Many organizations have a tendency to become pack rats, especially when they have surplus storage space. While most of the corporate hoarders have learned to purge their dated documents, very few have adopted the practice of purging obsolete electronic equipment. Although old computers and telephone systems are the most common equipment stored in the “Bone Yard”, it’s not uncommon at manufacturing or institutional facilities to find highly sophisticated assets that were (or are) very expensive to replace. Some of the assets retain real value as spares or salvage, but most are in storage only because of indolence. What happens when they are damaged and part of an insurance claim?
Too frequent, Adjusters simply ask the obvious – “What’s the status of the equipment in the storage area?” and receive the predicted response – “Everything was in good condition”. Asking a series of progressively specific questions generally results in an accurate appraisal of pre-existing condition. It’s better to ask (in order):
- When was the equipment purchased?
- Was it new or used at the time?
- How much did you pay for the equipment?
- Is it on the agreed value schedule (if applicable)?
- What is current replacement model?
- What is estimated current replacement cost (new)?
- Is there a market for the (used) equipment?
- How much do you believe you could have sold the equipment for just prior to the loss?
- What is the estimated replacement cost for a comparable unit (used)?
- Was the equipment ever installed and operational?
- Were any additional repairs/add-ons required to make it operational?
- When was the equipment removed from service?
- Why was the equipment removed from service?
- Absent of the current loss event, what would it have taken to re-commission (repair) the equipment?
- What is estimated repair cost to return the unit to “pre-incident” condition?
The progression of questions will usually yield more genuine (honest) and accurate answers to the real status (and repair/replace) values for the mothballed equipment assets. Assuming that the answers don’t appear legitimate you should consider a switch in tactics – Present the prospect that you will need to begin actual recovery/repairs to establish “actual” condition (to differentiate pre-existing damages from those related to the claimed loss incident). Most likely, you’ll see a dramatic shift in focus when they realize that the cash thrown at the problem may go to someone else.