Property damage from water and fire-related events, including smoke and soot, account for the vast majority of costs within the $210 billion property damage restoration industry. While natural disasters and household mishaps are difficult to avoid, insurance companies, adjusters, and restoration companies can work together to reduce the total cost of property damage claims.
Though it is rarely possible to entirely salvage property after a disaster, taking the right precautions and following best practices can help reduce claims by thousands of dollars.
Prepare
Having an emergency plan is absolutely necessary. Before you can even take the first post-disaster steps, it’s critical to have a detailed written set of guidelines as well as established relationships with reliable disaster responders.
In addition to becoming familiar with best practices, finding a reliable restoration company with the ability to mobilize quickly is imperative. When working to salvage damaged property, a timely response can make all the difference in reducing claims. Consider using restoration companies that specialize in emergency mitigation and restoration services, since they are accustomed to fast-response times and are likely to have equipment and expert personnel available on call.
You also should establish connections with specialty restorers that handle losses of property with extraordinary value, whether monetary or sentimental. Art, antiques, personal hobby equipment (dark rooms, wine cellars, coin/stamp collections), important documents, and rare books are some of the most common, highly valuable items. Be sure to review high-value policies thoroughly.
Lastly, it’s important to build a backup plan. In cases of widespread disaster damage—e.g., flooding, forest fires, and hurricanes—you may need more than one option should your first choice be affected by the same disaster.
An insurance claims professional who is familiar with how a standard restoration company manages properties and materials after a disaster will be better prepared to ask the right questions and inform customers of the progress of their claims. They will also be better equipped to help reduce claims and improve the chance of salvaging items.
Regardless of the type of disaster, the most important element of any salvage strategy is time. Nearly every technique and tactic is contingent upon how quickly the initial response takes place and how rapidly the process moves forward.
Water Catastrophe
In water losses, the first phone call with the policyholder should ensure that they have turned off the water, a critical but too-often overlooked step. If there are floor vents, it is a good idea to turn off the HVAC system, if possible. However, if turning off the HVAC will cause other damage—like frozen pipes in the winter months—it should not be done. The second phone call should be to the restoration professional, regardless of the perceived size of the loss.
Assessment - Restoration professionals are armed with a variety of specialized technology that has the ability to control and detect potentially detrimental damage unseen to the eye. The first step upon arrival is to assess the damage. Tools and meters, such as infrared imaging (IR) devices, can determine the full extent of the damage, a key point in ascertaining the insured claim losses, as well as the ability to salvage materials affected by the disaster.
If the IR device shows warm or neutral, there is no hidden water and, therefore, minimal damage. On the other hand, if the IR device shows cold, it becomes necessary to investigate further using both invasive and non-invasive meters that can determine whether or not there is hidden water damage. These tools allow professionals to map the full extent of the damage.
Upon finding the wet spots, the next step is to extract water from the flooring. All loose items, such as furniture and other materials—should be moved to another location. If laminate or engineered flooring is present, there is typically no way to salvage these materials. If the restoration professional arrives within 24 hours (36 hours, maximum), hardwood floors have an excellent chance of being salvaged, assuming there is no plastic or other moisture barrier underneath the hardwood floor. For water-damaged carpet, a process called weighted extraction is the best way to remove the moisture quickly and efficiently. Weighted extraction can remove up to 95 percent of the water from the carpet and pad.
Next, a determination must be made about what to attempt to save. Industry standards indicate that if you’re dealing with a category one loss (little or no contamination), then all materials have a high probability of being saved. In a category two loss (significant contamination, such as from a washing machine overflow), everything can be saved except the pad. Finally, in a category three loss (gross contamination, including sewage and flooding of any kind), nothing that is porous can be saved, including materials like carpet, pad, and drywall. Semi-porous materials, such as 2x4 framing, can be decontaminated, sanitized, and saved.
Balanced Drying System – After the extraction, demolition, and sanitation steps, it is important to establish a balanced drying system. This should be implemented to ensure structure and content drying is as fast and efficient as possible. Typically, this process incorporates professional equipment: low-grain refrigerant (LGR) dehumidifiers, high-capacity air movers, and air filtration devices. Continual inspections, at least once per day, and evaluation visits are made to track the progress and make adjustments when necessary. The evaluation visits also let the restoration professional know when the structure has dried to the designated goal and the equipment can safely be removed.
High-capacity air movers are strategically placed throughout the structure to create a vortex, similar to the motion of a tornado. The high-velocity air helps dry the water-damaged area quickly. LGR dehumidifiers are also used to remove moisture by drawing in wet air and blowing out warm, dry air. Because of enhanced engineering, LGR dehumidifiers produce dryer air, allowing the salvaging process to occur more quickly and efficiently.
Lastly, air filtration devices are used to clean the air and protect the health of employees and building occupants. These are always appropriate since the restoration process, through the use of air-moving equipment, moves various particles throughout the air. Removing these particles is a prudent step in maintaining the health of all persons who might enter the structure.
Highly Valued Items – The best and often only way to salvage unique items is to work with a professional who is highly specialized in restoring the specific type of material/content. Art and jewelry are among the most common high-value items that need special attention. Antique firearms are also of special concern because there is a high probability that water (or fire) will cause rust on the unblued metal, impair function, and decrease value.
Post-disaster document restoration is also of great concern because the consequences of permanent damage and the loss of critical information can severely compromise an organization’s records history and operational effectiveness.
If there is a small number of documents (within a home, for example), the general practice is to spread them out to dry immediately following the disaster. However, large amounts of important documents, like those housed in physicians’ offices, hospitals, and large corporations, are of significant concern.
The industry standard for salvage of documents in these cases is through freezing in order to halt deterioration. Within a day, the documents must be frozen, usually in blast freezers or freezer-equipped trucks, in a state in which they could potentially remain unchanged indefinitely. The frozen materials are then stored until the drying procedure begins. One of two options is then used—desiccant drying (uses desiccant dehumidification to remove moisture) or vacuum freeze-drying, similar to the process used when drying fruit.
Follow Up – In order to determine when the structure and contents are dry and completely salvaged, it’s important to return to the site once a day to secure readings from the aforementioned meters until they indicate the desired pre-loss conditions. Typically, this takes around three-to-five days, but it can take longer if hardwood floors or plastic walls are involved.
Fire Damage
Fire catastrophes can present the most difficult restoration of contents due to secondary damage, residual effects of fire, and delays in beginning the restoration process. Working at a fire-damaged site also requires more precautionary procedures on the part of those working to salvage materials due to the negative health effects of smoke, soot, and the multitude of acids that are generated in every modern fire.
Once again, time is a critical element in salvaging contents after a fire. If the recovery process is delayed by even two or three days, the restoration can be twice as expensive. If delayed by a week, it can be up to six-to-eight times as expensive (mostly due to mold and bacteria development). The most common reason for postponing restoration efforts is the investigation of the origin and cause of the fire.
Assessment – The first step when assessing damage from a fire is to check the furnace filter to see if it is blackened. Changing the filter helps provide a more manageable working environment. Along the same lines, it’s important to open as many windows as possible and position exhaust fans to blow out of the building. This helps get rid of the vast amount of harmful products of incomplete combustion (PIC) produced from any fire. PICs can pose serious health hazards by entering the body through breathing or absorption through the skin.
Any professional working at the site should always wear some form of respirator (particularly for the first day or so) and should always wear rubber or vinyl gloves as well as long sleeves and long pants to avoid contact with soot and remaining smoke.
Next, evaluate the actual damage. Keep in mind that many fires, especially large-scale ones, are extinguished with water. When the flames are extinguished, 85-90 percent of the damage caused by a fire stops. However, acids produced by the fire will begin to damage metals and glass materials even after the fire is out. If they are not dealt with properly, the acids can increase total costs by 10-15 percent. Water damage, if not remediated, will escalate very rapidly, resulting in greatly increased remediation and restoration costs. The restorer should deal with the water damage before fire, smoke, or soot damage.
Contents Cleaning – If there is serious water damage, the above salvage strategies should be implemented first to avoid mold growth, contamination, and further damage.
Any furniture or contents that are in the same room as the fire are almost always not restorable. If the cost of restoration approaches 50 percent of the cost to replace the item, the general rule of thumb is to replace the item. With proper techniques and processes, between one third and one half of contents damaged by smoke/soot can be salvaged—sometimes more.
If not burnt or scorched, hard surfaces are generally salvageable. Upholstered items, such as dining room chairs and couches can either be wet-cleaned or dry-cleaned with a solvent, depending on the fabric and amount of soot.
Within roughly two-to-three weeks, the acids from a fire can begin etching glassware, crystal, china, and other surfaces. One way to help prevent this is to pretreat those items and materials with a light film of vegetable oil immediately following the disaster. The standard procedure, once the damage has been assessed, is to box up these items and take them to an off-site location in order to be salvaged and avoid further exposure to contaminants/acid.
Other contents, such as clothes, bedding, curtains, and drapes, should be sent to a professional dry-cleaning service that specializes in fire-, smoke-, and soot-damaged items.
Salvage to Save
When disaster strikes, losing property and contents is inevitable, but there are ways to minimize losses and improve chances of salvaging contents after a disaster.
Prepare a disaster plan and build relationships with restoration professionals, including specialty restoration professionals, so the damage mitigation process can begin immediately and efficiently. Time is of the utmost importance when dealing with fire and water damage, so the faster the detailed plan can be enacted, the better the odds of minimizing losses.
Work with the policyholder and restoration professional to determine the items that may or may not be salvageable based on damage, sentimental value, and cost to restore versus cost to replace. If the restoration process can begin immediately, high-tech equipment and best-practice salvage strategies have the potential to save a greater percentage of the contents and property affected by a disaster.
Will Southcombe is the director of training and technical services for PuroClean’s North American headquarters. He can be reached at wsouthcombe@purosystems.com, www.puroclean.com.
Another Angle: Auto Salvage Programs
By John Kett
Whether it’s tropical storms, hurricanes, tornadoes, or floods, natural catastrophes result in hundreds of thousands of vehicles being deemed a total loss each year, which can cost insurance providers significant claims payouts.
When insurers are dealing with total loss claims, auto salvage becomes an essential component in the claims process and can be a differentiator in managing and saving costs. With this in mind, here are a number of key elements that insurance companies should keep in mind when establishing or enhancing their catastrophe auto salvage program.
Predict and Prepare. The core of successful preparation lies in estimating and predicting incoming total-loss volumes. This knowledge is critical because it enables insurers to consider all potential scenarios involving employees, equipment, and network and systems capacity first, and then identify and designate the most appropriate resources and partners to implement an efficacious response in any catastrophe situation.
Strong Vendor Relationships. Even with the most advanced forecasting technology, it is virtually impossible to assess the full impact of a storm or hurricane, so responding effectively to an event requires flexibility on the part of the insurer. Strong relationships with reliable vendors allow carriers to provide the necessary people, technology, and equipment on the ground with extremely short notice so that recovery can occur as quickly as possible.
Robust Internal Structure. Insurers with well-defined internal structures at both the national and regional levels are able to communicate more successfully and better manage their staffing levels and resources to adequately service customers. Strong internal staffing structures also ensure that the right external resources can be allocated.
Resources and Requirements. Access to national and regional resources, including salvage providers and manpower, is critical during any natural disaster. The salvage company should take responsibility for towing vehicles from the disaster location to a yard after working with the insurance provider to establish requirements for handling the increased volumes that a disaster presents. The requirements should be based on several factors, including: the severity of the event, total-loss volumes, distance to pickup, and communication capabilities. An effective partner will assess first the total loss vehicles, and then identify potential buyer information to target for the auction.
Rapid, Protected Communications. Another necessity during a catastrophic event is the ability to facilitate rapid communications efficiently. It is critical for the insurer to be able to clearly disseminate information from the national office down to the local staff and for the salvage provider to keep the national, regional, and local staff informed. An absence of this flow can lead to inaccurate estimation of incoming total-loss volumes prior to a catastrophe and longer cycle times after the event. A secure IT network and the right hardware to support communication needs ensure that operations continue to run smoothly from a systems perspective. A protected technology infrastructure will also be important to communicate key business steps and processes from the field back to the carrier in a virtual manner to further increase the efficiency and accuracy of the tasks and to manage the sheer volume of vehicles.
Innovative Salvage Partners. Insurance companies must seek partners in the salvage industry that have the expertise and solutions needed to help manage disaster-recovery efforts while securing the highest return possible for totaled vehicles. Salvage partners need to have extensive experience and data to provide carriers with market value information, and have feet on the street locally that can be used in the total-loss valuation process and enable quicker settlement. This allows for a faster turnaround time for claims to be settled as swiftly as possible in the wake of a catastrophe.
A tropical storm, hurricane, or other natural disaster magnifies the least systematic parts of the claims process. Insurance companies should make sure their salvage partners offer solutions to help either manage the title procurement process for them completely, or enable them to secure titles with the appropriate tools and reduce cycle times and costs throughout the process.
A catastrophe situation requires insurance providers to manage a much larger volume of salvage vehicles at a much faster rate than usual. Look for a salvage partner with a strong national and global buyer base that will help expedite movement of salvage sales at auctions and generate higher returns.
Multiple auction platforms also play a critical role in securing a greater return for a vehicle. Combining both in-person and live online auctions assists in driving prices higher than those of online-only sales, and it increases the odds of generating high returns per vehicle. Similarly, technological advancements in the salvage space, enabled through mobile technology, ensure that insurance providers have anytime, anywhere visibility of their salvage assets and those assets have 24/7 exposure to buyers.
Insurance companies can show meaningful results in terms of salvage returns, reduced claim cycle times, and improved policyholder satisfaction when they are prepared and find the right industry partner that possesses expertise in the salvage auto space.
John Kett is president and CFO of Insurance Auto Auctions. He can be reached at jkett@iaai.com.