here are some questions to consider when researching loss adjustment expense coverage: 1. Is this coverage provided by the basic property form? 2. Does the insurer offer coverage through an added endorsement? 3. If coverage is by extension, is a separate premium charged? 4. Is there a limit of insurance applicable for this extension? If so, is it a fixed limit or variable? If it is variable, is it based on a percentage of the loss? And if so, what is the percentage? 5. Does the extension limit coverage to the use of the insured’s own employees? Or conversely, does it exclude employees
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