As a contractor, you know how important the tools you use everyday are to you. But, do you know how much they are actually worth should you sustain a loss? In a theft situation, the following questions will be asked of you by a claim representative: Do you know what was taken? Do you know how old the item was? Do you know where you purchased the item? These questions are followed up by: Do you have any receipts to show ownership? In many cases, the first few questions are answered with “yes,” but the last question is answered “no.” If you can’t answer yes to all of these questions, how will your claim representative be able to accurately assess your loss amount?
As an insured, you have a duty to prove your loss, and the best way to prove what you own is a sales receipt. This gives the claim representative accurate information as to what you are claiming, and it also affects the potential payment amount of the claim. On polices with Miscellaneous Personal Property or Unscheduled Contractor’s Equipment, depreciation is taken on items to reflect the Actual Cash Value. If you do not have receipts to show the age of the item, you may receive a higher depreciation amount applied unless you are able to prove otherwise.
It is a good idea to keep your receipts in a separate folder and not with the case in which the tool is stored. This will not only allow you to keep track of your purchases, but in case of a loss, it will save you time by not having to track down receipts from retailers. In addition to the receipts, it’s a good idea to keep owner’s manuals in this same folder so that model numbers can be matched up, especially on higher-valued items. You may also want to take a picture of your inventory periodically, as well. In many instances, you may not remember everything you had in a trailer, toolbox, shop, etc. Photos will help you recall some of the smaller items you may not have even thought about (extension cords, wrenches, etc.). With this information readily available, it will reduce the claim processing time and ultimately get you back to work sooner.
Josh Aberle, CPCU, AIC
Royce Fults, AIC